Earlier this quarter, we looked at Sri Lanka [1] and its roadmap to become a prime 5G candidate. But there are plenty of countries looking to move into 5G, so this month we’re taking a peek at Taiwan as the country gears up for the next generation by leveraging its strong fundamentals.

Taiwan enjoys a dynamic telecom landscape, characterised by excellent infrastructure and intense competition among the top three operators Chunghwa Telecom, Far EasTone and Taiwan Mobile, which have a combined market share of around 85 per cent and actively shape the industry.

The market is also well-equipped, with attractive product offerings and abundant supply of handsets. Sitting on a strong foundation, the operators are expected to launch 5G services in Q3.

Let us look at the factors defining the market readiness for 5G and how they are driving Taiwan on to the 5G road:

High data adoption: Taiwan is one of the few countries, besides Niue and Tokelau, to achieve 100 per cent 4G penetration. Not only this, Taiwanese subscribers are ardent mobile internet users, with average monthly data consumption of 25GB per capita, making it the second-highest mobile data consumer after Finland.
Operators preparing for 5G: In early 2020, operators spent $4.6 billion to acquire 5G spectrum, leading it to become the third most expensive auction for the technology in the world, after Italy ($7.6 billion) and Germany ($7.4 billion). Such high prices resulted from intense bidding, but also highlight operators’ willingness and readiness to launch 5G services.
Then, in March, the top three players announced subscribers with existing 4G monthly plans of TWD1,399 ($46.74) will be able to upgrade to 5G at the same price. However, Taiwan Star challenged these biggies by unveiling 5G tariffs at less than half their price, TWD599 in a clear attempt to drive the technology into the mainstream and attract subscribers ahead of the service launch.
Collaborations and support: Operators have been aided in their 5G plans by work with other operators, vendors and the government. Taiwanese operators are building partnerships with South Korean players (such as SK Telecom and KT) to access their experience in delivering 5G services and digital content. In the wider ecosystem, vendors including Ericsson and Nokia secured contracts with operators for 5G rollout and joint promotion of the technology. In order to march ahead with 5G technology, the Taiwan government allocated $648.2 million over the period 2019 to 2022 for the development of services and applications.

In view of these developments, we can say that Taiwan is ripe to propel towards a more advanced 5G market.

Now if we look at the 5G footprints globally, there are 38 countries which had launched the technology by end-May, and this number is expected to increase to 52 countries by Q3. In other words, when 5G comes to Taiwan, it will be later than many other markets. In fact, it will be approximately two years after South Korea launched the world’s first 5G network. Despite the delayed entry, GSMA Intelligence forecasts it to be among the top five countries by Q4 2025, with 5G penetration around 48 per cent thanks to the solid backbone of the market (see chart, below, click to enlarge).

[2]

Hold on though. Yes, there is always a but.

While we expect solid 5G adoption, revenue growth is expected to remain flat over the next few years. Classic story, right? But it’s worth looking at why.

Consumer 5G uptake will be positive in terms of connections. But with no premium likely to be placed on tariffs and a market history of price wars, we see revenue remaining flat until 2025.
The operators have already spent heavily on acquiring 5G spectrum. The major players are already facing declining revenue and profit from their core businesses. Combined with an expectation of higher operational costs, expecting revenue and profit growth would seem unwise.

So, where might we look for additional revenue opportunities?

Where traditional consumer services aren’t expected to drive growth, new non-core and B2B services may hold the greatest promise for growth. The advent of 5G technology can accelerate new services and use cases, for example cloud gaming, streaming content, and enterprise cloud and connectivity. GSMAi research showed B2B enterprise revenue [3] varies from 10 per cent to 50 per cent of operator revenue, with 30 per cent as an average across ten top operators. This suggests a lot of potential upside.

Many of these dynamics, strong interest in 5G and expectation of growth beyond traditional consumer services, are not unique to Taiwan. It would be noteworthy to see Taiwan leveraging its ICT industry capabilities and ecosystem to drive additional value and 5G momentum, where it could outpace its own benchmarks and fully leverage the 5G opportunity.

– Charu Paliwal and Divya Bhargava – team leads, 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-should-sri-lanka-push-4g-or-5g/
[2] https://www.mobileworldlive.com/wp-content/uploads/2020/06/GSMAi_Taiwan_Connections_by_Tech.png
[3] https://data.gsmaintelligence.com/research/research/research-2020/operator-revenue-in-the-enterprise-market

It is still early days to fully size the impact of the current pandemic on the global economy, not to mention IoT. Nonetheless, what is important to note for both the enterprise and consumer is that IoT is not just about connecting devices, it is about using and analysing the data these devices collect to achieve an outcome.

By no means do we think we have all the answers; the degree of uncertainty is still high– from the overall economic impact, to changes in consumer spend, and how enterprises in different verticals respond to the ‘new normal’. Rather, our analysis is a reflection on how the market has responded to Covid-19 so far and how we see (at this time) the future, recognising that, for both the enterprise and consumer, IoT is not just about connecting devices but about using and analysing the data these devices collect to achieve an outcome. And, of course, we will continue to monitor market developments, plough through quarterly reports, talk with the ecosystem players to to try to gauge where the market is moving.

With that in mind, our views and analysis are guided by some top-level assumptions that underpin our latest forecast thinking.

Recession looms
Based on IMF data, global GDP will contract by 3 per cent this year and grow by 5.8 per cent in 2021. Whether or not these predictions still hold true is up for debate. Regardless, recent news suggests that the current crisis is far worse than the 2007-2008 financial crisis, pointing towards a U-shaped recovery in economic output, rather than the hoped for V-shaped fast recovery. As such, we look at any IoT market impact from a short-term and long-term perspective.

The ‘new normal’
On the demand side, the picture isn’t rosy. The Manufacturing PMI (Purchasing Manager Index), measuring the health of the economy, has nose-dived. This reflects low business confidence. Consumer confidence indexes have plummeted too, due to growth in unemployment and limited spending power. Almost overnight a large proportion of employees moved to a remote working environment, which increased enterprises’ urge to support their workers via cloud based software applications.  On the supply side, production has been impacted as manufacturers had to deal with supply chain disruptions, often looking to find alternative providers. China’s rapid re-opening has helped remedy some of these issues. But, in the longer-term, enterprises will look to build yet more resilience into their supply chains to be able to ‘track and trace’ and have visibility of their asset. Potentially, they will be also looking for a greater geographic spread of suppliers, and even at the potential for re-shoring – building greenfield operations to support in-country production.

