As commercial services begin to ramp across the globe it’s a fair question. And, after attending the Next Generation Mobile Networks (NGMN) International Conference and Exhibition in Vancouver earlier this month, witnessing a host of viewpoints and successes from operators and vendors alike, there’s a strong case that it has.

At GSMA Intelligence, we’re very confident that 5G will see good progression, forecasting over 1 billion 5G connections by 2024 worldwide. However, what was more evident was a reality check as we approach widespread commercial rollout, with companies showing a much-refined understanding of the challenges and requirements for delivering beyond the promise of 5G.

5G realness
From a consumer perspective, the biggest improvement customers will expect from the next generation of mobile is faster data speed. But what was further emphasised in Vancouver is that the ambitions of the technology goes far beyond the idea of just better mobile broadband.

5G is expected to be the connectivity framework that operates in low- to high-band frequencies to provide a thorough mix of capacity, coverage, throughput and low latency. Beyond simple expectations, however, there were examples, from a range of applications for vertical industries, to field trials and first deployment stories, which brought this 5G ambition to light. Telecom Italia outlined various applications it has trialled and tested in its refined categories of use cases, such as drone patrolling in its public safety use case; and BT spoke of nine 5G trial sites that are live across East London, which has so far encompassed every element of building a new 5G network, from obtaining planning permission and access agreements, through to managing RF power outputs.

Strategies for migration from 4G to 5G, enabling platforms, roadmaps and deployment strategy from a vendor perspective were also well covered. As you’d expect from the vendor community, optimism surrounded 5G, which was vindicated by some of their announcements of recent successes.

Nokia, for example, when talking about field trials described its engagement in network slicing projects in sectors ranging from robotics, manufacturing and smart cities. With the latter it specified an example of connecting slices with street furniture.

Ericsson was proud of its part in fixed wireless access (FWA), boasting of its existing achievements in deployments with 4G and detailing plans of accelerating rollout in 5G. Though Verizon are the only ones with its flag in the ground with 5G FWA, Ericsson remains positive of other operators following suit despite being fully aware of the varying regional dynamics (only Deutsche Telekom in Europe, so far, has announced plans of an FWA launch).

Innovation was a strong point, too. The event sponsor, Telus, showcased its working relationship with several start-ups and SMEs with innovative solutions. This ranged from Riot Micro, a semiconductor start-up which introduced its new low-power chipset addressing the battery and memory issues in cellular IoT and NB-IoT, to Dali Wireless, a wireless infrastructure provider evangelising interoperability between operators through infrastructure sharing solutions.

While innovation has been core to every generation of wireless, it’s particularly important in 5G as operators look for ways of keeping capex and opex in check. I’ve seen and modelled no shortage of examples (see the GSMA Future Networks – Network Economics report) but it’s always good to see more.

Understanding the challenge
Beside the pros it seemed the difficulties were also well understood.

A common theme throughout was the question of cost and the need to make networks more efficient in the 5G era. There are value propositions to be realised and advancements in the network architecture are undoubtedly needed, but there has to be a degree of pragmatism when it comes to cost effective 5G network rollout. Telus highlighted the need for sound economics as one of three key drivers for 5G success (along with innovation on use cases, and spectrum and legislation), while Orange Labs rightly specified the need for operators to find ways to lower their energy-related opex, as we move into the era of rapid data consumption growth.

Security requirements and the importance of end-to-end solutions were also rightly highlighted as a major challenge. Security will be a differentiator and securing 5G will require a new approach, especially as we move towards Ultra Reliable Low Latency applications and services. There is an argument that the ecosystem is not prepared adequately to deal with threats such as authentication bypass vulnerabilities or brute force attempts: connected car hacking is an important example.

Elsewhere, it was well accepted that the business model is more complicated than it was few years ago: value creation and the business case in general will continue to be mulled.

