Stéphane Richard, Orange's CEO and Chair, and Chair of the GSMA, outlined what he sees as the industry's biggest challenges in this opening keynote at MWC Americas 2019.
If I have to choose one thing to say in my first year as GSMA chairman it is that 2019 has been a year in which 5G has become real.
I have just returned from South Korea where I have seen [it in action] myself: people watching their favourite live match, through an immersive experience, in 360° view enabled by drones. A new way for people to be able to experience what matters most to them in their daily lives.
This new experience is built with important investments on a solid and extended edge computing infrastructure deployed everywhere in the country, that makes latency almost disappear and makes virtual reality … a reality.
We are here in Los Angeles at the very heart of the entertainment industry, an industry which has been deeply transformed in the last few years: 75 % of videos here in the US today are watched on mobile devices.
The transformation of the entertainment industry will not stop there.
5G with speeds up to a hundred times faster than 4G; cloud-based mobile gaming that allows immersive gaming from anywhere, …without a console, ….scaling with the Internet of Things and Artificial Intelligence….
…is the key enabler of this big new transformation and of the huge new opportunities coming.
Now allow me to highlight three challenges that I see for our industry as Chairman of GSMA.
Loss of trust in supply chain
Our first challenge is the loss of trust in global supply chains. Do you know the amount of the CAPEX of the mobile industry in the last 20 years? Since the year 2000, the mobile industry worldwide has invested $2.7 trillion in CAPEX – to put this into perspective, American debt stands at $1 trillion a year – $2.7 trillion spent by the mobile industry on CAPEX, offering at the same time lower and lower prices for our customers, for you and me.
Now how was that made possible? It is quite simple. The mobile industry currently enjoys unparalleled economies of scale, underpinned by globally harmonised standards (3G/4G/5G) and global competition at all levels, from chipsets and devices to infrastructure and service provision.
The global supply chain is intricately entwined, with key software and hardware components sourced from all over the world. These economies of scale, and therefore costs of services, are now being threatened by the risk of fragmentation: market fragmentation and technical fragmentation.
We are facing market fragmentation [but] restricting market access to key components and products will reduce the addressable market size for everyone, decrease competition and increase costs.
At the same time those market restrictions may ultimately lead to different solutions being applied in different markets, therefore to a technical fragmentation threatening the globally interoperable, standardised solutions we have today.
This once again leads to reduced competition and increased costs.
We stay confident that network softwarisation will pave the way to new players into the supply chain, thus increasing competition and diversity of supply, and with the GSMA we will take the technical leadership to support the operators.
Loss of trust as digital citizens
Our second challenge is a loss of trust in the protection of our digital life.
The dominant Internet model of the last 20 years, “free” services against use of personal data, has actually brought a fear of exploitation and manipulation by big business and governments among breach of privacy and some scandals.
A lack of trust can act as a barrier to growth in economies that are increasingly data driven.Mobile operators have always been on the side of a trusted partner for their customers.
Different issues are arising on privacy guaranties and legal interceptions for citizens security, as well as on protection of customers against cyberattacks.
GSMA is strongly engaged on the policy issues to find the right balance between privacy and data protection, innovation and legal interceptions that are essential to fight against crime and guarantee national security.
Governments should ensure that legislation is technology neutral and that its rules are applied consistently to all players in the large internet ecosystem, which will become larger and more fragmented with 5G.
The vulnerability of our digital life, that goes from our bank balance to our car tomorrow, has been ranked the number 1 risk in the US Intelligence Community’s Worldwide Threat Assessment – that is higher than terrorism, higher than war.
You cannot be protected anymore behind a “closed digital door”. Protection has evolved too; this is why operators invest massively in the cyberdefence of their interconnected networks and in attack detection capacity inside their networks.
The GSMA is not only calling through the Digital Declaration all relevant stakeholders to cooperate to mitigate cybersecurity threats, but also leading work to propose a testing framework for cybersecurity that is common for the industry and all the suppliers.
Let me give you one example: sme time ago Orange Spain was informed by Telefonica of a very pernicious cyberattack. In just a few hours Orange created the protection measures and none of our customers was affected, while this attack cost more than $4 billion around the world.