The impact on IoT
Government measures put in place, related to social distancing, impacted travel and site visit restrictions, holding back services and project installations across all sectors. They have also underlined the importance of ‘out-of-the-box’ services that just work and can be easily deployed without specialists present. We’ve observed this trend on the consumer side, especially with regards to home security – self installed security cameras are on the rise. Granted, when it comes to enterprises, customised solutions are the preferred option as our survey shows, but this crisis might shift the status quo. In the short term, companies have been using software tools to ensure business continuity.

[1] [2] [3]But what is the market actually saying? On the back of the launch of the 5G IoT for Manufacturing [4] Forum we ran a short survey to measure companies’ sentiment toward the impact of Covid-19 on their operations and ability to conduct BAU/provide services.

Below are some of the key findings:

Increase in automation, use of advanced analytics and increase in agility as a result of COVID-19
Expectation that COVID-19 will increase customer demand for 5G while potentially shifting timelines
Manufacturers see impact due to government measures – social distancing but overall, they see a rebound in the long term

The major downsides
We expect connected vehicles to be the most impacted sector across consumer IoT. Even before Covid-19 stopped cars rolling off the production line, new car sales had been slowing. This, combined with weak consumer demand, results in our expectations that connected vehicle growth will be less than 2 per cent in 2020 – compared to previous double-digit growth. The retail sector, for its part, will be forever changed, as the move to online channels accelerates. It’s important to recognise that a large proportion of retail stores are SMEs, many of which will struggle to survive the current crisis. Those that do, will most likely have to embrace digitalisation. Smart city projects are also currently put on hold with cities having to reprioritise their budgets to focus on citizen safety. Interestingly, the crisis has highlighted the role drones and thermal cameras can play to monitor citizens or robots to sanitise the streets.

The hopeful upside
The current crisis has proven that companies that have already embarked on the digital transformation journey are faring much better. According to our 2019 IoT Enterprise Survey, 65 per cent of companies deployed IoT as part of their digital transformation agenda. Some of the planned deployments, especially for SMEs, will either never happen or be put on hold. But this isn’t true across the board. Smart health, including prescribed and non-prescribed medical devices, will grow even faster than we would have expected just six months ago. The current crisis has highlighted that globally, public health systems are struggling to cope; when the dust settles, and perhaps even ahead of a vaccine, post-mortems of where failings were made will focus on where technology can help, even if that does mean relaxing regulations. Telemedicine and remote patient monitoring are two areas that will be prioritised in developed nations. Similarly, smart buildings as a sector will change. Working from home practices are here to stay and this will have an impact on office space requirements, but at the same time health and safety measures will have to be put in place to ensure those who return to the workplace are not placed at risk.

What does it mean?
When all is said and done, after analysis of market trends at a global level, our forecast is seemingly unchanged: 24 billion IoT connections in 2025 vs 24.6 billion that we forecast at the end of 2019. As surprising as it might seem, we foresee that the immediate downturn will result in longer-term IoT adoption as enterprises will look to achieve business benefits (cost reduction, increase in revenue etc).

As history has shown, every crisis leaves a long-lasting legacy in terms of faster innovation and a ‘new normal’. Covid-19 will accelerate the move to digital and companies adopting IoT, AI/ML and 5G amongst other technologies to drive digital transformation.

– Sylwia Kechiche – principal analyst, IoT – 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/2020/05/GSMAi.tif
[2] https://www.mobileworldlive.com/wp-content/uploads/2020/05/GSMAi-1.tif
[3] https://www.mobileworldlive.com/wp-content/uploads/2020/05/GSMAi2-1.jpg
[4] https://www.gsma.com/iot/manufacturing/

Sri Lanka, the land of Ceylon tea, is among the top South Asian nations in various demographic and economic indicators. It maintains a high literacy rate of more than 90 per cent, and an impressive GDP per capita: $4,102 in 2018. The country’s telecom industry is also on a good footing with the presence of various established groups like Axiata, Bharti Airtel and CK Hutchison contributing to mobile subscriber penetration of almost 150 per cent, and 4G coverage of 95 per cent of the population.

This makes the country a prime candidate for 5G, right?

Maybe. But, two key realities on the ground suggest a most complicated story.

Limited 4G Network Options
While Dialog and Mobitel launched 4G in 2012, in line with players in other countries, Hutchison was a late entrant in the space (launched as late as Q1 2020). Airtel, meanwhile, has not even forayed into the 4G market.

Limited 4G Penetration
Eight years post-launch, 4G services have barely scratched the surface. Subscriber penetration remains at 14.66 per cent as of Q1 2020 and is expected to reach 33.1 per cent by 2025. That’s strong growth, sure. But it compares poorly to other South Asian nations including Bangladesh, where penetration is expected to outperform Sri Lanka to reach 46 per cent by 2025 (see chart, below, click to enlarge).

[1]

But, if Sri Lanka benefits from solid fundamentals, we must ask why 4G uptake is so low. Let’s look at a few key factors.

High Taxes: Taxes (such as service and telecom levies) make mobile internet usage an expensive affair. For 1GB of data, the poorest 20 per cent of the country’s population spends approximately 5.3 per cent of their monthly income. This figure increases to more than 7 per cent for a 5GB data
Low digital literacy: At the end of June 2019, digital literacy (id est, can people use a computer, laptop, tablet or smartphone on their own) in Sri Lanka stood at only 44.3 per cent.
Affordability (or lack thereof): While launching Hutchison’s 4G services, its CEO acknowledged affordability and limited business usage as uptake inhibitors: “Although 4G network services have already been launched in Sri Lanka by other operators several years ago, its mass adoption till recently has been limited due to several factors including the availability and affordability of 4G phones, and the requirement of applications that really needed 4G (instead of 3G) bandwidth.”
Stagnant smartphone penetration: 4G without smartphones doesn’t really make sense. Smartphone penetration being flat in the range of 40 per cent to 50 per cent since Q3 2017 hasn’t helped 4G’s prospects.

So, what is the industry doing to make mobile internet and 4G space more attractive?
To create a healthy, competitive 4G environment for operators and make 4G more accessible to the masses, the government has been taking various initiatives.