The most lucrative use cases are still unknown, while the right strategies to ensure efficient capex and opex spending is still being considered. In addition, standardisation efforts alone are not sufficient for a simple go to market. There are many options in place and dialogue with other entities, initiatives and communities is needed to build ecosystems and drive industry collaboration, for example Open RAN (ORAN) Alliance and the 5G Slicing Association.

Entities like NGMN and GSMA are also continuing to help provide these guidelines.

Ultimately, however, the show emphasised the state of 5G; nothing ground-breaking yet but the key proponents in networks understand the 5G vision and are investing determinedly to make it a reality, which is encouraging. The examples of clearer use cases, successful field and lab trials and first deployments underline this.

In my view, 5G will succeed only with a strong sense of practicality and a clear understanding of the challenges. Operators need to focus not only on being efficient while handling the massive quantities of data expected to be generated from both consumer and IoT, but also understanding the value they can derive from it. This step undeniably needs a collaborative effort from the industry and, for me, is the key pragmatic component to achieving 5G palpability.

– Jasdeep Badyal, senior analyst, strategy – GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

Last week, policymakers and senior industry stakeholders convened in Dubai for the GSMA’s sixth Mobile 360 Series MENA [1] event.

GSMA Intelligence analysts joined other delegates to discuss the opportunities and challenges facing the region’s mobile sector, and to examine how technologies, including 5G, artificial intelligence (AI) and blockchain are enabling operators and governments to realise their digital ambitions and deliver a socio-economic impact.

5G will be a long-term play
While the previous year’s event centred on topics such as digital technologies addressing social challenges and driving innovation, 5G stole the limelight in 2018, and understandably so given the hype surrounding this next-generation technology and the significant capex implications it is likely to have.

The 5G era is certainly in sight, although operators consider that it will take a number of years to fully develop. Etisalat, for example, stated that 5G represents an opportunity to earn better returns from growing data traffic, but conceded that the consumer proposition has yet to materialise, which is due to the widespread availability of affordable and high-speed 4G services. STC was similarly long-termist, counselling that payback on 5G “will take time”.

Still, fast progress is being made in parts of MENA, with plans for near-term commercial launches putting operators’ PR teams into overdrive. In fact, major operators in the Gulf Cooperation Council (GCC) Arab States (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE) are looking to be global leaders in 5G deployments, and to keep pace with the likes of South Korea and the US. While not as high as some markets, GSMA Intelligence expects there to be 18 million 5G connections across these countries by 2025 (excluding licensed cellular IoT), representing a 16 per cent adoption rate (see chart, below).

[2]Fixed wireless access
One use case that has the attention of several GCC operators is fixed wireless access (FWA), which uses point-to-point mobile signals rather than copper or fibre cables to provide last-mile fixed broadband connectivity.

So far, much of the discussion around 5G-based FWA has concentrated on the US; however, it will also be an early 5G solution in the GCC Arab States, allowing operators to extend high-speed broadband beyond their existing fixed line coverage, in some cases being a stopgap until fibre is rolled out. Alternatively, it could complement fibre broadband services in congested urban areas where that network is completely utilised.

Consequently, there is momentum around fixed wireless in MENA, with several operators having launched or intending to launch services between 2018 and 2020:
Etisalat announced the launch of its first commercial 5G network in May 2018. In doing so, the operator stated that 5G-based fixed wireless services would become available in selected parts of the UAE in September, with access increasing to other parts of the country depending on consumer demand;
Ooredoo launched its 5G-based fixed wireless network in Qatar at the same time using 3.5GHz spectrum. The operator is on track to hit its target of 100 5G network tower installations, and has already taken delivery of the first 5G home broadband devices;
STC, meanwhile, has announced that its 5G network in Saudi Arabia has gone live following successful technical experiments and trials concluded in January 2017. It is continuing to build out the network in the anticipation of compatible devices becoming available in 2019; and
Zain and VIVA have each obtained 90MHz of spectrum in the 3.5GHz band for the provision of fixed wireless services, but require the Bahraini regulator’s approval to launch.

