5G Might Be Buzz Saw for Carriers

#5G #smartphoneIn the IoT era, mobile carriers’ customers are no longer just people. They’d have to deal with machines, vehicles, sensors, hot spots, ‘things’ – in an orchestrated ecosystem.

 The Mobile World Congress (MWC) used to be the premiere conference for tech companies to launch the latest smartphones, connectivity chips, new apps to drive up data usage, and core building blocks to help mobile carriers upgrade their wireless communication infrastructure.

Some of that is still going on. But the outfits who come to MWC to strut their stuff are a more diverse bunch nowadays. This year’s show will host data processing and analytics companies, carmakers, “smart-city” and VR/AR tech firms. In short, every vendor who fancies its role in the emerging 5G ecosystem has joined the gold rush to Barcelona.

Communication service providers are still the MWC’s core audience. But for most of them, the MWC this year is anything but business as usual.

Let’s face it. For most carriers, the days are long gone when success was measured by subscriber numbers, and strategy was all about how fast they can grow the average revenue per unit (ARPU).

Driving today’s carriers to rethink their business model are three factors: a maturing smartphone market, the Internet of Things and 5G.

As Sam Lucero, senior principal analyst for M2M and IoT at IHS Markit, told us, in a saturated subscriber market, “The mobile ecosystem in general has embraced the IoT as a key growth opportunity.” And the upcoming new narrowband radio technology developed IoT, such as NB-IoT, is enabling mobile ecosystem players to “capitalize on the IoT opportunity,” he added.

While moving into the IoT market seems like a logical step, it’s neither simple nor easy for mobile carriers to execute. The carriers’ focus has always been on human subscribers. They’ve grown by tailoring services to the needs of their customers.

In contrast, in the IoT era, mobile carriers’ customers are no longer just people. They need to deal with defined and non-defined uses of their network – by machines, vehicles, sensors, hot spots, ‘things’ – in an orchestrated ecosystem. Connectivity will be a core component, delivered across multiple vertical industries and devices.

In short, bye bye ARPU.

In a recent phone interview with EE Times, Francesco Venturini, global industry managing director, Media and Communications for Accenture, told us carriers are coming to Barcelona this year not necessarily to look for new technologies to boost their business (i.e. increase data usage), but “to get a direction, or at least make some sense” of where the mobile industry is heading.

Carriers today, caught between a rock and a smartphone, are at a critical juncture to re-examine their business model, in Venturini’s opinion.

The easiest option for carriers is to stick to their traditional model, selling voice, data and access.

Or, they can go vertical, negotiating to acquire content and bundle it in their services. As exemplified in AT&T’s pursuit of Time Warner, today’s carrier wants programming optimized for presentation on mobile devices, gains knowledge about personalized ways to view sports and other live events, and integrates professionally produced content with virtual reality or augmented reality services. Such a vertical content play, however, comes with a hefty price tag and requires deep pockets.

Carriers have a third option, though, said Venturini. “Become a platform” company.

The concept of a “platform” is familiar to tech companies, but alien to communication service providers. By platform, Venturini means, carriers open up their API, make their platforms available to third parties and treat all the third parties equally.

As a platform company, a carrier becomes “a single sign-on” data platform on which they can use collected data as trading currency, he explained. Noting that communication service providers have been traditionally strong with “ID management,” he said their platforms can be opened to a plethora of startups, enabling them to offer services.

Venturini said that carriers understand all the options available. “But these are very tough decisions.”

The radical shift by communication service providers into the platform business will invite radical changes in their networks and technologies, which will enable them in the IoT and 5G era.

The many new uses within the 5G network, for example, will require virtually dedicated networks to cope with specific requirements and service levels. New strategies will be needed to manage the quantity and variety of network elements with flexible services.

As a result, the hottest conversations at MWC will shift from the smartphone market to topics like Software-Defined Network (SDN) and Network Function Virtualization (NFV) that must be put in place to enable self-organizing and self-healing networks.

Source : eetimes

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