In late 2018, it removed floor rates for voice calls to improve the health of telecoms. The move was aimed at promoting cost optimisation and allowing more competition. In October 2019, the National Digital Policy was released, setting targets of at least 70 per cent internet penetration, more than 95 per cent indoor and outdoor high-speed broadband, 4G and 5G coverage, and various other development parameters.

Towards the end of 2019, we saw a reduction in Telecommunication Levy, a direct tax, by 25 per cent, bringing it down to 11.25 per cent. And this year? Already in 2020 we’ve seen the Telecoms Regulatory Commission re-initiate trials with all major operators to encourage the launch of 5G services which further connect with Smart Nation vision.

What does the future hold?
Well, that’s pretty much the most important question. Right?

Clearly, Sri Lanka could be a successful 5G market. But, first, fundamentals need to be addressed and 4G’s potential needs to be fully tapped. Better awareness and marketing for smartphones will help. Improved connectivity would too, especially in suburban and rural areas. Fixed wireless offers could help to move the market along.

How will we know if this is working? What are we watching? CAPEX and new product offers. Operators have announced network investment plans and we’ve seen those support 4G expansion. As we move into a post-pandemic world, we need to see how these continue.

Yes, as much as network investments are important, they are meaningless without solid product offerings. Here, too, we’ve seen progress, particularly as new 4G launches spur competitive offerings. Think Hutchison introducing new product offerings across data, voice and other services targeting specific customer segments soon after moving into 4G, along with launching post-paid packages for consumers for the first time in 20 years.

5G in Sri Lanka may not seem sensible today, but continued execution on these fundamentals will set the stage for its success.

– Ankit Sawhney – research manager; Charu Paliwal – team lead, 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/2020/04/GSMAi_SriLanka_4G_connections.jpg

Telefonica introduced a new organisational structure [1] in late 2019 recognising that to compete meaningfully in targeted new growth areas would require a new modus operandi.

Equally, as a result of sustained competitive intensity, macroeconomic uncertainty and regulatory changes, particularly in Latin America where the group has ten operations (excluding Brazil) a change was needed. The new strategy is multipronged and includes the operational spin-off of its Hispanoamerica (in Hispam Telefonica includes all of its Latin American units excluding Brazil) assets as it decouples the traditional operating company model, as well as aiming for increased agility and efficiency as the operator creates two new enterprise units, Telefonica Tech and Telefonica Infra, acting autonomously.

Further, Telefonica seeks synergies between the units through a revamp to its corporate centre, as it eliminates operational duplications and centralises procurement.

This blog investigates why management autonomy in this multipronged strategy will enable Telefonica to achieve its goals of agility and efficiency, and can act as a possible template for other operators to emulate in future.

Telefonica re-prioritises markets: the why
While the company is operating in 14 markets globally, it is four markets (Spain, Germany, UK, Brazil) which contribute 80 per cent of its overall revenue, EBITDA and cash flow. Thus, the operator decided to focus investments in these four markets where the existing model remains sustainable (exempli gratia, in Brazil the operator already accelerated heavy fibre expansion to increase reach), while undertaking an operational spin-off of its other Latin American businesses (Hispam).

Across Latin America, investments into 4G are still ongoing and as adoption remains below 50 per cent, capacity issues need addressing for customer adoption to rise. This means efforts to improve 4G capacity and coverage in the region will begin to overlap with the onset of 5G investment as we expect the next-generation capex to pick up over the next two years. The impending investment outlay combined with competitive intensity, inflation and currency depreciation has negatively impacted revenue and put pressure on cash flow. Thus, a new management steps in with freedom to experiment.

Management autonomy in new divisions: Tech and Infra
Telefonica is in the early stages of executing on an operational structure that layers two new horizontal business units, Tech and Infrastructure, on top of its four primary country operations selling mobile, fixed and TV services. Equally to the new self-governance of Hispam, these two units will act autonomously and are tasked with growing revenue in discreet business areas. They will set a strategy for growth and leverage the in-country operations to sell and manage new business contracts.

The new unit Telefonica Tech brings together IoT and Big data, Cloud, and Cybersecurity, and while they previously were reported under Advanced Digital Services, now they are combined under one new management structure and act as one unit. With this move Telefonica eyes new market footprints, hopes to leverage existing relationships with customers in key sectors and, lastly, aims to become a key partner to enterprises in their digital transformation.
Telefonica monetises its infrastructure assets with the creation of Telefonica Infra. This division uses existing infrastructure vehicles to serve third-party operators and partners. Telxius, the existing tower company Telefonica created in 2016 and has a majority stake in, will play a key role within this division. The unit has already assumed ownership of multiple towers across the Hispam markets and carries a highly attractive EBITDA margin of 60 per cent and a year-on-year cash flow growth of 54 per cent. In addition to tower monetisation, the unit will focus on data centres, greenfield fibre projects and deployment of submarine cables to provide access to other operators and internet service providers.

[2]

What are the implications for the operator?

Efficiency and autonomy through decoupling business units. The new methods mean Telefonica can now measure growth by solutions and services in the same way platform and cloud players do. Decoupling markets and verticals should also improve operational efficiency in key growth areas. Operational and commercial efficiency will streamline the corporate centre based at its headquarters, optimising use of assets and customer experience.

Telefonica Tech and Infra – best shot at growth? The two new units are targeting a minimum €2 billion increase in annual incremental revenues by 2022. This is equivalent to 8 per cent of its current group total and would therefore be a very meaningful contribution.

Telefonica is not the first MNO to aim for growth outside the core business, and non-core services still only make up a small fraction of most telecom groups’ revenues. Those instances where contributions are higher, such as with AT&T and SoftBank, have typically come as a result of buying into new businesses rather than engineering them organically. Telefonica’s existing B2B sales amount to 26 per cent of group revenues, but these are mostly comprised of traditional connectivity services (leased lines, on-site hosting) into SMEs and corporates.

However, the increased management autonomy and decision-making power will allow the new pure-play B2B business units to develop and iterate on products faster than before. The fact its European operations sit in some of the most industrially advanced countries (Industrial IoT connections in Europe will grow at a 17 per cent annual rate between 2020 and 2025) and can upsell existing enterprise customers to new services using a re-engineered sales approach should stand it in good stead.

From Hispam revamp to the new B2B units, management autonomy is the underlying key to success for Telefonica. And will other players copycat the model? Peers with footprint in similar market conditions will be watching Telefonica and its new units’ success closely, and so will we.