Further, due to the economic costs of deploying fibre to rural communities and the challenging terrain of certain geographies in MENA, 5G-based fixed wireless could represent a viable opportunity to deliver a superfast, yet affordable, broadband service to areas that do not currently have access to fixed line broadband.

Indeed, a significant addressable market exists for 5G-based FWA services in countries with limited FTTH/B penetration. FTTH Council Europe figures show FTTH/B penetration is 14 per cent in Saudi Arabia, 6 per cent in Kuwait and just 1 per cent in Jordan. For MENA operators, 5G-based fixed wireless therefore represents a promising incremental revenue opportunity, as well as a potentially lower cost of deployment, a faster time to market and a quicker return on investment compared to fibre.

Moreover, while fixed wireless may not trigger the same interest or buzz as immersive reality or autonomous vehicles, the promise it holds for greater digital inclusion, better in-home connectivity and incremental value for operators means that it is set to be an important 5G use case in the short-run at least.

– James Robinson – senior analyst, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/mobile-360-mena-2018-dubai/
[2] https://www.mobileworldlive.com/wp-content/uploads/2018/12/GSMAi-blog-chart.png

While it doesn’t make the headlines, an incipient trend is afoot. The traditional operator model of owning and operating towers (vertical integration) is changing to shared and leased access.

The reason is simple: spending money on network investment in an environment where revenues don’t grow to pay back those investments is not sustainable. Do not be fooled by the fact capex intensity ratios (as a share of revenue) have remained stable at 15 per cent to 20 per cent over the past ten years. The amount of money left after capex (free cash flow) is in structural decline. Add to the mix impending demands of new investment for 5G, coverage obligations attached to spectrum licences and persistent debt loads, and the decision to slim down is less a choice than an imperative. Tower sales mitigate capex demands by shifting a portion of network spend to opex.

Bharti Group’s spin-off of its Indian towers into Infratel [1] in 2007 was, at the time, an isolated case which has since re-emerged following the creation of China Tower [2] in 2014. Third parties now control and operate 60 per cent of mobile base stations in China, a striking figure given their presence was essentially zero in 2014. While China has the highest outsourced ratio in the world, in its wake have followed a wave of infrastructure spin-offs in partnership with private equity groups (for example Telefonica, Altice) or sale and leaseback deals with tower companies (for example Verizon with American Tower in 2016, and Zain with IHS in 2017).

One could be forgiven for regarding network economics as a dry subject, but this matters. The basic telecoms network operating model is undergoing a permanent change, albeit in slow motion. The prevailing asset-heavy model of the past will be replaced by a more diverse and changeable range of network options, with a host of new competitors on the block.

Business model
It is a common penchant among high-flying tech industry bellwethers and start-ups to decry the utility business model as boring, inefficient, hamstrung by labour unions and delivering low margins: in short, something that should be operated by the public sector given the lack of a profit motive.

The rise of tower companies and their insertion into the telecom sector value chain offers a sharp tonic to this position.

A short primer. Mobile networks have broadly two levels in the value chain: passive and active. The passive level includes real estate (sites), towers (masts) and ancillary equipment such as power and housing. The active level includes the radio access network (RAN), backhaul links and core.

Tower companies target the passive level by taking on ownership of the assets and then wholesaling access back to mobile operators. Operational efficiency in the passive level of the network value chain is significantly higher when tower companies control it. Why? Because tower companies operate multi-tenancy arrangements, with the major companies running ratios of between 1.8 and 3.0 customers per tower.

Operators have not historically provided access to competitors on a wholesale basis, although that is now changing in some countries. Because the infrastructure cost base is largely fixed following the initial investment to lay the towers, substantially all incremental revenue derived from an additional operator siting their equipment on a given mast flows through to profit. This is buttressed by rent escalators of 2 per cent to 3 per cent built into the annual leasing contracts. Coupled with a demand stream driven by an inexorably rising tide of data traffic, the net effect is a near bullet-proof business model with EBTIDA margins ranging between 30 per cent and 60 per cent. Who said you can’t make money from being a utility?

