Midterm Observations on the Telecom Industry.
July 2, 2016
Three events were held this past week that provided an opportunity to get a midterm pulse of the telecom industry: the MWC-Shanghai, 5G World and WBA Congress. Having attended the last two, I wanted to summarize a few observations:
* The vision for 5G is converging; industry is aligning along common themes. A few leading operators are racing to claim 5G capability for different reasons and interests. The absence of standards coupled with vendors’ urgent need for 5G, will lead to market confusion which will climax in the next two years as the olympics in Japan and Korea approach and companies and countries race to claim firsts. Expect to be inundated with terms such as ‘5G-Lite’, ‘pre-5G’, ‘5G-Phase1’, ‘pre-certified 5G’, ‘5G-ready’, etc.
* Technology is more varied, advanced and disconnected from implementation than ever before. There are excellent technologies that don’t get to deployments because of process, organization structure, mentality, competency and other such issues. In other words, the pace of innovation is not slowing down, but the pace of implementing new innovations in commercial networks is slowing down.
* The convergence of the Internet and telecom worlds is exposing differences in culture, attitude and approach to business that are not favorable to the telecom industry players. Emerging technologies promise to reduce the power of the MNOs leading to opportunities for aggressive new players.
* In fact, technologies like SDN/NFV, IoT and data analytics are exposing many organizational and structural issues within the telecom sector. There’s more need than ever before to keep an open mind to new approaches, but this will be harder to do in an aging industry. The result is missed opportunities for new revenues, slow development of new markets to complement legacy solutions and services, and lower operational efficiency. The business models required for success in IoT, data, and other services require agile and dynamic cultures.
* Much more work is still required to improve the performance of 4G networks to realize their full potential. This is especially related to operators in markets in developed countries and major cities. Operators are maintaining tight budget control aiming to minimize capex in alignment with their eroding financial performance. [Hint: there are some positive consequences for the savvy few.]
* The major problem for IoT center on the applications and use cases. Successful mobile applications have been tapped with 2G modules while proprietary and peer-to-peer technologies fulfill the requirements of applications where cellular technologies fall short on performance and business case. This leaves unserved low margin / long RoI applications or more applications in fragmented markets that require a longer sales cycle. The focus on technology obscures that the challenge in IoT is business and market issues not technology ones.
* Smart cities is focused on connectivity and Wi-Fi access as opposed to sensors deployments, automation, remote reading or control, or other applications that fall in the realm of IoT. The wide disparity between cities – geography, economics, demographics, etc. – leads to a wide range of interest and requirements for applications, but connectivity remains key. This is fitting as for the majority of the people throughout the world, connectivity is most impactful on the individual citizen.