Mobile network operators can scale, but can they hyperscale?

Telecom.tv recently hosted a knowledge sharing discussion about the successful take up of APIs. Being a ‘highly digitized country’, Brazil was the focus market. 

The session is part of the GSMA’s efforts to develop the market for mobile network operator (MNO) APIs. Panelists included representatives from the leading MNOs - Claro, TIM, and Vivo - and Infobip, an IT and telecommunication service provider. Their experience shows how a new market developed, beyond the usual MNO scope of mobile connectivity offerings. 

Success involved an ecosystem approach to address emergent customer demand, technology fragmentation, and a shift in MNOs’ mindset to value market expansion over market-share rivalry. 

Telecoms, Transformers, and Transportation

There is a common challenge that affects telecommunications, transportation, and now, the application of transformer technologies in AI systems. Telecommunications systems consist of multiple mobile networks and service providers. In many countries, there can be a handful of competing network operators, their direct-to-user service-provider arms, and multiple indirect channels in the form of (mobile) virtual network operators (MVNOs). 

One aspect of the value in this arrangement is that users of all providers can communicate with one another. This was not always the case. In the past, each operator aimed to keep customers on their network. Examples include SMS messaging during the USA in the late ‘90s, and walled garden services in the mobile internet era. There is a similar dynamic in the AI domain with large language model (LLM) providers attempting to bond consumers to their offerings. 

AI, APIs, and IoT

Telecommunications service providers have high aspirations for network APIs. Meanwhile, hyperscalers are equally ambitious about AI (language models, prompt engineering, and agents). In both cases, players are looking for ways to capitalize, respectively, on network and (GPU-equipped) data center investments. AI and APIs developments are now starting to converge because they are complementary technologies. Here, for example, is BT’s Managing Director of Research and Network Strategy, Gabriela Styf Sjöman, discussing emerging prospects in a TelecomTV interview. 

Telecommunications Futures – A Perspective From China

Mobile networks have become essential digital infrastructure for everyday activities.

High-speed connectivity dominates the conversation around wireless communications services. On a recent trip through London, I came across Connected London Wi-Fi which aims to improve visitor and Westminster resident experiences by tackling digital and technology inequality through easy-to-access and free internet connectivity. Later, as I arrived in the US, Verizon was encouraging spectators to enjoy Super Bowl LIX exclusively over its purpose-built, stadium-wide 5G network. 

The emphasis on high-speed connectivity continues to prevail; while they are indoors - 90% of time of their time - US users consume more than 80 percent of their data. Finally, with the advent of 6G, it seems obligatory to mention faster communications and remote surgery.

Do these usage scenarios represent the full spectrum of communications use cases? Not likely based on the prevalence of global users, many of whom live in China and India. Many also lead a rural and mobile existence, i.e., not dominated by indoor use but requiring dependable and ubiquitous wide-area connectivity. So, what does usage look like in other parts of the world?

2024 in Review: Wider Factors are Enveloping the IoT Industry

An important lesson from 2024’s IoT corporate initiatives is about an industry that is evolving to a post-connectivity world. This is due to the dynamics of market-demand, one of which is to treat IoT connectivity as a component in a system-level application. An example would be the case of connectivity being a part of an electric vehicle, IoT system. The introduction of regulatory protections represents another market driver. Here, examples are evident in consumer education and consumer protection initiatives.

The impending arrival of 6G is another factor. In anticipation, the communications industry is adjusting to the commercial necessities for 5G through by focusing more on enterprise customers and business modernization requirements. Examples here relate to private networks for smart factories and digital transformation. 

As a standalone technology, IoT is no longer a magnet for hype. Topics such as AI (generative and traditional), digital twins, and enterprise or private networking are generating plenty of noise. 

Platform Opportunity for the Communications Industry

The VW Golf and Audi TT share a common platform, as do Chevy and GMC SUVs. The foundations for these automotive platforms are, firstly, critical shared dimensions (e.g., between front axle centerline and driver’s hip point) and, secondly, the placement of hardware (e.g., chassis, floor pan, powertrain) within those dimensions. Sharing an automotive platform maximizes the return on engineering investment by keeping a check on the development costs for unseen structural elements and by reusing the platform across several (market segment) vehicle types to generate multiple lines of sales and economies of scale.

Automotive and telecommunications industries exhibit platform commonalities. Communications service providers (CSP) serve several consumer and enterprise segments with service offerings that operate over a common network infrastructure. Standardization applies to unseen structural and operational elements such as network elements, chip sets, roaming. Is this as far as the platform model goes? Might there be other platform models for the communications industry to pursue?