Future point 1: pooling costs need not mean a loss of control
Tower leasing, as opposed to direct ownership, does two things for operators. First, it reduces the size of the balance sheet. Second, it shifts costs from capex to opex, which is typically between 50 per cent and 70 per cent of network spend. Estimates from the field suggest cost savings for an operator of 70 per cent over a five-year term and 50 per cent over ten years under a leasing agreement with a tower company compared to direct build outs (price premiums are applied for long term security).

But what about 5G, which necessitates a different network planning strategy to anything that has come before it?

The interesting potential change involves small cells. Operators could deploy their own small cell networks, but there would be heavy overlap in city centres given cramped cell sizes. A tower company may choose to deploy its own small cell network and sell capacity to multiple operators on a wholesale basis.

Crown Castle and American Tower in the US have positioned small cells as a priority investment area. The advantage of this approach is a faster time to market by pooling costs. Recent modelling in the UK reported in the Telecommunications Policy journal, for example, suggests that under a shared small cell approach, 5G population coverage would reach 67 per cent some 18 months faster than by continuing the existing two-by-two national network approach. In this scenario, operators would still be able to differentiate on network quality based on their spectrum holdings.

Future point 2: sweat the asset
Beyond cost savings, there is also the option to sell access to a spun off tower portfolio on a wholesale basis to competitors (excluding the RAN). Altice explicitly cited the opportunity to wholesale capacity to other operators in its rationale for spinning off towers into a JV with KKR in France (SFR) and Portugal (PT).

In the latter, Altice claims “it will be the first independent tower company…allowing other operators to access towers and expand their 4G/5G networks, in line with the Portuguese regulator’s latest recommendations and best market practices about sharing of infrastructure.”

While these operator companies are at the vanguard, our expectation is that such co-opetition will grow in popularity if for no other reason than the tower assets would otherwise be underutilised.

Operators without towers? Not in full but even in part is a sensible shift and one that will continue into 5G.

– Tim Hatt, head of research, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/featured-content/top-three/bharti-airtel-seals-infratel-indus-tower-deal/
[2] https://www.mobileworldlive.com/asia/asia-news/china-tower-profit-jumps-as-tenancy-ratio-climbs/

I recently attended a cable conference in London (Cable Next-Gen Europe), which as well as providing an update on the latest developments in the cable sector promised some thoughts on the outlook for cable and 5G.

A number of key themes emerged from the discussions, including the increasing pace of innovation in the cable market as network upgrades are set to make gigabit connectivity a reality. Cable network upgrades provide both opportunities and challenges for mobile operators as they begin to deploy 5G networks.

The in-home experience matters
There was a growing recognition from cable operators that it is not sufficient to view the network as ending with the home gateway, but rather to better understand what happens inside the home.

Unless they move in this direction, the risk is that the existing disconnect between customer expectations and actual user experience grows, both as more devices are connected in the home and as the advertised network speeds continue to increase (1GB offers are now being launched in both the US and Europe). Hence, we have solutions such as Mesh Wi-Fi getting included as part of the monthly subscription.

Other options included pre-installation checks or software solutions that could help user to better manage interference issues in the home.

As always, there are both opportunities and challenges here for the mobile industry.

In-building coverage is already an issue for many mobile users, whether in the home, office, or leisure location. This is likely to increase with 5G, given the higher frequency spectrum that these networks will use. The propagation characteristics of mmWave spectrum in particular are challenging, although the topic of in-building coverage for 5G has received relatively little attention to date. For fixed wireless access (FWA) solutions, some of which will compete with cable, getting the signal to the home can only be part of the challenge. With the first commercial offers already live, ensuring that there is adequate coverage inside the home should be a key element of the commercial offer.

