Annie Turner talks to Kester Mann and Richard Webb from CCS Insight about their original takes on upcoming telecom trends
Kester Mann is Director, Consumer and Connectivity at CCS Insight, while Richard Webb is Director of Network Infrastructure. Below is an edited version of our conversation just before CCS Insight’s annual event at which it makes 100 predictions around telecoms and tech (you can watch the video here). The idea is to avoid the obvious and established trends, seeking to identify new ones.
AT: One of your predictions is that an operator will be able to claim full global coverage – can you elaborate?
KM: We both came up with this separately. The idea is that an operator can claim whole-world coverage instead of focusing on a particular area, or region, or markets in which it’s got a presence or spectrum. The rationale that is a large amount of this [coverage] is through satellites which can cover a very wide area straightforwardly but complemented by its own terrestrial infrastructure – mobile networks, fixed networks and so on.
Potentially, it could strike wholesale and roaming deals as well. Softbank is edging a little towards this with some of the partnerships it has with satellite providers. We wondered if one provider might be bold enough to say, “We can pretty much cover the world through buying from our services…
RW:…We can connect you in lots of different places, we can connect you anywhere.” That’s quite a statement: imagine the operator that can make that claim first. We think there is a business model/case for it, initially among high net worth individuals, but also global corporations for whom that connectivity…is strategically important.
Starlink and others are building out constellations of satellites and becoming more competitive between themselves in terms of how they offer connectivity, but on the commercial side, how is that relationship between mobile operators and satellite providers is going to play out? They’re wary of each other, but can see they need to work together although, obviously, everyone wants everything on their own terms so there’s going to be some regulatory refereeing, probably, to ensure they play fair.
AT: What about the business model of operators taking what they’ve developed and proven then selling it to other operators, like Rakuten Mobile with Rakuten Symphony? There’s also SK Telecom looking to export is metaverse-like ifland to Europe through a deal with its long-term tech partner Deutsche Telekom. Will this operator/vendor-to-operator approach work?
RW: There’s always has been that CTO peer to peer, operator to operator kind of information sharing, mutual education and comparing of experiences. Not in their home market with direct competitors, necessarily, but tier one equivalence, there is a general respect in the CTO and CIO community amongst operators. “How good are Ericsson’s small cells?” “What do you make of MPLS?” “How have you put it in place and is it delivering?” “What are you charging as cost per circuit?” Those kinds of conversations.
KM: In one of our predictions, we expect at least three tier one European operators buying mobile network management services for Rakuten Symphony by 2025.
RW: I don’t think there’s any barrier of scepticism necessarily; it’s an extension of something an operator has put in play and thinks it’s become really good at it. Operators have created a lot of their own technology…there’s a lot of customisation with the tools they buy from Ericsson, Nokia, or whoever that they do themselves. There’s always been that technology creation, customisation and adaptation within operators’ technology office so it makes sense that they are now developing them as products for themselves and others, otherwise it’s just sunk investment.
In last year’s predictions about operators we noted they’re no longer recruiting hardware engineers so much as software coders and programmers; they’re trying to get as many as they possibly can through the door. That could lead to product and service creation for other operators’ environments. They’re trying to build more active communities, to open up the software community: sometimes the community’s internal – their own DevOps guys – but also third-party application developers. Operators want to become more IT oriented.
AT: How much is it about established vendors not giving operators what they want, so they decided to do it themselves?
RW: They’re recruiting from those [vendors] in some cases, where it makes sense. Rakuten and then the Korean model is an inevitable manifestation. They’re going to get to the point where they’ve created something for their own platform and think it will translate for others as well. It could be a nice shortcut for other operators, saving them going through their own growing pains. Still, getting the pricing, right and matching technology from one network to another provider’s network is not easy to do: it’s not trivial.
AT: I can’t see the operators’ demands, including from trade bodies like ETNO and the GSMA, being met for a so-called fair contribution from the Big Six Tech companies that collectively drive more than 50% of all internet traffic, can you?
KM: I have a hunch that that operators don’t really, in their heart of hearts, believe that [fair contribution] will ever be enforced or could be. It could be more of a lever for getting some regulatory slack…maybe in areas like spectrum or regulators being more sympathetic in areas like consolidation [a hope that suffered a considerable setback after the ruling by Juliane Kokott, Advocate General at the European Union Court of Justice just after this conversation].
