State of the Telco Industry: MWC2019 Perspectives

By | March 3, 2019
MWC 2019 Intelligent Connectivity

This year I’ll opt to write a few quick thoughts on the state of the telco industry instead of the annual report that follows MWC. Time is tight, so let’s get straight to the main points.

Foldable Phones

Foldable phones were the main highlight of MWC2019. Both Samsung and Huawei launched models featuring foldable screens. At prices in the range of €2,300, these phones will be the ultimate status symbols. You can’t expect high volumes with this kind of pricing. If the industry is looking for a device that will make the business case for 5G, I don’t think it will be these phones.

Radios Dominate Infra

The infrastructure side is dominated by radios. All the major vendors are focusing their marketing and announcements on hardware for 5G. This is going back to the roots! It is not a surprise since, at it stands today, 5G is a new radio slapped on top of a 4G core network. When dealing with radios, power consumption and efficiency are the critical parameters. I think this is where we can find a little secret about 5G: massive MIMO is massive power consumption and will lead to a bump in operators opex. Nokia’s liquid-cooled radio is the tip of a large iceberg. Vendors are racing to improve the efficiency of their radios, but this will evolve over time. What is the impact on 5G roll-outs? Could bullish operators pace the introduction of 5G and not over-commit to major roll-outs before they get better economics and performance metrics?

Subsiding IoT Hype

Perhaps we have a connected car fatigue – there seems to be less cars on display (but more Spiderman this year!). Mobile network operators continue to roll-out LTE-M and NB-IoT technologies, but they are yet to monetize these networks – it remains a struggle for them to venture beyond connectivity. AT&T is adding 1 million IoT devices per month which is impressive, but no carrier is willing to share the revenue from IoT services (<1%!). The opportunity for adjacent ecosystems (e.g. LoRa) remains open.

Long Road for Private Networks

Robots were everywhere! But I could not find a convincing use case for robots outside of manufacturing environment. Even there, the questions center on the business models for private networks: will a large manufacturer trust an MNO for its factory automation? I don’t think so. Setting the right context for private networks requires a set of elements to be in place: spectrum availability, right price points, appropriate support and service strategy, etc. All these are elements where there’s a strong disconnect today between the mobile wireless industry and the enterprise. The large vendors are betting on private networks to compensate for declining carrier revenues. Here it will be critical to segment the market as different verticals will behave in different ways. Overall, I think we are in the early steps of a long process that will be highly regional in its evolution with select markets and sectors in the lead.

Edge Computing Killer App: Gaming!?

Justification for edge computing hinges on the ability to monetize applications. But what are users willing to pay for? MNOs are still tipping their toes into the edge with Deutsche Telekom taking the early lead. For now, it seems gaming is what the industry could rationalize for edge computing. However, I think that the MNOs will be challenged on this front with a number of other players including startups and traditional cloud players beating them in this race. Even the fixed access service providers and the cablecos are active and better positioned to leverage the edge than the MNOs.

Quick Notes

  • There’s much to catch up on related to AI: it is still a buzz-word with much claimed being AI has nothing to do with AI!
  • ORAN is stimulating an ecosystem of small(er) companies to develop infra solutions. Success is in the hand of the operators who not only will have to muscle the large vendors into playing fair, but to also take an active role themselves in integration activities.
  • 5G fixed wireless access CPEs remind me of WiMAX! In the last decade, I was heavily involved in bringing fixed wireless access CPEs to market. The laws of physics are still the same, as are the economic levers. But today, we can makes ASICS that process a large number of antennas while we were limited to 2 then. Will this make a difference and make the business case for fixed wireless access?
  • There are different opinions on the deployment scenarios for mmWave access technology. Qualcomm remains in the beamforming camp, but there are alternative implementation approaches that attempt to mitigate the shortcomings of the beamforming approach. Which to win?
  • This is the first year that mmWave has ‘gone indoor’. Expect more of this trend over then next couple of years.
  • With so much emphasis placed on radio, the core took a back seat. But it would be a mistake to ignore developments on the core network side: this will determine the winners in the 5G era (network slicing included!).
  • Not many M&A announcements. Ericsson announced its acquisition of Kathrein on the first day of the event, cementing the coupling between radio and antenna. There were also a number of calls for consolidation on the European MNO side.
  • Last but not least: security. Given the US government position on Huawei, I did not think that security was a dominant as it could have been. The major vendors (Ericsson, Nokia,…) refrained from entering the fray as they should. With the absence of US-based player in the RAN, Samsung stands to win the most. The security topic seems to have fizzled by the third day of the event, but promises to remain a proxy for issues between China and the US.

In Pictures

5G CPE MWC 2019 fixed wireless access
5G fixed wireless access CPEs look a lot like WiMAX!
5G robotics @MWC2019
Paper-plane robotics!
Facial recognition @ MWC2019
Facial recognition instead of passport control (it actually worked well – congrats Comba!)
Samsung Fold and Huawei Mate X foldable phones @ MWC2019
Foldable phones: Galaxy Fold and Huawei Mate X
Leapfrog technologies @ MWC2019
Have to look hard to find blockchains – but it was there in applications such as roaming and identity.
IoT Lessons learned
Still need to optimize LTE-M and NB-IoT for prime time!
Xona Partners @ MWC2019
Xona Partners team @MWC2019
MWC2019
Official attendance: 109,000; but it felt lower than last year (107k).