Fibre, fibre everywhere
The conference provided a timely reminder that network speeds across the telecom industry are increasing, whether from the latest iteration of DOCSIS (3.1) or new all-fibre overbuild networks. As noted above, cable operators are already looking to commercialise 1GB services, with full duplex DOCSIS 3.1 promising symmetrical gigabit speeds and data rates of up to 10GB becoming realistic as fibre is pulled deeper into the network.

Cable operators are now mirroring traditional telecom operators in deploying more fibre. They are also increasingly being joined by non-telecom players including utility companies, local municipalities and private equity companies that are building out fibre networks in many regions. There is a broader question here as to whether we are set for another bandwidth glut, similar to that which emerged in the late 1990s as an abundance of cheap capital fuelled a proliferation of both long-haul and city fibre networks. While this question is beyond the scope of this blog, it’s a useful reminder that supply and demand do not always move in lockstep.

Of more immediate relevance is the competitive backdrop against which 5G services will be launched. Enhanced mobile broadband (eMBB) is one of the key initial use cases for 5G networks, offering both higher data rates to end users and increases in network capacity. However, the market backdrop brings both a marketing and a practical challenge for mobile operators: how to position 5G in the context of other gigabit connectivity solutions and how to not over-promise on speeds, at least in the early stages of network deployments.

Putting it all together
One of the more interesting sessions examined whether 5G is friend or foe. The overall tone of the session offered a mix of healthy realism and pragmatism. One of the cable operators with its own mobile network noted that 5G launches in its market in 2020 would be largely for marketing purposes and depend on moves from its domestic competitors.

There was a general view that, at least initially, it will be hard for 5G FWA to compete with installed fibre networks and upgraded cable, with spectrum still at early stages of licensing and the technology still evolving. However, the challenge could become greater over time, especially as the technology evolves and specifically as massive MIMO and beam-forming improve the bandwidths that can be delivered to individual homes.

The growing array of fibre builds noted above also provides some opportunities for collaboration. As cable operators deploy fibre deeper into their networks, it will create the opportunity to offer wholesale services to mobile operators for both fronthaul and backhaul solutions, as well as potentially edge-computing capabilities. Network densification and ongoing increases in data traffic will mean an increase in the number of cell sites and require upgrades to backhaul capacity, with fibre the most effective backhaul solution. While there was acknowledgement from panellists that neither the networks or business models are ready today, there is a clear opportunity for future collaboration.

For all the discussion of cable versus 5G, all of these conversations pointed to a common takeaway for everyone in the broadband ecosystem. Higher network speeds, whether fixed or wireless, are enabling a range of innovative new services.

In the consumer segment these range from streaming 4K content to online gaming, and the potential of AR and VR; while 5G and gigabit fibre also promise a range of new services in the enterprise space.

There is a bigger question here for all telecom operators, whatever their underlying network, as to how to move beyond the connectivity play and gain a greater share of the revenues that these services will deliver. Operators across the telecom space are looking to lower operating costs through network upgrades, but addressing the cost side of the equation alone is not the path to sustainability.

– David George, head of consulting, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

Analyst Summit season is upon us, a time when operators and vendors alike work to get their messaging across before the year comes to an end. Following visits with Qualcomm [1] and Vodafone Group, you’ve already seen some of our recent analyses. Huawei’s vison will get shared at its Mobile Broadband Forum in a few weeks, after a 5G update from Intel this week.

It all makes for a busy time of the year, but it’s important to get out of the office on a regular basis if you’re trying to understand the shape of the market.

That’s why the last few weeks have seen me go from Delhi to Barcelona, back to London and, most recently, off to the US (specifically, New Jersey) for a few days. After all, if the goal is to understand the shape of mobility (or at least one, well-informed vendor’s vision) it only makes sense to go see Nokia at its Analyst Summit. And if there was one clear theme to Nokia’s messaging, it’s the role of the enterprise in shaping mobile networks and innovations.

