MWC in 20 Years?

As Mobile World Congress 2021 unfolds with pandemic-induced reduced attendance, down roughly two thirds from the last per-pandemic year, most of us wonder how the recovery process will unfold.

The practical immediate metric for most of us will be how soon attendance returns to the last pre-pandemic year. 

That all makes sense for the near term. But one logical question we must ask about maturing markets--in connectivity or elsewhere--is how demand for exhibitions and trade shows changes over time. 

Fragmented markets create value for such events, as they aggregate buyers so sellers can affordably reach them. 

In 2016 the NCTA gave up its annual trade show, for example. In 2010 Supercomm, the former big U.S. telco show, was canceled. In both cases, industry maturity made the meetings expendable. CTIA, once the big U.S. mobile industry show, declined to the point where it essentially became a GSMA event in 2017. 

The point is that big annual industry trade shows only make sense when markets are young and fragmented. Once consolidation has happened, the logic for holding them goes away, as sellers know exactly how to reach their buyers. 

So it is not unreasonable to speculate about whether pandemic-induced travel bans and trade show cancellations will, in some cases, accelerate thinking about their value, in markets that are becoming more concentrated. Value, arguably, will remain high in yet-fragmented markets. 

Such processes unfold over decades, but are a clear pattern. Consolidated markets have less need of big trade shows.

Are Mobile Data Prices Correlated to Rates of GDP Growth?

Economists tend to agree that economic growth is “caused” by an increase of aggregate demand plus an increase in aggregate supply. 

Demand side drivers include consumer spending, investment, government spending, exports and imports. Supply side drivers include increased capital investment, an Increase in working population, an Increase in labor productivity, discovery of  new raw materials or technological improvements to improve the productivity of capital and labor.

It is that last item--technological improvements in computing or communications--that are believed to improve chances for economic growth. 

But economic and political stability also are important as they reduce uncertainty. Low inflation rates also encourages business investment, arguably because it reduces uncertainty. 

The point is that economic development is a complicated process. And the presence of many necessary preconditions does not always ensure success. What is necessary is not sufficient. 

For such reasons, metrics such as the cost of mobile data might, or might not, be helpful in explaining economic growth rates. If that were the case, the relationship between mobile data cost and economic growth would be linear. And that is not the case. 

Countries highest gross domestic product growth rates do not match up in a linear way with countries with the  lowest costs of mobile data per gigabyte of usage.  

source: Speedcheck

source: IMF 

We all seem to agree that quality communications are better than poor quality. We all act as though there is a correlation between quality communications and economic growth. To the extent that low prices per gigabyte of mobile data are any measure, a correlation with GDP growth is difficult to discern. 

How Big are Carrier Opportunities in New 5G-Related Services?

At the moment, mobile operators globally are optimistic about selling a variety of new connectivity services to enterprise customers. How much incremental revenue can be generated is the issue, as always.

Telcos will have competent competitors in all the new lines of business. Consider SD-WAN, among the new varieties of WAN services offered. Carrier services compete with do-it-yourself approaches by enterprises as well as other SD-WAN specialists. As often is the case with new services, specialists have dominated much of the early activity. 

And many of the new other services also will compete with DIY and specialized network providers. Internet of things connectivity, for example, can be handled by enterprises themselves using several private networks; public low power wide area networks and other internet service providers. 

Private network services of several types also are envisioned. In some cases operators might engineer, build or operate such facilities as a managed service. In other cases the public networks might work. But enterprises also will be able to use DIY. 

Edge networking, as opposed to edge computing services, also are seen as a growth area. But there remains much uncertainty about the roles telcos actually will be able to sustain. At the moment, few are contemplating offering their own edge computing services.

source: GSMA 

Most telcos are partnering with cloud computing firms, bundling real estate and connectivity, but staying out of the retail edge computing “as a service.”

So multi-access edge computing could affect public and private networking choices, at least when enterprises look at use cases requiring high-performance, low-latency, high-availability and high device density performance. 

Traditionally, private networks have been preferred when enterprises want high isolation from public networks, plus full control and lower cost, higher-performance in-building networking. Some 50 years ago, the use case was support for personal computers and peripherals connected to servers and cabled networks were the platform. 

These days, Wi-Fi tends to dominate for general purpose computing requirements supporting devices of all types. Mobile phone support remains a mix of public network access for voice and messaging, while data access can use either Wi-Fi or the public network. 

5G plus multi-access edge computing allows new permutations. Some 66 percent of mobile operators polled by GSMA are looking to use their core assets to support private enterprise networks. Some 59 percent also believe they can use their public networks to do so, operating with service level agreements.

In all likelihood, quite a mix will emerge. 

source: GSMA 

How Big is the Private 5G Network Opportunity for Mobile Operators?