Solutions vs. Systems

Many years ago, while working on the GSMA’s “Beyond M2M” strategy, an M2M service provider described their service offering to manage office photocopier machines remotely. This included continuous status monitoring, diagnostics, and just-in-time replenishment of consumables. At a time when cellular hardware and network connectivity were costly, the provider chose cellular over Wi-Fi connectivity. This was for economic and user-experience reasons. The cellular approach avoided the costs of liaising with the customer’s IT staff to customize local area networking policies. It also reduced technical support costs that arose from dispatching support technicians when remote management was ineffective due to local IT and firewall configuration issues.

Unlocking 5G’s Innovation-to-Market Bottleneck

Ultra reliable, low-latency communications (URLLC) accounts for the largest number of standard essential patent (SEP) declarations for 5G. This is based on data from GreyB Services, a specialist in intellectual property (IP) for the communications sector.  

However, URLLC’s strong showing of URLLC does not show up in market offerings. Instead, 5G market propositions feature mobile broadband for consumers which map to the enhanced mobile broadband (eMBB) category. The difference suggests a disconnect between supply-side technologies, where innovators have invested, and commercial outcomes that should address demand from gaming and enterprise types of application.

 Explaining the difference is complex. It involves the life-cycle steps of taking innovation through standardization into market ready networking equipment. Then, communications service providers (CSPs) face decisions in balancing the rewards from new propositions against the costs of incremental technology licensing fees and business model changes. Value-chain bottlenecks also arise when insufficient evidence about end-user demand results in corporate hesitancy. 

Central Agency in Telecommunications

Mobile network operators (MNO) have long been the engine at the heart of the modern communications industry. With operating licenses and obligations set by government, MNOs’ reach stretched from the shaping of technology standards in 3GPP to deciding what communications services consumers would get.

From the 2000s, however, internet era dynamics lessened the revenues dominance of voice communication; messaging, data, and media services filled the gap, beginning with the hype around 3G. That is when the MNO cog started to lose some of its motive force as the communications industry began to resemble an increasingly intricate machine.

A $300bn Market for Telco-APIs

How much of the opportunity will mobile network operators capture? 

The business opportunity to access mobile network capabilities via application programming interfaces (APIs was one of the top stories at MWC 2024. Valued at $300 billion by McKinsey, the management consultancy, the scale of opportunity positions APIs as a vehicle to move the industry’s revenue dial materially.

However, the opportunity will be complex to realize. From this GSMA webinar, it was evident that business model and monetization frameworks are a work in progress. In addition, market realization depends on a multi-party service delivery chain; critical elements to the telco API ecosystem reside outside of mobile network operators’ (MNOs) control. Finally, the mobile industry’s focus on API monetization and revenues puts the sector at risk of overlooking wider considerations and key market-development levers. 

Cluster Competitiveness in 6G Ecosystems

Finland’s academic, commercial and government connections can inspire other 6G clusters

3GPP’s December 2023 announcement, committing to develop the specifications for 6G, resolved one market uncertainty about 6G. 3GPP offers a proven governance framework for open, consensual and international technical standardization. It is also a globally recognized institution due to its track record and regional standardization partners.

There are, however, other technical and socio-technical aspects of 6G that are likely to alter 3GPP standardization. For example, there will be new frontiers to address as the scope of mobile networks extends to distributed communications and computing systems. In the socio-economic arena too, new expectations are taking shape. These touch on resource sustainability, capabilities to ensure resilience and trust, and socio-technical issues arising from digital world applications that go beyond purely human and machine communications.

2023 in Review: Connectivity Dominates but IoT-system Gaps Remain

Two investment themes bookended 2023. In January, the European Union backed a $100m venture capital fund, managed by Momenta Partners. In December, Softbank announced its EUR473m ($514m) investment for a 51% stake in Cubic Telecom. This development more than drew the eye as
exemplified by the analyst commentary around the high (16x) revenue to implied enterprise value multiple. 

In between, the level of corporate activity in the IoT sector continued at roughly the same pace in prior years, albeit down on the years of heightened activity going back five or so years ago. There were several developments among the vendor and network operator communities, but less so among the IoT platform providers. Governments became more active with an emphasis on security and protections for the consumer sector. 

Against the backdrop of 5G developments and 6G pathfinding, IoT is becoming a part of the fabric of enterprise operations and national infrastructure. Established players continue to emphasize connectivity, a relatively small portion of IoT value chains, while enterprises focus on quick-to-market solutions enabled by cloud providers and systems integrators. Both approaches risk leaving ‘system of systems’ issues for later consideration. 

Shifting Paradigms Set to Shape 6G

How is North America affecting policy change and industry competition?