– Armita Satari – analyst, Core Mobile 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/home-banner/telefonica-set-for-sweeping-restructure-spin-offs/
[2] https://www.mobileworldlive.com/wp-content/uploads/2020/03/GSMAi_IB_Telefonica_chart.png

Two months ago, it felt nearly profound to say we were living through unprecedented times as the enormity of the Covid-19 (coronavirus) pandemic became clearer. Today, it feels like a trite understatement.

Around the world, the first order of business has been to stop the spread of the novel coronavirus in an effort to support the health of national populations and healthcare systems. The strategy has included quarantines, stay at home orders and shutting down (most) economic activity to an extent that no sector of society or the economy will remain un-impacted.

The impact on mobile and telecoms businesses (in the near- and long-term) will be discussed and analysed for months, if not years to come. Personally, my favourite coverage includes the impact tracking done by Mobile World Live [1] along with the analyses my team has put together looking at diverse markets and topics, including:

5G Uptake and Adoption [2]
Mobile Network Resiliency [3]
Fixed and Pay TV Markets
Digital Consumer Markets
IoT and Enterprise Services

Supply and demand dynamics will, doubtless, conspire to hold back 5G adoption in the near-term. And, where an economic downturn impacts small businesses disproportionately, the impact on IoT and enterprise wireless could be profound. Long-term, however, the impacts are a broad set of unknowns. Will post-lockdown pent-up demand drive a wave of 5G adoption? Will several months of Netflix bingeing and online gaming drive greater usage in the long-term? Will working from home (and the associated increase in home broadband usage) become the new normal? Will the April Fools joke of Disney buying F1 become a reality as live sporting events struggle under the burden of social distancing? Or will social distancing give AR and VR the boost they need to be successful?

Support
One thing that is for certain? In the here and now, mobile operators are leveraging their networks, services, and businesses to support people and societies struggling against the pandemic. You see this in the news as operators (and regulators) race to put new spectrum assets to use, work to spin-up proximity tracking tools and promise to keep people connected.

As an analyst, I find these anecdotes compelling, but of limited value. By definition, anecdotes only tell part of the story. That’s why, when pulled into an effort to survey operators about their efforts, I jumped at the chance. Anecdotes are one thing. Getting input on the breadth of activities from a significant share of the world’s mobile operators? That’s something you can draw conclusions from (see chart, below, click to enlarge).

[4]

Of course, there is an upside to anecdotes. Selecting the anecdotes you highlight allows you to craft the story you want to tell, the surprising sort of story that grabs attention. Surveys, on the other hand, often confirm what we already know. Like the fact the primary efforts from operators revolve around educating the public, ramping capacity where needed, and ensuring connectivity via zero-rating or other service schemes. Not too surprising, right? But when the survey asks sentiment questions, those which aren’t reflected by what we see in the news and press releases? That’s when things get fun. And that’s why we asked which efforts operators expect to benefit them going forward.

This doesn’t mean the results are any more surprising.

Outlook
Expectations of long-term benefits from new data collaboration and analytics efforts are understandable as operators get pulled into proximity tracking efforts. Telemedicine, long before the promise of 5G remote surgery is realised, is a no-brainer during a global pandemic. And as network and service attacks spike, taking advantage of health concerns and increased network usage, anything operators can do to combat them should yield expertise and reputational benefits.

What’s more important here, however, is a reminder the Covid-19 pandemic will come to an end. Shops will re-open. People will go back to work. Societies will slowly go back to normal, whether or not an economic downturn proves lasting. And when this happens, the way we engage with communications service providers, and the way they engage with their customers, will not be the same.

Today, helping one another remain healthy and safe is of paramount importance. But a post-Covid world will provide opportunities for operators to execute on their strengths, if they can imagine what that world looks like and begin planning for it.

– 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/featured-content/home-banner/covid-19/
[2] https://data.gsmaintelligence.com/research/research/research-2020/evaluating-the-impact-of-covid-19-on-mobile
[3] https://data.gsmaintelligence.com/research/research/research-2020/covid-19-impact-testing-the-resiliency-of-mobile-networks
[4] https://www.mobileworldlive.com/wp-content/uploads/2020/04/GSMAi_Covid19_OperatorSurvey.png

The fight against the Covid-19 (coronavirus) pandemic could continue for years before a vaccine is widely available. This will clearly have a negative impact on global health and the global economy. But the good news is mobile technology, in the form of such things as contact tracing apps, can dampen the impact of the virus by reducing the number of people which need to remain in quarantine, leading to an effective allocation of public resources.

Epidemiologists have used contact tracing for decades to help identify people who may have been infected by diseases. Digital contact tracing apps can expedite this process, and can empower users to make decisions which positively impact their health, and the health of others.

High smartphone penetration and mobile broadband coverage provide the platform to develop contact tracing solutions.
The mobile industry has developed rapidly in recent years. Today mobile broadband networks cover more than 90 per cent of global population, with smartphones making up almost three quarters of total handsets, GSMA Intelligence figures show (see chart, below, click to enlarge).

The most severely affected countries in terms of Covid-19 cases, the USA; China; Italy; France; and the UK, all have relatively high smartphone penetration. This means smartphone solutions can be a vital tool in fighting the virus in these countries.

[1]

Current solutions for using mobile phones to track infections fall into two categories:

Centralised solutions based on GPS, mobile signals or other methods such as credit card records that collect the geographic movements of infected (or potentially infected) users.
Decentralised solutions using Bluetooth-based apps, where records of proximity to other users are stored in the users’ own mobile phones.

Centralised solutions have mainly been adopted in countries in East Asia. This option is, however, generally less accepted in countries with greater data privacy concerns. We are now seeing the development of decentralised solutions, notably via Apple and Google, which are jointly working on an API. This will allow public health agencies to hire developers to write their own apps which can securely collect anonymised information about user proximity. As well as helping to address concerns on data privacy, a Bluetooth solution requires less battery than GPS or mobile signals.

How effective is Bluetooth-based contact tracing?
A team of researchers at Oxford University in the UK has demonstrated how a contact tracing app could work. They built an epidemiological model based on the UK’s demographic structure and smartphone usage. Their simulation suggests that for the app to be effective in controlling the spread of the virus when the country emerges from lockdown, approximately 60 per cent of the country’s population would need to use it and follow-up its recommendations to self-isolate if necessary. The report states, one infection could be averted for every one-to-two users.