RW: So instead of a big upfront fee for spectrum, operators could buy or lease it for 25 years or whatever. Think of it as kind of private mobile network model based on 60 spectrum. They pay for the licence as spectrum is utilised – like the build-out of a private mobile network so operators don’t start paying for it until there’s a customer on it. That enterprise-led model takes the big upfront onus off the operator.
I am not saying it is the right way or not, but operators will look for a continuation of this dialogue: as you said, they’ve got massive debts and cannot continue to plough all their money or investors’ money into building infrastructure on an if-we-build-it-they-will-come basis. Whether it’s money from the Big Six or some slack on spectrum, or whichever way you play it, operators will continue trying to reinforce the point: “Our networks are expensive and we’re getting hammered”.
KM: It seems like we hear something about Big Tech contributing to networks every day. Our prediction is that it will be mandated in one European country to create some debate. We’ve been vocal about the need to update net neutrality rules…but I personally think the idea of Big Tech paying for networks is unjustifiable because the [relationship is] symbiotic. The telcos need the ‘OTTs’ as much as the other way around. I’d also argue that the telecoms industry created this challenge of ballooning traffic through unlimited data tariffs.
RW: Operators also need to be wary of claiming too loudly that it’s not possible to make money from 5G or there’s no monetisation model. That’s a really bad thing to echo into other areas because technology is expensive. Saying, “We can’t make money out of 5G” is not a good look if the industry wants investment to continue to flow.
AT: Is citing the court action in South Korea relevant in the [fair contribution] argument – that is, making Netflix pay for the huge amounts of traffic generated by Squid Game at the end of last year – as Korea is so culturally different from Europe and the US?
KM: It’s relevant because certain European countries have a requirements for the OTTs to invest in local content production, such as the Netherlands and France, which is interesting in terms of perhaps being a kind of segue into other new approaches.
AT: So how are operators going to monetise 5G?
KM: Around, private mobile networks and industrial IoT, factories of the future, autonomous vehicles, robotics and drones, all those different kinds of reality. The industry’s best hope for 5G is it drives enterprise opportunities, combined with edge computing, AI and IoT.
The best approach is not to think of 5G in isolation, but how it combines with other technologies as part of a wider connectivity story. There’s been misstatements from the industry and commentators that 5G is all encompassing and will revolutionise everything.
RW: 5G has different performance characteristics…whether operators have the right types of organisations to really take advantage of them [is a moot point]. Sure, they’re transforming themselves as businesses as they transform their networks but basic [5G] coverage doesn’t exist in some places so can they really offer the holistic, ultra-sophisticated connectivity-plus environment for smart robotic factories? Systems integrators, cloud providers and solutions providers do a lot of the heavy lifting in those environments.
Telcos are putting the radios in and it’s their spectrum licence and perhaps, and maybe it’s their customer or perhaps it isn’t. The trend towards more dedicated spectrum [being made available] for private networks might cut operators out almost entirely if they are not even involved in the spectrum environment.
AT: Can you each choose the prediction that you think will have the most profound impact?
KM: It’s in 2026 a leading operator moves away from naming specific technologies in its marketing. The thinking here is that it starts to position services under a broad connectivity banner rather than using terms like 4G, 5G, fibre to the home, Wi-Fi, or whatever. This has been operators’ traditional approach and has led to a lot of confusion in the marketplace.
People don’t necessarily care which technologies they’re using; they’re only interested in getting a good connection that that always works. That tallies nicely with our global operator prediction – it would be a play for a converged operator, so we’ve got to boost strategies around convergence. Terms like 4G, 5G are ingrained in people’s conversations. I wonder if an operator will be bold enough to move away from referencing technologies and focus on experience?
RW: [Moving up the stack beyond connectivity to deliver more value is] a possible logical corollary of what we were discussing about the Rakuten Symphony model – developing your own capabilities then leveraging them as a service, perhaps on a mutual peer basis. That market will start to evolve; increasingly operators will look to build it as a revenue stream. Their own internal technology development will say, “We’ve got to have something out of this to sell to other operators, because we’re going to need to buy from other operators in different departments or markets. There’s a really interesting but difficult to get to opportunity.”