The participation of White House and Congressional speakers at 6G World’s recent symposium shine a light on the strategic prioritization of next generation communications systems. Political participation matters in the context of 6G leadership ambitions, the practicalities of which I outlined in this three-part article series for 6G World - 1: Leadership, 2: Purpose, 3: Leverage. 

The event was equally important for shedding light on how industry stakeholders are approaching emerging 6G topics and market development activities. The mix of discussions spanned academic research, commercial and operational implications of 6G, industry competition, long-term Federal funding programs, policy priorities, standardization, and vertical-industry requirements. Rather than summarize each panel discussion chronologically, here are several threads that ran through the different sessions, beginning with the need to learn from the past. 

Market Development for the Economy of Things

At Mobile World Congress in February 2022, Vodafone launched a new Economy of Things (EoT) platform. It would allow businesses across multiple industry sectors to compete in disruptive, online markets by transforming physical goods into tradable digital assets. 

Just over a year later, Vodafone formed a blockchain based EoT joint venture (JV) with Sumitomo. This will operate as standalone business focusing on IoT devices, electric vehicles, and smart street furniture. Vodafone will contribute its blockchain-based Digital Asset Broker (DAB) IoT trading platform as part of its 80% stake in the JV. Sumitomo will invest in the business. It will also draw in additional investors, partners, and customers.

There is a lot to unpack in Vodafone’s announcement and the dependencies on which the EoT unit’s future successes rest.

Free, low-speed IoT data

Earlier this week, Amazon opened its Sidewalk long-range, low-bandwidth network to developers with an offer of free, low-speed data. On the surface, this sounds like a great inducement for developers and IoT innovators. 

The publicity alone might evangelize the market in the manner that multi-vendor support for the Connectivity Standards Alliance’s Matter protocol is stimulating the smart home market. 

Before committing to AWS’ IoT bandwagon, however, adopters should weigh their position on three questions. 

2022 in Review: A Sudden Shock of Realism

Amazon opened 2022 with announcements targeting the smart home community that is forming around the Matter protocol and opportunities for IoT in non-residential sectors. These two initiatives are examples of how some large organizations are trying to have a “finger in many pies” to make the most of the variety and scope of IoT opportunities. 

2022 closed with a flurry of Matter-compliant product launches from a range of large and small businesses. The year-long journey and commitment to an industry-alliance model point to a degree of realism about the IoT market. Behind the technology fanfare, they highlight how businesses and getting to grips with commercial market-development and the technical challenges associated with interoperability, both of which are needed for scale. Meaningful collaboration seems to be taking hold compared to “go-it-alone” strategies. 

Business Reengineering and Twitter

The recent and abrupt change in Twitter’s governance model has large businesses scaling back their advertising spend on the platform. Anecdotally, advertisers spend a small proportion of their budgets on Twitter compared to larger scale platforms such as Facebook and YouTube. As a result, advertisers can disengage gradually without completely losing touch with the public.

Whose experiences will shape 6G?

Last week, I moderated a panel at 6G World’s North American symposium. The panel focused on the new “experiences” that next generation networks are expected to enable. To begin with, we heard from Cathy Hackl, industry pundit and Godmother of the Metaverse. 

To complement Cathy’s largely consumer-oriented and brand-marketing insights, panelists from Mitre Labs, US Ignite and Verizon Robotics discussed an alternative way to look at 6G experiences. Their contributions highlighted the changing structure of the communications industry. We explored how external bodies and agencies peripheral to the communications industry are driving new industry dynamics. The role of spectrum regulators, the US Department of Defense and holders of licensed and unlicensed spectrum will reshape the industry’s supply-side experience. Inevitably, there will be consequences for innovation, procurement, and operations of 6G systems. 

Telco Challenges in Entering Adjacent Markets

I recently come across a couple of experienced industry analysts using some variation of the term “permission to play” when talking about where telco service providers should and should not focus their strategies. As a framework, there is some merit in being disciplined about an organizations core market(s). 

However, if the framework is applied rigidly, the mantra artificially limits the scope for innovation and industry analysis. That is a growing risk for a sector that operates against a backdrop of transformative innovation. It is also a risk because the boundaries between telco, adjacent industries and emerging sectors are blurring.

IoT is Dead; Long Live IoT!

Copenhagen Business School recently hosted an expert panel [1] to explore how algorithms and data shape competition in the context of platforms. These might be e-commerce or social media platforms that exploit consumer data for advertising and behavioral-nudging purposes. The dynamics of this market are changing, partly due to privacy regulations. Competitive strategies, such as Apple’s App Tracking Transparency (ATT) offering, are another factor [2]. 

Among the economic, competitive strategy and technology topics under discussion, the discussion around data seemed particularly relevant to how the Internet of Things (IoT) market is developing.