MWC19: Can intelligent connectivity halt telco commoditization?

intelligent connectivity commoditization
Chua Sock Koong, CEO of Singtel, delivers her keynote Monday at MWC19 in Barcelona. Image credit: GSMA

This year’s MWC tag line, ‘intelligent connectivity’, isn’t just another snazzy catch phrase – it’s the key to the mobile industry’s survival as it faces commoditization of its core business and a poor reputation for customer-centricity that it largely brought on itself.

Those were the recurring themes from operator CEOs on Day 1 of MWC19 during the morning keynotes, which were a mix of breathless enthusiasm and sober reflection – which was a departure from the more traditional message that the only obstacle to breathless enthusiasm were clueless regulators.

There was some of that, of course – José María Álvarez-Pallete López, chairman and CEO of Telefónica, kicked off the morning by criticizing regulators for applying archaic regulations to the fast-moving digital 5G world.  

“Voice regulation is to the data world what horses were to cars,” he said. “5G requires a refresh on the old regulatory approach. We need policymakers to be open to new market structure based on a single network technology offering highly differentiated and competitive access at all levels.”

López said regulators should aim to simplify and reduce regulation, release spectrum for longer periods of time rather than treat it as a short-term cash grab, and create a level playing field between telcos and digital players, “otherwise much of the expensive innovation in 5G will be lost before [it is ] deployed.”

However, Vodafone CEO Nick Read said that while European policymakers haven’t yet quite realized the “pivotal role” that mobile in general and 5G in particular will play in almost every other sector, you can’t place all the blame on regulators. Read said that telcos didn’t help themselves by being too protectionist, being poor collaborators and not doing enough to understand customer needs – RCS and roaming being two easy examples.

“Because we didn’t move to address these points, it provoked the regulators to try and moderate our behavior,” he said. The shift to 5G and digital creates an opportunity to fix those three basic pain points, he added.

A cure for commodization?

Singtel Group CEO Chua Sock Koong took that a step further, noting that the GSMA’s vision of ‘intelligent connectivity’ is based on three fundamental building blocks: 5G, IoT and AI. Chua said the combination of those three technologies are key to unlocking value creation for the network – which is crucial at a time when connectivity is increasingly approaching commodity status.

“The paradox for operators is that mobile revenue growth is stagnating, even as data growth takes off,” Chua said, citing GSMA Intelligence forecasts that new mobile revenue growth, and new revenue growth is expected to shrink from 5% to just 1%. “This is clearly a major concern for operators for investing billions of dollars on networks and spectrum to enable this data traffic growth.”

The notion of value creation, she added, is illustrated in market forecasts for the IoT market. “Applications, platforms and professional services are the growth areas for IoT, and are expected to consume 95% of all of IoT revenue,” Chua said. “By contrast, connectivity will further commoditize, and is expected to shrink to just 5% of IoT revenues. This will make it difficult for operators to compete on the basis of connectivity alone.”

Chua said that intelligent connectivity technologies represented an opportunity to slow down the process of commoditization. She added that Singtel has been doing that in part by investing in standalone digital businesses – including cyber security, digital marketing, big data analytics and SVOD – to keep itself relevant at the application, platform and service layers.

“Intelligent connectivity is a new way of differentiating,” she said.

Likes
Please feel free to share

Be the first to comment

What do you think?

This site uses Akismet to reduce spam. Learn how your comment data is processed.