Clearly, the more people who use the app, the greater the impact will be in terms of suppressing the virus, but it will be a challenge to introduce it to the masses. For example, Singapore’s TraceTogether app was launched a month ago, but is only being used by around 1 million of the country’s 5.7 million population. Singaporeans were seemingly reluctant to use the initial version of the app (since rectified) which had to be used in the foreground for the device to work, which prevented the use of other apps and drained the battery.

It’s also likely some Singaporeans did not feel the urgency to install the app due to the country having relatively light lockdown regulations compared to European markets for example. In these countries the desire to end lockdown may be greater, which could motivate more smartphone users to install such an app. However, at the same time, individual concerns about data privacy are more prominent and could limit the adoption of digital contact tracing. Some people may fear hackers while others worry about surveillance and misuse of data by the government.

There is evidence, however, Europeans may be prepared to compromise more on privacy given the potential benefits of a contact tracing app in fighting Covid-19.

Oxford University worked with a team of behavioural economists, who surveyed 6,000 potential app users in the UK, France, Germany, Italy and the USA. The proportion of respondents that said they would install the app fell in a range of 67.5 per cent to 85.5 per cent. Another survey conducted by The Guardian and Essential Research showed around half of people in Australia believed the government’s Covidsafe contact tracing app would limit the spread of the virus and also speed the removal of physical distancing restrictions.

Contact tracing apps are based on a natural model of trace and self-isolation, but effectiveness can be improved if the data is shared further
The simple model is based on a scenario which identifies those that have been in contact with infected people and assumes they will self-isolate, but there is still space to accelerate the process and further reduce the cost to society. This, of course, depends on the availability of public resources and how much data individuals are willing to share with authorities.

If all contacted people are tested then only infected people need to stay at home, which will lessen the impact on economic activity. This, however, means the healthcare system must be able to offer enough tests and they must be able to deliver those tests in time. Both of these objectives will be much easier to achieve if the health system has access to the data generated by the app.

Beyond testing, there are plenty of other ways a healthcare system could leverage the data for good. Resources like hospital beds and ventilators, for example, could be dynamically configured based on the data collected, without waiting for self-reporting. We need these tools at the right place and time to save lives, but not so many that we have wasted resources on excess capacity for a once-in-a-decade epidemic.

What happens in countries with lower smartphone penetration? Tracking based on mobile signals and sending warnings via broadcast text messages can still help, although those approaches also raise privacy concerns (to the extent that any Covid-19 solution involves data from mobile network operators, the GSMA has developed guidelines [2] to help mobile operators support governments and health authorities while maintaining subscriber privacy and trust). These solutions could also present issues with battery life, and the data collected from basic and feature phones is likely to be less granular than that of smartphones and possibly less effective.

There is no universal solution which can apply to all markets. Each country will actually apply a basket of solutions to fight against coronavirus. As the creator of the TraceTogether app said in a recent blog post, “automated contact tracing is not a coronavirus panacea”. We need technology, but it cannot win on its own.

– Gu Zhang – senior analyst, Mobile Operators and Networks, 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/2020/04/GSMAi_smartphone_share.png
[2] https://www.gsma.com/publicpolicy/resources/covid-19-privacy-guidelines

The collapse of OneWeb has sent shockwaves through satellite communications. Once a bright star in the sector with multi-billion dollar backing, the refusal of SoftBank to pour more money into the start-up led to OneWeb filing for Chapter 11 bankruptcy relief [1] at the end of March. The timing of the announcement was particularly brutal, just hours before OneWeb launched more than 30 micro satellites into orbit from Kazakhstan, part of a planned constellation of 720 satellites which is now in serious doubt.

The demise of OneWeb has been attributed to both Covid-19 (coronavirus) and SoftBank tightening its investment belt. The Japanese giant has projected $16.7 billion in losses for 2019 for its Vision Fund, with OneWeb identified as one of its most notable losing investments not included in that fund. But industry sources suggest the satellite start-up has been struggling for years to adapt its business model as the consumer LEO proposition became increasingly unrealistic. And SoftBank has had enough. Covid-19 might have just been the accelerator of a foretold death.

The advantage of LEO satellites over their high-orbit cousins
Low earth orbit (LEO) satellites have been hailed as the next big thing in non-terrestrial communications, with the potential to boost data backhaul for operators, bring broadband connectivity to underserved regions, and further enable cloud and edge-based services. The key advantage of LEO satellites over legacy geostationary earth orbit (GEO) satellite services is the much lower altitude. This not only slashes the cost of launching and maintaining the constellation, but also improves downlink speeds and latency due to a much-reduced data round trip.

However, one of the key drawbacks of the LEO proposition is the expense on the ground. In order to maintain a strong and constant data link, LEO satellite antennas need to be steerable: simply put, the dish has to move to track the satellite. This means the antenna are considerably more complex and expensive than comparable terrestrial wireless receivers or the basic passive aerial on a GEO satellite phone handset. Clearly there is an option to simply throw more birds into the air to reduce the need for steering, but aside from the huge additional cost this raises other issues in terms of precisely planning the satellite trajectories and avoiding space debris in our already-crowded skies. So far, the focus has been on the space segment of the LEO constellation solutions, with most of the investment going onto the design, production and launch of the satellites, without much concentration on the end-user device segment (the stuff on the ground).

The cost of these antennas varies, but is likely be higher than the comparable cost of a fibre (FTTP) connection for more than 99 per cent of homes and small businesses. SpaceX reportedly said the cost of an individual satellite terminal was around $1,000 and that mass-market production could bring the cost down to $300. It’s likely to be many years before we’re even close to developing LEO antennas cheap enough to support a consumer proposition and, by that time, other solutions such as 3G and 4G are likely to have reached all but the most remote areas of the planet.

Despite the demise of OneWeb, the LEO proposition is still flying
This is not to say LEO is dead in the sky. Other operators such as Canadian communication satellite veterans Telesat have made a firm decision to target the wholesale and enterprise sector, even designing satellites with built-in flexibility via steerable antenna to target receivers with the highest data demand. There is a major market opportunity here in offering additional backhaul to existing operators as well as data-hungry industry verticals. And there will always be the sectors that need reliable connectivity in unserved regions such as aviation; maritime; oil and gas; and defence.

