T-Mobile may be prepping the sale of Sprint's wireline business | Light Reading

For those with long memories, it might be shocking that the former Sprint wide area network books just $1 billion annual revenue. http://dlvr.it/SWXWpj
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Digital Transformation is Hard

If you have been around information technology investments long enough, you know that outcomes often are negative: the hoped-for benefits do not emerge at all, or prove to be less than expected. Possibly 30 percent of major IT investments actually produce the expected results. 

The same continues to be true of digital transformation efforts and investments. A new survey of IT professionals suggests DX has the same outcomes. 

source: Walkme 

The study also had respondents estimating that, of all IT projects, fully 41 percent failed to meet objectives, in the form of key performance indicators. And the larger the organization, the more likely it is that DX or any other IT initiative will fail. Larger enterprise respondents reported failure rates at six times the rate of small entities. 

source: Walkme 

To be sure, the more-important KPIs deal with financial performance: productivity, equity value growth, higher income or lower costs. 

Such “failures” are not hard to understand. Most large enterprises rely significantly on third-party integrators to attempt complex initiatives. That means lots of organizational complexity. And the number of persons who must not only agree to support, but actively ande usefully support such initiatives is therefore quite high. 

source: Walkme 

And that runs squarely up against an immutable law: the more permissions one requires to get anything done, the lower the chances of success. Consider any project with a number of key influencers. Assume that at each stage, the chances of getting a “yes” are 50 percent.

If only one “yes” is required, odds of success are 50 percent. If two “yes” hurdles are required, success rates drop to 25 percent. If three “yes” hurdles exist, odds drop to 13 percent. Each successive hurdle reduces success rates further. 

As you can see, even a small number of hurdles, each with a 50-50 chance of success, quickly reduces odds of success to an impossible level. After seven hurdles, odds of success are one in 100. 

Obviously, any complex IT project has many more gates than seven. With sufficiently vigorous top-level support, the odds of success at each gate are likely higher than 50 percent. But there are so many more hurdles or gates that odds of success are low; odds of failure high. 

The conventional wisdom is that about 30 percent of big IT projects actually succeed as expected.

Is Sustainable Advantage from "Digital Transformation" Illusory?

Competitive advantage from “digital transformation” will be as transitory as all earlier applications of computing and information technology, one might conclude from a Gartner assessment. 

In other words, sustainable competitive advantage will not be possible. 

As digital networks, “always on” connectivity, and smart devices become ubiquitous and commonplace, computing will simply fade into the background, becoming as unobtrusive as the dumb thermostat or light switch, says Ed Gung, Gartner Research Board managing VP.

As digital technology becomes embedded into the way all parts of the business operate, “digital” will cease to be a useful modifier, he also notes. In the end, digital technology will become just one more dimension on which companies compete. 

Distribution networks, capital assets, exploration rights, customer relationships and content are other levers companies can pull. But sustainable advantage will be difficult to maintain in those realms as well.

Can We Actually Measure Knowledge Worker Productivity, In Office or Remote?

The debate about the productivity of remote work will likely never be fully settled, in large part because it is so difficult, perhaps impossible, to measure knowledge worker or office worker productivity. 

Whether knowledge worker productivity is up, down or flat is almost impossible to say, despite claims one way or the other. Much of the debate rests on subjective reports by remote workers themselves, not “more-objective” measures, assuming one could devise such measures. 

Measuring intangible output is inherently more challenging than measuring output of physical goods. And some “test effect” occurs, at least temporarily. The output of workers who know they are being tested tends to rise during the period of the test. 

There will always be room to contest managerial effectiveness at managing remote workers; the ability of workers to perform as well remotely as “in the office” and differences between workers (motivation and actual output). 

There also will be room to contest the impact of heavy remote work on company culture; collaboration and other “soft” outcomes at levels beyond individual effort and output. Do work groups actually perform as well, or better, in remote work settings? Do companies benefit in other ways that are measurable and offset any potential costs?

And beyond all that, productivity arguably is an issue affecting broad swaths of the U.S economy, no matter what the form of work setting. 

Productivity—defined as output per labor hour—has grown at a below-average rate since 2005, representing a dramatic reversal of the above-average growth of the late 1990s and early 2000s, according to the U.S. Bureau of Labor Statistics. 

source: Bureau of Labor Statistics

Assume you believe the measurements are correct, and that non-farm productivity actually can be measured. Labor productivity compares the amount of goods and services produced (output) with the number of labor hours (inputs) used to produce those goods and services. Productivity is defined mathematically as output per hour of work, and growth occurs when output increases faster than labor hours.

As always, there are caveats. Such measures are not good at capturing hedonic improvements. 

Hedonic qualIty adjustment is a method used by economists to adjust prices whenever the characteristics of the products included in the consumer price index change because of innovation. Hedonic quality adjustment also is used when older products are improved and become new products. 