Which is easier: building a general purpose communications network or integrating a new computing, application or platform for an enterprise? In other words, where does value lie? 

Most of us instinctively would opt for the latter as the driver of value, rather than the former. 

Which is easier: a systems integrator bundling local private 5G networks with application, platform or computing solutions for an enterprise, or a connectivity provider integrating those functions with its connectivity solution? Most of us instinctively would opt for the former, not the latter. 

All of that suggests the private 5G networks business will be led by the same cast of characters that have led the information technology system integration business for decades, namely third-party system integrators. 

As much as mobile operators might hope for a big role in system integration or supply of private 5G services and networks, optimism must be tempered. There will be few instances where a general-purpose private 5G network is the driver of enterprise interest.

In most cases it will be some business process the private 5G network must support that drives the deployment. And that suggests system integrators with vertical market knowledge will have the upper hand. 

Qualcomm and Capgemini are partnering to create and supply private 5G networks for enterprises, with Qualcomm supplying off-the-shelf private networks while Capgemini is the system integrator. 

“System integrator” is one of several private 5G network roles that mobile operators might themselves undertake, and, as always, illustrates the obstacles to success at scale in that role. Large consulting firms have for many decades operated as system integrators for information technology projects undertaken by enterprises. Private 5G now appears as one of the latest of such efforts.

A survey of mobile operator executives conducted by GSMA suggests the areas where suppliers believe they have opportunities, ranging from security and managed services to connectivity and integration. 

source: GSMA  

 

Some might be surprised by the belief that providing security services ranks at the top of possible opportunities. This apparently is because 44 percent of operators have seen increased growth in demand for security services from their enterprise clients due to Covid-19, GSMA notes. It is not immediately clear why the 5G connectivity provider is the most-logical provider of security, which also must be embedded directly into devices, applications and platforms, for example. 

The logical implication is that 5G offers more security than does Wi-Fi, for example, which is reasonable enough. The extent of this opportunity for sale of public services is the issue. It does not seem inherently clear that a public network 5G access provides advantages over a private 5G network that is logically isolated from the public network. 

That said, 45 percent of respondents consider it extremely important to invest in security because enterprise customers want it, GSMA reports. 

Fully 77 percent of operators are planning to offer security as part of their private network solution, which makes sense. 

Professional services include consulting (technical and business), systems integration and managed services, together account for 40 percent of operators’ potential revenue upside. The opportunity is arguably greatest for larger mobile operators with IT capabilities or with a strong local channel in local systems integrators or IT value-added resellers, GSMA notes.

How Will Operators Deliver 5G Private Network Features?

At the moment, mobile operators globally are optimistic about selling a variety of new connectivity services to enterprise customers. SD-WAN is among the new varieties of WAN services offered. But beyond the expected sale of 5G mobility service to enterprises, many expect to offer internet of things connectivity as well.

Private network services of several types also are envisioned. In some cases operators might engineer, build or operate such facilities as a managed service. In other cases the public networks might work. 

Edge networking, as opposed to edge computing services, also are seen as a growth area. 

source: GSMA 

Multi-access edge computing could affect public and private networking choices, at least when enterprises look at use cases requiring high-performance, low-latency, high-availability and high device density performance. 

Traditionally, private networks have been preferred when enterprises want high isolation from public networks, plus full control and lower cost, higher-performance in-building networking. Some 50 years ago, the use case was support for personal computers and peripherals connected to servers and cabled networks were the platform. 

These days, Wi-Fi tends to dominate for general purpose computing requirements supporting devices of all types. Mobile phone support remains a mix of public network access for voice and messaging, while data access can use either Wi-Fi or the public network. 

5G plus multi-access edge computing allows new permutations. Some 66 percent of mobile operators polled by GSMA are looking to use their core assets to support private enterprise networks. Some 59 percent also believe they can use their public networks to do so, operating with service level agreements.

In all likelihood, quite a mix will emerge. 

source: GSMA 

Is RCS Part of a Long-Term Pattern for Telecom?

Rich Communications Services was intended to be the multimedia successor to SMS (short message service). It still seems likely to do so, though the way it may do so illustrates some key changes in communications value and control, ultimately reflected in business models. 

The GSMA has promoted the use of RCS since 2008, primarily as a way of making carrier text messaging behave as do chat apps. But application-based messaging such as iMessage, WeChat, Slack, Skype, Viber, Android Messages, also are built on SMS. 

So RCS was envisioned as a “telco” messaging platform to rival app messaging. As with a few other salient telco initiatives, it has not quite worked out that way. 

In the U.S. market, AT&T and T-Mobile have opted to use the Google Messages platform, based on RCS. So instead of a “telco alternative” to app messaging services, RCS--as developed by Google Messages--becomes the AT&T and T-Mobile default for advanced messaging, not a carrier version. 