Even before the day one keynotes kicked off, this focus was front and centre: a tour of Nokia’s new Future X lab included an immersive, virtual factory floor and no shortage of industrial automation use cases. The opening keynote from CEO Rajeev Suri, then, put the enterprise focus further into context. Enterprise executive and customer panels followed. We heard how, with the move into enterprise verticals as a core part of Nokia’s business strategy, the vendor now counts more than 60 mission critical networks in energy and mining, along with support for more than 80 rail networks, not to mention work with web-scale players like Tencent.

Day two hammered the message home with the launch of Nokia’s Future X for Industries strategy [2], a private networking deal with China Unicom and BMW, and a strategic alliance with Infosys focused on the energy, transportation and manufacturing sectors.

Clear signals
Of course, for anyone following the vendor, a deep discussion of the enterprise was never going to be a surprise. Enterprise verticals have always been a part of the Nokia customer mix, getting greater focus over the past few years. More recently, its Q3 results [3] highlighted, “continued year-on-year growth in net sales to large enterprise vertical and web-scale customers.” And, while somewhat lost in a broader announcement about accelerating strategic execution, the creation of a new Enterprise Business Group was announced a few weeks back in late October. Heck, there’s even a dedicated Nokia for Industries Twitter handle…with about 1,000 more followers than I’ve got.

That’s a lot of signs, right? Sure, but even if you’d missed all of the panels and keynotes, and hadn’t followed any of Nokia’s previous messaging, you could still see how integral the enterprise is to Nokia’s business if only by looking at the technology bets it’s making:

5G. With an industry focus on slicing and IoT and opening up new markets for operators, 5G is about much more than consumers;
Mobile Edge. There are consumer applications for mobile edge networking (gaming, augmented and virtual reality, video streaming efficiencies). There are many more enterprise applications from IoT analytics and control to industrial automation;
Private Networking. Before the recent deal with China Unicom, Nokia was selling its Digital Automation Cloud as a plug-and-play networking solution for industries, including private network whether with licensed, unlicensed or shared spectrum;
CBRS. On the shared spectrum front, Nokia has been a big CBRS proponent since the very beginnings of that industry and the CBRS Alliance.

Past announcements. Recent announcements. Product announcements. Demos. Partnerships. Customer wins. Technology bets. The message of a focus on the enterprise and industries is impossible to ignore.

Target market
While this all might leave no question of Nokia’s focus on the enterprise, it does leave one question unanswered: who is the customer? Is it an operator in support of the enterprise? Is it the enterprise via a direct sales channel? An integrator? Some other partner?

The easy answer is “all of the above.” It’s a fair answer: they will all be customers and channels linked to Nokia’s enterprise efforts. That doesn’t necessarily make it a satisfying answer. Instead, it suggests a tangled web of relationships driven by a diverse set of stakeholders (some not yet cultivated) delivering components across operators and enterprises. As a corollary, it suggests plenty of potential commercial conflicts as we sort out who takes responsibility for deals and who gets their share of the business, all against the backdrop of “friendly” competition.

These issues will get solved. But, they won’t be solved by technology. They’re fundamentally sales issues.

So, yes, Nokia will need to invest in vertical specific solutions and expertise. But it will also need to invest in new sales and marketing efforts, along with new ways of working with partners in an open way while guarding against competitive complexities the likes of which Nokia hasn’t had to deal with in the past.

The good news is that, at some level, Nokia seems to understand this. The new enterprise business unit implies new sales and marketing thinking. And, when it talked about “open,” the vendor is quick to note that this includes the way it works with partners and ecosystems, as well as products and product development.

What needs to follow, however, is proof that Nokia can pull all this together with a variety of customer references showcasing a variety of different enterprise engagement models. On top of that, it might as well make an interactive sales demo an integral part of its Future X Lab.

