Rarely, if ever, do statistics about video and television consumption surprise me. This does. Assuming it is not mislabeled, the data suggests that older consumers spend more time watching online video on mobile devices than do younger viewers.
I would have guessed just the opposite.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
Global spending on broadband access equipment and customer premises equipment is expected to have a three-percent compound annual growth rate 2020-2025, an upward revision from the zero-percent CAGR capital investment pattern Dell'Oro Group had expected in January 2021.
Service providers seem to be pulling forward some of their upgrade projects, including those involving the transition from copper to fiber, Dell’Oro says.
An expectation of falling capex would not have been unreasonable. Some observers had predicted a dip in cable operator capex, for example. Other global capex forecasts called for flat spending. Also, fixed network capex has been relatively constrained, compared to mobile capex, for some years.
source: S&P Global
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
“Rather than continuing down the road of being a connectivity provider, CSPs need to transition to become an intelligent service orchestrator ,” says Bengt Nordström, Northstream managing director. “Taking a connectivity and wholesale approach in 5G, or becoming a reseller to the edge, will put CSPs in danger of seeing revenues dry up.”
“Becoming an orchestrator” is viewed by some as a move up the stack to becoming a “service enabler,” presumably allowing additional value creation and revenue generator possibilities.
Also, there is a less customer-facing understanding of “orchestration” that involves the internal operations of the access and transport network itself. In that sense, orchestration is about automation more than service creation, the creation of end-to-end service more than occupying a new role in the value chain.
Orchestration makes sense, no matter which definition is used. But one form is easier than the other. Orchestrating the internal operations of the communications network is one thing, taking on a new role in the value chain, ecosystem or functions stack is a different matter.
The issue is how feasible it is that the access provider becomes the app orchestration supplier, “positioning themselves as the key to enabling a wide range of services through their ability to connect a complex ecosystem of new digital offerings,” notes Nordström.
Otherwise, 5G is likely to turn out as did 4G, with much of the new value reaped by over the top app, commerce and content suppliers, not access providers.
“For many CSPs (communication service providers), the aim of digital transformation programs is to empower them to become service enablers or service creators, which increases their commercial enterprise opportunity,” Ericsson says.
But it might also be fair to point out that this requires moves akin to becoming system integrators, especially integrators with vertical market domain expertise. Some might note that others in the value chain already have staked out this position, requiring access providers to muscle out other existing competitors.
Connectivity providers might assemble multi-cloud access capabilities, for example. But most access executives would be happier with a more-developed role as service creators.
Also, in the internet era, it has proven easier to move down the stack than up the stack. That is to say, it has proven easier for entities with domain knowledge to add lower layer functions to create new offers, than to assemble new offers from below.
In itself, the advice to “orchestrate” makes operational sense. All virtualized networks require orchestration. Whether the use of the term also extends to business role, and the odds of succeeding in such roles, is a different matter.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
Enron attempted to become a bandwidth trading platform two decades ago, but imploded in 2001 for reasons directly related to accounting fraud. Highly controversial at the time, Enron’s notion of creating a platform for buying and selling bandwidth services appears not to be ahead of its time, but very much in line with current thinking about platform business models.
It is hard to say what could have happened had Enron not gone bankrupt. The basic model of creating an exchange seemed to work in a number of other markets. And there was a logic to the hope of creating a more-liquid marketplace where complex products could actually be traded.
But there was significant resistance from many other partners, for one obvious reason: the exchange was touted as leading to lower prices, and it was not deemed to be “in our own best interest” for other big carriers to put their assets into such an exchange.
The offer was real-time contracting and delivery of capacity at network pooling points. It was one example of “on demand bandwidth provisioning,” long an industry hope. Enron promised an “efficient” market. But other potential partners might have heard “commodity pricing.”
About the last thing capacity executives wanted was anything that would turn their core product into a “commodity.”
Two decades later, businesses in many industries are urged to “become platforms,” earning their revenue by facilitating transactions.
It’s the same idea, twenty years later.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
For most people, all-digital customer fulfillment or “all-digital marketing” is an easier concept than “becoming a different kind of business” (customers, products, industries). In the mobile business, the concept is captured by “all-digital customer activation.
For that reason, much thinking about “digital transformation” focuses on customer-facing marketing and sales.
The notion of finding, ordering and taking delivery of a product all online is now familiar, and is the preferred activation model used by many upstart mobile service providers.
Transforming a business model (revenue, customers, products, position in value chains) is far more difficult, and arguably quite a bit riskier. For connectivity providers there is another danger: transformation by rivals who then compete directly with connectivity providers.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
AT&T, Comcast and Charter Communications own networks covering the most U.S. residents (and presumably housing units). But it is difficult to directly correlate population covered with “homes passed” or even “locations served.”
Most locations are served by at least two different terrestrial providers. Subscriber percentages hinge at least partly on marketing strengths (cable operators have at least 70 percent of the installed base).
Still, the numbers suggest telcos have lower take rates than do cable operators, which corresponds to reality. Also, the telcos arguably have the greatest upside from network upgrades that would match or exceed cable performance metrics. With appropriate pricing, that should allow telcos to eventually close the take rate gap with cable companies, all other things being equal.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
Political rationality often is not economic rationality, because ends and means relationships are misunderstood or because of opportunity costs.
Consider an infrastructure bill passed by the U.S. Congress authorizing $548 billion in public
infrastructure spending. In principle, one might argue that additional spending should create economic growth and benefits. It will not, say Penn Wharton School economists Jon Huntley and John Ricco.
“The additional public capital makes workers more productive, however, this is offset by the decline in private capital, which makes workers less productive,” they say. “Overall, workers’ productivity is unchanged, which is reflected in wages that do not change in 2040 and 2050.”
“Overall, similar hours worked and lower private capital lower GDP, an effect that is offset by the productivity benefits of the infrastructure investment,” they say. “Overall, GDP does not change in 2031, 2040, or 2050.”
The capital on public works “crowds out” (displaces) private investment that otherwise would have been made.
Economic Effects of the Senate Infrastructure Package
Percent Change from Baseline
source: Penn Wharton Budget Model
Improvements to roads, bridges or other infrastructure often are necessary. But so are other investments in private productive capacity that are competing uses of capital. Diverting funds to one area necessarily precludes investment in alternative investments.
In this case, what seems politically rational is economically less than fully rational, to a great extent.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