Telcos once hoped to become significant platforms for mobile app stores, data center hosting services and cloud computing as well. Many have moved into roles as video entertainment providers or content owners. They still hope to create roles in edge computing and internet of things value chains. 

History suggests it will be an uphill battle. Already, many major tier-one telcos are opting to become partners with hyperscale computing-as-a-service suppliers, rather than compete. Some telcos already are outsourcing their compute facilities to hyperscalers. 

AT&T will move its 5G core network to the Microsoft cloud. The switch means Microsoft’s Azure Cloud provides a path for all of AT&T’s mobile network traffic to be managed using Microsoft Azure technologies. 

As is typical for many outsourcing deals, the provider of the outsourced functionality also will absorb AT&T employees who presently operate the function. 

As part of the deal, Microsoft will gain access to AT&T’s intellectual property and technical expertise to grow its telecom flagship offering, Azure for Operators.

Microsoft also is acquiring AT&T’s carrier-grade Network Cloud platform technology, which AT&T’s 5G core network runs on. AT&T’s Network Cloud platform has been running AT&T’s 5G core at scale since the company launched 5G in 2018. 

Unlike some outsourcing deals, AT&T will continue to operate its core network, using Microsoft as the hardware platform. AT&T expects the deal will reduce its engineering and software development costs. 

Microsoft will assume responsibility for both software development and deployment of AT&T’s Network Cloud immediately and bring AT&T’s existing network cloud to Azure over the next three years, AT&T says. 

The point is that for all the wisdom of telcos “moving up the stack” and “adding more value,” that has proven exceptionally difficult. If that cannot be done, at scale, telcos are likely facing the alternative strategy of sharply reducing costs and consolidating. 

On the scale of potential strategies, ranging from a low-cost “bit pipe” optimized for cost to the “full featured application provider” roles, history suggests the former, not the latter, will be the ultimate fate for most service providers. 

Many note the centrality of connectivity for modern life. All true. But Wi-Fi also is central, and that is not a major revenue driver--if a revenue source at all--for service providers. It will not be a pleasant thought, but perhaps that ultimately is the fate of the global public networks business. 

Telcos used to drive global bandwidth needs and supply. Now hyperscale app providers do so, primarily relying on their own facilities. Wide area networks now are computer networks, albeit with some highlighted apps. 

Increasingly, WANs are not public networks, though an important role remains for public networks (voice as a last resort; public safety communications; military communications; internet access for consumers). 

Consolidation is definitely on the table in coming years. Beyond that, in many markets, common carrier operation might be the last resort. So a 50-year move towards privatization and deregulation might ultimately, in many markets, drastically revert towards common carrier market structures, at least for fixed networks. 

Wireless and mobility networks, with different cost structures, might remain the place where facilities-based competition remains more common.

"DX" Can Mean Almost Anything

Without a workable definition, it will be hard for any telcos or enterprises to figure out whether their “digital transformation” efforts and spending have had any positive effect. 

“Digital transformation” frequently is assumed to be an enterprise or telco objective, without specifying what that means. Colloquially, many assume it simply means converting manual processes to automated processes, or substituting digital technology for existing processes.  Quite often, that is a meaningful practical definition. 

In other cases digital transformation applies mostly to the customer-facing operations (sales, activation, support, fulfillment). Others emphasize the creation of new services and revenues beyond data transport. In that sense, it is a euphemism for “moving up the stack” or “taking on new roles within the value chain.”

The point is that DX is such a broad term as to be almost devoid of meaning, unless we speak concretely about the particular process, function or outcome we are trying to change. 

source: Ericsson 

With the caveat that a business model embraces all operations that any enterprise or organization must support to make money, digital transformation in its widest sense means new revenue models. In itself, that is about as broad a concept as that of the “business model,” which is all the processes any entity has to undertake to identify a customer problem, create its solution, deliver the solution and create a sustainable revenue model.  

source: TM Forum 

“Digital transformation is the process of using digital technologies to create new--or modify existing--business processes, culture, and customer experiences to meet changing business and market requirements, says Salesforce. As you would expect, Salesforce focuses on all customer operations. 

Clothes also tend to put the focus on customer-facing operations. “the realignment of, or new investment in, technology and business models to more effectively engage digital customers at every touchpoint in the customer experience lifecycle,” says Altimeter Group. 

In principle, according to the TMForum, DX can apply to almost any process conducted by an organization. So it might be best to envision digital transformation as a layer cake or continuum, where processes are changed little by little, starting with customer-facing operations in many cases, but ending up with creation of wholly-new or different products and revenue streams. 

That means DX will happen in stages, over time, from easiest to hardest processes, as would be the case for most information technology projects, changing operational processes one at a time.