Can network operators really capture the next wave?

5G
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When you read a press release with the title ‘Network Operators to benefit from an additional $120 billion from Value Added Services by 2024’ you have to smile, at least. Then you might think ‘well, they deserve it’.

When you then read the first sentence you realise that the headline leaves out one rather critical word.

‘Opportunities’ – ‘$120 billion worth of opportunities’.

The new data from Juniper Research revisits the old problem of how and when (and if) network operators can replace the revenues they are losing from voice and messaging termination. The answer, according to Juniper, lies in mobile identity services, carrier billing and IoT connectivity.

The company measured the level of innovation amongst top operators against such factors as agility and innovation and the level and scope of their solutions.

The top three (in reverse order obviously) are Verizon, AT&T and Vodafone.

Vodafone came top because of its investment in virtualisation technology, its approach to the world of IoT and its trials in 5G networks.

The author, Morgane Kimmich, notes that “Innovation must continue to focus primarily on reducing the capital expenditure on networks through virtualisation of core networks”.

Maybe operators should focus on the, er, innovation part as well.

Innovation is all very well and there are indeed plenty of opportunities for operators to increase revenues and margins from a host of new services. The problem will be, as it always has been, whether or not the culture that is slowly changing is genuine or whether most employees still go to work at [insert name of operator] and think, ‘right, another exciting day at my digital service provider’ or ‘right, another day at the telco’.

The other problem, as demonstrated in South Korea, is that data usage is exploding, with SE Asia second only to Africa.

According Cisco’s Visual Networking Index:

  • IP traffic in Asia Pacific will reach 172.7 exabytes per month by 2022, growing at a CAGR of 32 percent.
  • By 2022, APAC will have 2.6 billion Internet users (62 percent of population), up from 1.7 billion (41 percent of population) in 2017
  • It will have 13.1 billion networked devices/connections, up from 8.6 billion in 2017.

Given that level of explosion, it will be quite a challenge for operators to concentrate on anything other than keeping up with demand, which is a significant investment, whether on virtualised networking or the old fashioned kind.

The real question for operators is whether the services that they control, from the outset of 5G, are ones that they can intuitively offer and their customers will intuitively buy from them, rather than a digital service provider.

It does seem that, finally, operators are realising that the future depends on partnering and optimising services with third parties. Whether or not they are ready to charge for third party services is open to question. Whether they are going to make a go of carrier billing is by no means certain. BlueVia, the Telenor initiative has gone very quiet after a lot of noise when it launched a few years ago.

More from Cisco, on the sheer scale of what is about to happen:

  • By 2022, global mobile devices will grow from 8.6 billion in 2017 to 12.3 billion by 2022 – over 422 million of those will be 5G capable.
  • The share of M2M connections will grow from 34 percent in 2017 to 51 percent by 2022. There will be 14.6 billion M2M connections by 2022.
  • Virtual Reality (VR) and Augmented Reality (AR) traffic will increase 12-fold between 2017 and 2022 globally, a CAGR of 65 percent.
  • Nearly twelve percent of global mobile traffic will be on 5G cellular connectivity by 2022. Globally, the average 5G connection will generate 21 GB of traffic per month by 2022.
  • Internet gaming traffic will grow ninefold from 2017 to 2022, a CAGR of 55 percent. Globally, Internet gaming traffic will be 4 percent of global IP traffic by 2022, up from 1 percent in 2017.

In anyone’s book, these are big numbers and do indeed represent massive opportunities for operators.

The only question is whether, this time round, they are in the right place at the right time and able to capture the opportunities, or whether, as before, they will have to sit and watch as others plunder their network capacity and leave them holding the bill.

Time, and not much of it, will tell.

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