– Peter Jarich, head of GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/blog/intelligence-brief-qualcomm-advancing-fast-on-5g/
[2] https://www.mobileworldlive.com/featured-content/top-three/nokia-steps-up-enterprise-market-play/
[3] https://www.mobileworldlive.com/featured-content/top-three/nokia-reveals-e700b-cost-cutting-plan-reduces-net-loss/

Earlier this month, Qualcomm made a number of 5G related announcements at its 4G/5G Summit in Hong Kong.

Unlike previous years, the recent event included a dedicated day of interactions with only journalists and analysts. I jumped at the chance for some candid conversations and left with three key takeaways around 5G and IoT:
1. Qualcomm has rapidly moved from prototypes (at 2017’s summit) to more concrete demos and tangible products and solutions ready for commercialisation in 2019 (this year’s event), a remarkable step which companies in the 5G ecosystem can build on.
2. The company is increasingly showing its technology leadership in 5G, leading with its mmWave solutions that will harness the indoor coverage ability for enterprise and residential use.
3. That Qualcomm’s ecosystem partners chose to share 5G enterprise use cases in industrial, retail, and automotive sectors suggests they expect these to be early adopters. Retail is unexpected as it isn’t often listed as a third example.

[1]Main developments
Overall, Qualcomm made eight new 5G-related announcements at its summit (see table, right, click to enlarge). Many are consumer-facing technical innovations aiming to accelerate developments in 5G and IoT. This is not surprising. Qualcomm, after all, is racing towards achieving 5G commercialisation in 2019 and consumer use cases are some of the first to materialise.

What is surprising is Qualcomm’s challenge to the broader 5G ecosystem to design the kind of immersive customer experience in a device form factor which 5G and mmWave will support.

This focus on designing products with enhanced customer experience in mind should not be ignored.

If successful, it could accelerate adoption of consumer IoT based on two new technological enablers from Qualcomm:
1. Its significantly reduced-size 5G mmWave antenna module should spur creatives to design the kind of extended reality wearables as ordinary as a pair of glasses, or the visor that Geordi La Forge wears in Star Trek. Qualcomm was candid (in private) that the current immersive form factor needs improvement to spur mainstream adoption.
2. The small cell partnership with Samsung (announcement number three in the table) is a significant move that helps remove the need to make a choice between Wi-Fi and cellular devices. While not necessarily positioned for in-home deployment, ubiquitous 5G coverage will help to make the case for connectivity beyond Wi-Fi or Bluetooth in consumer devices.

Cautious optimism
During a 5G deep dive session shared with journalists and analysts, Qualcomm showed a lab test focused on the performance of 5G mmWave indoors. It offered two future use cases in Enterprise Networks and factory automation, with the expectation that private networks should increasingly become economically and technically viable to deploy. Qualcomm backed this statement based on its own busy pipeline built out of committed business development efforts with C-level executives in each individual key customer.

I do not doubt Qualcomm’s experience, but would caveat the optimism with two additional points. First, Qualcomm’s current company-specific business development approach adds to the time needed to discover technical and business needs. Second, the mathematics of return on investments equations will always demand a strong business case to justify spending.

These caveats are important because our own Enterprise Survey (currently in progress) reflects a cautious prioritised investment approach towards 5G private networks among large manufacturers.

Overall, much of the excitement during the Qualcomm 4G/5G Summit was down to the technology achievements within the last year, which set the ground for further developments.

Implied above, the challenge from Qualcomm to the rest of the ecosystem is also to make progress on business models for both consumer and enterprise adoption. For example, the topic of who will pay for the customer experience was not discussed.

To this end, innovation is needed around the business enablers to price such a benefit. We are used to the one-off transactions of a product purchase, but 5G enables service-oriented transactions which require new mechanisms. Qualcomm’s Summit may not be the forum to discuss these outstanding areas. But, with MWC 2019 only a few months away, I expect to see more examples of use cases, collaboration and deployment from the 5G ecosystem in the New Year.