Hedonically adjusted price indices for broadband internet access in the U.S. market--adjusted for quality improvements such as speed--then looks like this:

source: Bureau of Labor Statistics 

Also, the productivity of knowledge or office workers is very hard--perhaps impossible--to measure. Virtually any quantitative way of measuring “input” is only a supposed proxy for productivity itself. 

Perhaps of notable significance are changes in “multi factor” inputs beyond capital investment and labor cost. That is where information technology, managerial skill, changes in goods produced or cultural changes apply. 

The point is that the debate over “remote versus in-office work” is more about politics and emotion than economic facts. Firms can do it or not do it, but we should stop claiming we are motivated by clear economic facts.

Tech Bubble "Burst?"

With "significant" to "massive" layoffs happening at venture-funded and to some extent now at profit-making technology firms, one is reminded we saw something similar happen back in 2001 and 2008, all times of economic distress and tech bubbles.  

But layoffs are only a manifestation of a trend; a sign or symbol, not the underlying reality. Then, as now, apparently, the problem is a shutoff of the funding valve. For more-established firms, the problem is a significant increase in borrowing costs. 

Where we had been in a regime of effectively zero interest rates, we now are entering a period where borrowing has real costs. That tends to increase business risk for growing firms that cannot self finance. 

So some think we are seeing another tech deflation event, a bubble-bursting destruction of value in the technology segments of industry. 

 

source: Qontigo 

In the run up to 2001, the start-up I worked at could literally not find people to hire, as has been the case recently in 2021 and earlier in 2022. That reversed in the dot com meltdown after early 2021. It appears something similar is happening in 2022. 

Though it is not clear whether we are headed for something like the wipeout of firms in the dot com bust, some think it is possible. The difference now is that many firms yet to hit cash flow breakeven or actual profits have business models that work. Back in 2001 some firms had not yet discovered a viable business model. 

That is much less an issue in 2022. Also, firms seem to be reacting faster than they did in 2001 to a change in business dynamics. 

Still, a period of some technology firm consolidation appears to be coming, bigger than the normal consolidation that happens for fast-growing segments of the industry.

If Broadband is a "Necessity," What Does That Mean?

Some make the argument that broadband is a necessity and therefore should be a “right.” It never is clear precisely what proponents of that view mean. Is electricity or clean water a right? How about natural gas, roads, airports, food or shelter? 

One guesses that proponents of those positions probably mean that the good in question should be universally available. There is not much room for argument there. 

But we probably disagree about how to get universal availability or universal access, especially  how to pay for it. Government subsidies are the most-common means for getting to universal availability, and arguably the most-common way governments subsidize consumption of products deemed necessary. 

   or that home broadband prices are too high. 

 

source: move.org 

Most governments seem to have policies in place to subsidize consumption of necessary products by lower-income residents. That is not to say the most-effective way to subsidize consumption is to make products available “at no cost.” In the U.S. market, for example, low-income customers can buy internet access at discounted prices. 

But “free” often leads to market distortions and harms production and supply of the product so subsidized. “Tragedy of the Commons”  is the way economists describe the problem posed by “zero price” products. 

Two key problems are created by zero price products: overconsumption and disincentives to increase production. The whole point of price mechanisms is to match demand and supply. So non-zero subsidized prices arguably work better than “zero cost” approaches. 

Oddly enough, some hyperscale app providers have tried to provide some level of basic and free mobile internet access to low-income residents and have been prevented from doing so, on the grounds of “network neutrality” in a direct sense or industrial policy and antitrust issues in an indirect sense. 

Such non-governmental approaches arguably have merit, and perhaps should not have been made illegal by government action, any more than any other ad-supported application or service a private firm can create.

How Big a Revenue Opportunity is Network Slicing?

Will 5G core network network slicing create a big new revenue opportunity for mobile operators? ABI Research forecasts predict $34 billion in slicing revenue by 2028. 

Research and Markets 

Existing virtual and other private networks generated something on the order of $38 billion in 2021, according to analysts at Research and Markets. But most of that revenue was earned by appliance and software  suppliers, just as most Wi-Fi revenue is similarly earned by device and software suppliers, not “service” suppliers.  

That is true fo the software-defined wide area network market, for example.  

Some managed services are provided by service providers of one sort or another, to be sure, of which MPLS is arguably the most-important carrier-provided service, followed by SD-WAN. 

It also is fair to say that network slicing could wind up largely displacing other quality-assured networking alternatives, such as MPLS, for example. In that case the issue is the net change in revenue, not so much the gross revenue network slicing generates. 

The point is that it is unclear how much net revenue network slicing might generate for mobile operators. To the extent that revenue is shifted from one supplier to another, or one industry segment to another, there could be important net gains. 

Still, at least so far, network slicing promises incremental revenue that is helpful, but unlikely to change the macro revenue picture all that much.