[2]The renaissance of satellite has been driven by LEO constellations, allowing operators to throw hundreds of satellites into the sky at a lower cost. But whether satellite can ever offer a realistic consumer service proposition depends on cutting costs in three areas: networks, service and devices. The cost of putting satellites in the air isn’t likely to fall much (unless there’s a run on rocket fuel), while the amount the operators can charge the end-user is constrained by the usual RoI and competition from other technologies. So, until devices, in this case the customer premise equipment (CPE), come down in price, LEO is unlikely to be anything more than a very niche consumer proposition.

What’s next for OneWeb?
It doesn’t look like buyers are queuing up to acquire the company’s constellation assets, especially given the hardware has apparently been designed with a consumer rather than an enterprise focus. Each LEO satellite provider has designed their satellites with specific requirements which match the shared spectrum they’ve got a licence for and the planned business model. So the brutal truth is the dozens of satellites already launched look set to become more space junk, until their orbits decay sufficiently that they succumb to gravity and burn up on re-entry.

The asset OneWeb is flaunting as the most sellable one, its licensed spectrum, also has its limitations OneWeb’s spectrum is on the shared Ku-band, and cannot be repurposed easily. Not all OneWeb competitors have Ku-band spectrum. Secondly, being shared spectrum, any changes in the satellites to use the spectrum would require extensive testing to make sure there is no interference with the other constellations using the same band.

Having around 70 satellites in operation [3], OneWeb passed the first of the new ITU milestones approved in 2019. As per the new ITU requirements for non-geostationary constellations, spectrum licensees need to deploy 10 per cent of their constellation within two years of the licence being granted to secure priority status against interference from other constellation hopefuls. But whoever acquires the spectrum would have to fulfil the other ITU requirements: launch 50 per cent of satellites within five years and 100 per cent within seven. Otherwise the licence is revoked or limited to the satellites launched. An alternative would be a pre-emptive strategy from another LEO constellation operator to block other entrants. Considering how expensive, on top of the limitations imposed by ITU, this unlikely route would require deep pockets for anyone choosing it.

Will other players in the LEO constellation race be affected?
The demise of OneWeb could also cast shadows on the viability of the other three main LEO satellite constellation projects, namely SpaceX, Amazon’s Project Kuiper, and Telesat. However, there are some big differences between OneWeb and the other three. They all have recurring revenues from related or, in the case of Amazon, unrelated businesses. Of the three, Telesat’s main business is providing services to the communications and broadcasting market segments with GEO satellites, which positions it well with an existing customer base for its enterprise and backhaul transport plans for its LEO constellation. Meanwhile SpaceX and Amazon, being vertically integrated, are better positioned than OneWeb and have clear business models outlined. Amazon, with its vast resources, might be even willing to take a stab at an end user terminal, if anything as a reference design, as it has done in other consumer ventures. Ultimately the downfall of OneWeb clears a market which was potentially becoming overcrowded from the start.

– Peter Boyland – lead analyst, Ecosystem Research; and Fernando Elizalde – 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/featured-content/home-banner/oneweb-seeks-safe-harbour-as-covid-19-halts-finance/
[2] https://www.mobileworldlive.com/wp-content/uploads/2018/09/OneWeb_satellite_constellation.png
[3] https://www.mobileworldlive.com/featured-content/top-three/oneweb-satellite-network-begins-to-take-shape/

In a matter of weeks the world has changed dramatically. Governments have mandated closures of educational institutions, leisure venues and offices to control a novel virus, save lives and protect healthcare systems. Millions of people have had to adapt their social and professional interactions, leaning heavily on telecoms networks to contact family, friends and colleagues. Overall internet traffic is up, peak data hours have shifted, voice call volumes have rebounded and certain videoconferencing solutions have become almost ubiquitous.

In a recent blog [1], we discussed how mobile operators are leveraging their networks and businesses to support customers and societies struggling during the pandemic. Laudable efforts include expanding voice and data allowances (for example, Telefonica and Veon), and providing free access to education and/or healthcare services (Airtel Uganda and Dialog Sri Lanka).

Telecoms regulators, too, have understood the importance of fast and reliable broadband, and acted accordingly. Several authorities, including those in the Republic of Ireland and South Africa, have granted additional (temporary) spectrum to help operators boost capacity, while Kenya fast-tracked approval of Alphabet’s Loon project. This will soon allow for the commercial deployment of internet-enabled balloons in partnership with Telkom Kenya, delivering 4G coverage to remote, previously unserved communities.

BEREC and various regulators are monitoring changes to online behaviours and network load, and Ofcom stated it is taking a “pragmatic” approach to balancing the need to guarantee citizens remain connected with the enforcement of consumer protection rules.

Moreover, governments are taking unprecedented fiscal and economic measures to support the telecoms industry and ensure affordability does not become a (greater) barrier for consumers. Commendable actions have been designed to reduce sector-specific taxes, stimulate investment and enable the use of mobile money services (see chart, below, click to enlarge).

[2]

Nevertheless, the crisis has exposed a degree of vulnerability. The EU moved quickly to request streaming platforms including Netflix and YouTube reduce their video quality to prevent network congestion. Large, densely populated cities remain Covid-19 (coronavirus) hotspots, but even a broadband penetration rate of more than 90 per cent can still leave tens of thousands of individuals without a decent and dependable internet service.

In rural areas, where the harm from poor connectivity can be more acute, the corresponding percentage figure is typically far lower.

Policy levers post-coronavirus: what should come next?
During the pandemic, telecoms infrastructure has been crucial to enabling the continued operation of critical government functions and provision of vital information to the public. Policymakers have been agile, but must redouble support for the industry once normality resumes, particularly given the supply chain disruptions and financial implications of retail store closures and plunging roaming revenue. This does not mean discarding well-established regulatory principles, but there is impetus for a renewed (symbiotic) relationship to emerge, in which pragmatism carries through.

Use the telecoms sector for GDP growth
Digitisation has been a mitigating factor in how society has handled the impacts of the outbreak, however, with several countries already entering recession, operators must be emboldened to invest in strengthening networks as the pandemic retreats. For instance, the Chinese government is urging mobile operators to ramp 5G investment programmes, considering that next-generation networks can be a pivotal growth engine to catalyse innovation across verticals, including autonomous vehicles. In addition, the Chilean regulator updated antenna regulations to drive 5G infrastructure deployment by reducing permit approval times. Policymakers should also explore how digital technologies could support efforts to effect a green economic recovery by underpinning seamless remote working and learning, powering low-carbon smart cities and helping industries become more productive and energy efficient.