– Yiru Zhong, lead analyst for IoT and Enterprise, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/wp-content/uploads/2018/10/GSMAi_blog_table_QualcommSummit.png

India has 1.16 billion mobile connections (that is huge), making it the second largest market in the world. With this connection base and low data costs, it is not very surprising that the country’s networks today are transporting more than 10 million TBs of data in a quarter, higher than that of the US and China combined.

Accompanying the recent growth in mobile data traffic, the country has also witnessed tremendous telecom M&A, reducing the number of mobile players from 13 in 2016 to only four in 2018 [1].

Why does any of this matter?

Because, consolidation delivers an opportunity for surviving players to acquire new customers, requiring an understanding of customer preferences and brand switching behaviour.

You only need to look to porting request trends to see this brand switching in action: requests in the country have witnessed an average growth rate of around 30 per cent over the last four years, while connections grew at an average of 6 per cent over the same time (see chart, below, click to enlarge).

[2]

So, what is driving this behaviour? While we know that Reliance Jio disrupted the market, there are other factors that affect the brand switching behaviour in consumers.

Price perception
India is a prepaid driven market with a large share of price sensitive customers. It’s no surprise, then, that pricing has a major impact on brand switching with customers moving to a new operator when they feel prices surpass the reference of “reasonable.” It’s even less of a surprise that operators understand this and revise their tariff plans frequently to cater to individual needs and requirements.

A good example of pricing strategy in India comes from Reliance Jio, which captured more than 20 per cent market share within two years of its launch, riding on an aggressive strategy of low tariff plans. Consequently, the new entrant grabbed a significant market share from incumbent operators. Bharti Airtel and Vodafone India joined the league and played the price card to attract and retain the customers resulting in the tariffs as low as $2.50 per month for unlimited voice and 1.5GB of data per day. Where one operator leads, the others generally must follow.

Brand image
Brand image is a result of myriad strategies and messaging opportunities: word of mouth; adverts; public reputation building; and marketing communication.

In India, Airtel and Vodafone maintained a brand image of network reliability and high-end customers, while Idea had affiliated its image to the youth. On the other hand, Reliance Jio presented itself as a cost-effective brand. Based on these images, customers would gravitate towards the brand that better aligned to their needs.

In the face of stiff competition, however, this has had to change: operators are now connecting their brand images with value added services and converged offerings, with the focus on increasing their market shares.

Ease of portability
Ease of number portability acts as a catalyst to customers’ switching behaviour. It doesn’t cause switching, but it sets the stage for one operator to more easily poach subscribers.

Yet, if tremendous growth in porting requests weren’t enough to create strong competition, the Indian government and policymakers are taking steps to further ease the process of switching among the brands. The Indian regulator, TRAI, has proposed to reduce the time taken by an operator to give a clearance to porting requests within the same circle to two days from a mandate of four days currently.

The Indian mobile telecommunication industry is entering a transition period: due to easy access to information and a wide range of offerings it is easier than ever before for customers to switch between service providers.

While we might understand the factors which have impacted the brand switching in the past, operators also need to consider strategies that will help them to retain customers. Operators understand this and are now moving away from conventional retention strategies, instead finding progressive solutions to make their customers remain loyal.

For example, as the market shifts from a voice- to data-driven economy, operators are now offering data-driven solutions to customers as their value added proposition including converged offerings, partnerships with OTT players to offer benefits like free annual subscriptions to Amazon Prime or Netflix, to their customers. This is a common strategy in many mature markets, but the fact that it’s now a feature of service offers in India is telling. It points to impressive development in only a short amount of time.

As tariff wars have reached maturity, it’s only natural to expect service wars to ensue as a customer retention feature. Where India has moved to quickly catch up with the rest of the world in terms of data usage and, now, customer retention, it will be impressive to see what innovations are coming.

– Radhika Gupta – head of Data Acquisition, GSMA Intelligence
– Lakshya Rastogi – research analyst, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/blog/blog-is-india-consolidation-too-much-too-fast/
[2] https://www.mobileworldlive.com/wp-content/uploads/2018/12/12-Dec-GSMAi-blog-chart.png