This is why high-level of requirements on security, as well as operators real-time exchanges, are important.
Delivering sustainable growth
Our third challenge [is] certainly not the least, is the loss of trust in business’s ability to deliver sustainable growth for all. Our industry brings development throughout almost every domain of life, connecting people to healthcare and education, to finance and opportunities. It lifts them out of poverty.
With more than 7 billion people covered by a mobile network, individuals are increasingly using mobile to access an array of life-enhancing services. This is the reason why we were one of the first industries to commit to supporting the 17 United Nations Sustainable Development Goals for 2030.
In these politically turbulent times, when environment risks are threatening to push some of our societies to a loss of faith in progress, it falls upon business to take the lead and affect real change.
The Business Round Table in New York this September announced that delivering profits to shareholders would no longer be the only objective: to strengthen trust in our societies they would look to deliver value to ALL stakeholders – customers, employees, suppliers and communities and replace their traditional “bottom line” with a “triple bottom line” of people, planet and profit – the 3Ps, an idea first presented more than 20 years ago but it finally feels like its time has come.
With 30 million employees, $2.7 trillion CAPEX since 2000 and $1 trillion to come for 5G in the next few years, the mobile industry has great power. With great power comes great responsibility and we need to take social and environmental leadership, but three-quarters of the digital divide is not a coverage issue.
Coverage not the issue
Only 750 million people are not yet covered by 3G+ networks. Besides this “coverage gap” there is a much bigger “usage gap” with more than 3.2 billion people living in areas covered by 3G+ networks but who are not using internet services.
Skills are an issue everywhere and when it comes to less developed regions affordability is a real barrier. Acting for people is critical because the digital divide goes far beyond the digital aspect, it divides societies even more.
It is my pleasure to quote here Esther Duflo, the French woman, 2019 Nobel Economics laureate, working on inclusion, saying: “In technology we spend so much time experimenting, getting the absolute cheapest way to do something, why aren’t we doing the same thing with social policy?.”
Well for digital inclusion we are! Operators have hundreds, thousands of actions on the ground, investing in low cost networks and devices, as well as experimenting innovative business models to bring networks and development everywhere.
Our industry will continue to invest in 4G for half of humanity that does not access to Internet…..while simultaneously investing in 5G. We need also to take environmental leadership because for the first time we are also facing questions from people, perhaps not everywhere but at least in Europe, for example in Switzerland asking:
• Do we really need 5G?
• Do we want our lives to become even more digital?
We have to find responsible answers to these questions.
You heard from Mats [Granryd, Director General of the GSMA] on the engagement of our industry on Climate during the United Nations General Assembly. This is a very important recent action on sustainable development and environment.
A lot of new opportunities are arising also for a better usage of Earth resources. We are here in the country that gave birth to the shared economy and to most of the companies that have been changing our lives in the last years.
A new wave of shared economy is coming with the Autonomous Transportation – convenient, safe, independent travel; a better use of human highly specialised resources will be possible with 5G, as for example giving remote access to a doctor or a high level teacher;
A better, more effective use of natural resources is also possible with smart metering of water and energy, with IoT for smart agriculture, for enhanced food production and efficient distribution.
We are engaged on environment leadership to answer the growing demand on digital, while at the same time respecting the environment, reducing greenhouse gas emissions and adapting to a warmer world.
At the GSMA we are also working for a Greener 5G as digital consumption grows to increase the efficiency of the whole chain and to use less energy as well as to use more sustainable energy.
But 5G can be also greener because it brings a new environmental advantage compared to the former generations: it can be “directional” or “concentrated toward the active user” and no longer diffuse signals everywhere; and also go into “sleeping” mode when it is not used.
The GSMA forecasts that there will be 40% of the world’s population covered by 5G networks by 2023 and 25 billion IoT connections. Operators will have to find new efficient ways to run their 5G networks, with increased virtualisation and tailored offerings to enterprises.
It’s an exciting time to be in this industry. Despite the challenges I’ve outlined, I see a better future that lies ahead with the huge transformation that is in front of us. Our responsible leadership of the industry can make the difference!