Expedite assignments of 5G spectrum
While several countries have postponed 5G spectrum auctions, New Zealand announced direct, fixed price assignments in the 3.5GHz band. The allocation is for an interim period until November 2022, but it means all three main operators now have 60MHz of C-band spectrum and can therefore accelerate 5G deployments and the commercialisation of new use cases. Encouragingly, Finland is maintaining its 5G auction schedule, with the process due to occur in June. Other European markets should use this as an example and finalise dates and rules for awards to provide certainty and keep pace with pioneers like South Korea and the US. Further decisions on C-band spectrum in New Zealand and elsewhere need to recognise the capex commitments operators are making now for 5G rollouts.

Support operators targeting rural areas
The crisis has triggered a greater disaggregation of the labour force and seen a larger share of economic activity conducted from a study or dining room. With remote working set to be the norm for office workers for some time, policymakers must maintain focus on extending connectivity beyond urban centres. Networks have weathered the storm pretty well, but incentivising private sector investment will be paramount. Policymakers must embrace ambitious strategies to expand high-speed broadband services to the underserved by addressing bottlenecks to capex and rapidly disbursing public funding without encroaching on state aid rules. These challenges may bolster the case for network sharing, such the UK’s Shared Rural Network, to create synergies and promote mobile broadband investment in the most rural geographies, while moderating competition concerns.

Focus on unserved communities
Connectivity is a foundational aspect of modern life, with an importance that stretches beyond entertainment or social media. Policymakers should remain conscious for the scope of this crisis to exacerbate the inequalities between those who are connected and those who are not. Millions of people either live beyond the reach of mobile broadband networks (3G or higher) or they are covered but do not have an active connection. Consequently, these individuals are facing Covid-19 without the information channels and communications tools that many in developed markets have only just come to appreciate. Addressing coverage and usage gaps by guaranteeing service availability must be at the top of the regulatory agenda. Hastening reductions in the digital divide will help markets rebuild and new businesses thrive, supporting future economic repair and value creation.

Outlook
Though restaurants, shops and schools are beginning to reopen, the virus will leave its mark at all levels of society.

As countries look forward, policymakers have the opportunity to harness the potential of telecoms networks and new technologies such as 5G, IoT and AI to drive economic regeneration and resilience. Regulators, while making sure markets are competitive, must be pragmatic in their mindset and prioritise collaboration with operators to break down stubborn barriers to investment. High-quality internet access for all will be central to achieving inclusive economies, inspiring innovation and ensuring governments have the ability to tackle future crises more quickly and effectively.

– James Robinson – lead 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/intelligence-brief-how-are-operators-supporting-covid-19-relief-efforts/
[2] https://www.mobileworldlive.com/wp-content/uploads/2020/05/GSMAi_Regulator_Covid19_responses.jpg

At the start of the year I explored the outlook for telecoms valuations, following on from what was a mixed year in 2019 for share price performance in the sector. The simple conclusion was near-term sector valuations would be driven more by local market considerations, whether political, regulatory or competitive, rather than any overriding themes. Longer term, a new sector growth story was required for a sustained uplift in valuations and share prices.

The current Covid-19 (coronavirus) pandemic and the material impact on both the global economic outlook and the living and working arrangements for a large proportion of the world mark an appropriate time to revisit this outlook. While telecoms has been front and centre in the Covid-19 discussion in terms of network resilience and the shift to home working, the medium-term outlook, once some degree of normality returns, remains uncertain.

A particular challenge at times of global economic crises is that policy response can drive overall stock market and relative sector performance, with company fundamentals of less relevance. Recent moves by many governments and central banks include payments to workers and large loans to businesses, alongside further interest rate cuts, injecting up to $13 trillion into global financial markets, based on Morgan Stanley figures.

Near-term impact: lessons from Q1
As much of the world is still in lockdown, the initial focus of the Covid-19 impact has been on how operators would maintain their networks and meet surging traffic volumes. Mobile operators have responded by offering free data and services to their users, while also benefitting in some cases from access to additional spectrum resources to manage increased traffic volumes.

As companies and individuals begin to adjust to new realities, and indeed as some countries beginning easing lockdowns, the key question shifts to the impact on financial performance. China was the first country hit by Covid-19 and is one of the first now emerging beyond lockdowns, giving some good evidence of how operators will fare as the situation improves.

First quarter results from the Chinese operators were resilient, with modest service revenue growth (1 per cent) an improvement over the prior year and with March already showing a recovery in new subscriber numbers, driven by 5G adoption. Consensus financial forecasts for the rest of the year are largely unchanged, reflecting optimism of the ongoing uptick in 5G demand. Share prices of the three operators have recovered strongly since market lows in mid-March, even if in relative terms they have underperformed local market indices.

There has been a similar pattern across Asia, with resilient results and operators actually outperforming their local indices, both into the downturn and indeed in the recent stock market recovery period. The situation in the US and Europe has been more mixed, with European operators performing broadly in line with the market since mid-February while delivering overall solid results.

Research by Credit Suisse underlines the general resilience of the telecom sector to date (see chart, below, click to enlarge). The company looked at 102 telecom companies across the world, finding only 10 per cent of them had pulled (id est, withdrawn) guidance for the current year, while only 7 per cent had cut shareholder returns. A number were continuing with, or in some cases even increasing, share repurchase plans.

[1]

How may Covid-19 shape telecoms going forward?
Beyond near-term financial results, Covid-19 may have some longer-lasting impacts on the telecom sector:

Regulation: Covid-19 demonstrated the criticality of connectivity, as well as the ongoing challenge of coverage and service gaps in rural areas. The question then is whether this could lead to a rethink on regulation to encourage investment. For example, with Europe as a whole still a laggard on 5G in global terms, it is not impossible to imagine a loosening of the regulatory shackles. Whether this goes as far as a new wave of consolidation remains to be seen, but new more flexible deployment models focused on maximising coverage and speeds will likely need more flexible policies to support them. Regulators in other regions may be encouraged to address excessive sector-specific taxes and high spectrum charges, which can also limit investments.
Usage and ARPU: networks are likely to see a sustained uplift in usage as the use of digital services in both work and consumer settings increases, with unlimited data plans becoming more attractive. This may be offset for some time by rising unemployment and the likely impact of the global slowdown on enterprise, especially SMEs. However, the net effect leaves sector revenues looking resilient.
Investment levels: 2020 will likely see some reduction in investment plans due to reduced discretionary spend and some practical challenges to installations and supply chains due to the pandemic. However, these effects should be short lived as the enhanced focus on connectivity and consumer appetite for higher speeds drive investment. Operators though will continue to focus on efficiencies, with network sharing and operational digitisation key.
Inflation: longer term, if the wall of money generated by the significant fiscal and monetary stimuli seen in many counties leads to a sustained pick up inflation rates, then operators could well benefit from a degree of pricing power. CPI-linked price increases are already a feature in a number of European markets, and could see more widespread adoption in an inflationary environment
Consumer sentiment: A positive for the sector is a likely improvement in consumer sentiment, having long viewed telecom companies with a certain disdain. This reflects factors such as bill shock, coverage issues and perceived poor customer service. However, the centrality of connectivity to life in lockdown and measures aimed at helping users should improve consumer attitudes. The Orange CEO recently commented: “Orange France has seen a sharp increase in NPS scores in recent weeks, its highest ever”.

Where does this leave sector valuations: opportunities on the horizon
So, has the conclusion on the sector outlook changed since the start of the year, even in the midst of a pandemic? In the short term probably not: telecoms remains relatively defensive and the outlook for revenues and earnings is robust. The speed uplifts of 5G, especially as network coverage expands and device availability improves, could boost consumer appetite for the new service.

In the medium term, as the world fully emerges from lockdowns, the backdrop of new ways of working and potential shifts in the dominant globalisation model does suggest a more interesting opportunity. Shorter supply chains and the re-shoring of manufacturing, as well as general efforts to ensure more overall resilience across industries, will lead to an acceleration in the rate of automation in both manufacturing and services.

In this scenario, 5G could gain added relevance, promising a range of new services to consumers and enterprises just as the demand for new types of interactive consumer entertainment, remote medical consultations and industrial automation (to name just a few) is growing. Leveraging their role as trusted network providers, the scope to integrate new services and gain a greater share of enterprise revenues is clear.

The challenge as ever will be developing new business models and services to meet this opportunity. The good news is that the search for 5G use cases and returns has already prompted operators into action, and customers will prove more receptive to new ideas as they look to adapt to the realities of the post-COVID world.

– 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.

[1] https://www.mobileworldlive.com/wp-content/uploads/2020/05/CreditSuisse_earnings_guidance_trackedbyindustry_gsmai.png

Over the past few years, we’ve been ramping our coverage of enterprise services as a core component of the GSMA Intelligence content agenda. I probably don’t need to tell you why.

As a part of that focus, we kicked off a series of reports earlier this year to look at enterprise requirements in a 5G world. We started by looking at what enterprises will need from 5G services. But we then turned to a less-discussed topic, what operators will need to tap these enterprise 5G use cases [1]. As you’d expect, we talked to a bunch of executives at operators around the world to test our theories and build an understanding of operator strategies. And, as you’d expect, the result was confirmation of some commonly-held expectations alongside the discovery of clearly divergent market views.

The stuff we know
Last week, our good friends at Mobile World Live wrote up [2] the latest instalment of our research on this topic. The top-line message, that standalone (SA) 5G is key to delivering on enterprise requirements, falls into the category of confirming existing beliefs. Whether it’s via slicing, massive IoT connectivity, or low-latency communications, the reality is that many enterprise-critical 5G capabilities will require SA. Combined with an interest in tapping digital transformation demands, this is why we see more than 70 per cent of operators highlight plans for SA deployment [3] within the next three years.

And that “interest in tapping digital transformation demands?” File that, as well, under confirmed expectations. Every operator we talked with cited B2B services as key to their 5G monetisation plans, some arguing there is no 5G business case without the enterprise.

Neither point might seem particularly insightful. Yet, both are important reminders: SA and a push on enterprise services will define operator 5G strategies for years to come. They will set the context for future service and network innovations. Ultimately, however, the real question we set out to answer was less about stuff we know and more about stuff we don’t. Specifically, what operators will need to do in addition to launching SA if they want to leverage 5G into B2B success.

The stuff we don’t know
It’s unfair to suggest that we don’t know what operators need to do in pursuit of B2B revenues beyond simply deploying SA.

Those who plan to target vertical industries will need ramp their vertical-specific profile, integration assets, and go-to-market capabilities. Those without a vertical market focus will need to loudly message the broader value of 5G to enterprises, while rolling out new services attractive to enterprises of all shapes and sizes, for example video surveillance, AR/VR-based training, and asset monitoring. And, of course, new network capabilities like edge networking and slicing will follow.

But, if SA is about helping operators meet specific enterprise service requirements, it will have implications for the way in which services are consumed. After all, any enterprise paying a premium for 5G based on the promise of service performance guarantees will want to know the performance they are paying for has actually been delivered. A key question around SA monetisation, then, is whether operators are ready to provide this type of performance visibility.

Are operators ready?
As with so many things in life, the answer to whether or not operators are ready to prove they’re meeting promised 5G service level agreements (SLAs) is an unsatisfying maybe.

On the one hand, operators have been successfully selling into the enterprise for years and SLAs have played a part in those sales. For the most part, those SLAs haven’t been particularly granular, based on metrics like coverage and availability. This is a far cry from the performance characteristics and metrics which are supposed to make 5G an enterprise game-changer. The suggestion, then, is today’s SLAs will need to evolve.

Here, the good news is that some operators clearly understand this: about half the operators we talked with noted they would need to be more granular with 5G-based SLAs than they have been in the past, exposing metrics like latency and bandwidth on a real-time basis, potentially via direct integration into enterprise business systems. Unfortunately, this means the other half doesn’t see any real reason to change the way they provide performance visibility to their enterprise customers in a 5G era.

For operators who plan to treat enterprise 5G at a high level, targeting services with less stringent performance demands, business as usual may suffice. But those hoping to execute on all the performance and digital transformation promises of 5G would do well to heed what one operator told us: “if you plan to charge for SLAs, your customers will want to know that they got what they paid for”.

– 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://data.gsmaintelligence.com/research/research/research-2020/service-performance-visibility-operator-thinking-on-slas-in-a-5g-world
[2] https://www.mobileworldlive.com/featured-content/top-three/gsmai-flags-enterprise-sa-5g-opportunity/
[3] https://data.gsmaintelligence.com/research/research/research-2019/network-transformation-2020