In a recent GSMA Intelligence Research Brief, we examined the lessons from GE’s Predix spin off and Samsung ARTIK’s closure. Both announcements underlined an overlooked challenge in the IoT market: scale alone is not a precursor for success.

Driving IoT adoption is as much about customer education as it is technology. We highlighted GE’s peers such as Siemens, Bosch, or PTC for having expanded their portfolio capabilities through closer cloud integration as demanded by their enterprise customers. Cloud infrastructure, while a key component of any IoT solution, is still only a technology solution. AWS, Azure or IBM may seem ubiquitous in any IoT discussion, but customer education is equally important.

We fully expect a newly liberated GE Predix to stir market demand for analytics and applications, especially in their industrial markets, because customers need to learn how to turn accumulated data into insights. Industrial platform vendors such as GE, Bosch, Siemens and PTC have the granular understanding of customer requirements that can drive the necessary education.

The ubiquity of cloud vendors in any digitalisation effort
2018 was an important milestone year for IoT with new market entrants, M&A and pragmatic partnerships with cloud vendors. For example:

Siemens and Bosch signed partnership deals with Chinese cloud vendors Alibaba and Baidu, respectively, to capture future manufacturing 4.0 opportunities in the country.
PTC, also a direct competitor to GE Predix, was integrated with Microsoft Azure, to directly address customers’ demand for rapid integration with a cloud vendor.
Mid-sized platform vendors such as Wind River also integrated with cloud vendors to fulfil enterprise demands.

If we consider 5G for enterprises to be an important turning point for telecoms companies in terms of network architecture and new service delivery modes, then cloud will become even more entrenched in this fully autonomous future. The question is how should the broader ecosystem co-exist with cloud vendors?

Bring customers to the table
An important lesson from the announcements by GE and Samsung is that customer education and technology are equally important. The broader ecosystem compete with cloud vendors by being more effective in bring customers to the table:

Help customer identify data centric use cases: Given the massive volumes of connections and revenue projections, it is tempting for the IoT ecosystem to capture as many customers as quickly as possible and enterprises to deploy IoT without fully understanding what problems technology would be solving. IoT has had more than ten years to move from M2M, but not every enterprise customer is aware of the IoT data repository in-house and how they might utilise derived analytics. Those IoT vendors with capabilities to identify business pain points offer the unique customer insights that cloud vendors would not have.
Help customers connect the previously unconnected: 2019 will be an important year for LPWA. Unlicensed LPWA in LoRa and Sigfox have enjoyed an early-mover advantage while mobile IoT (NB-IoT and LTE-M) become standardised on 3GPP. But, 2019 will see increased competition as mobile operators begin to connect new devices to their mobile IoT networks. At the last count in December 2018, the number of mobile operators deploying standardised LPWA such as NB-IoT and LTE-M increased from 30 in 20 countries in 2017 to 83 in 40 countries. Whatever the access technology, these customers require IoT solutions bundled with analytics, platforms, and cloud integration.
Be smarter about collaboration
In our research brief, we identified that the broader IoT ecosystem needs to be smarter about collaboration. This means a departure from the traditional sell-with or sell-through agreement for distribution channels. Smarter collaborations also means unbundling traditional ways of revenue share.

The unusual partnership between Sprint and Ericsson bears close monitoring. Announced in September 2018, Sprint IoT is building a dedicated IoT network with Ericsson and bills revenue not from network traffic, but through APIs that encourage the IoT community to build applications on the network. The desired outcome of smarter collaboration is to drive IoT adoption by developing applications that matter to customers.

– Yiru Zhong – lead analyst for IoT and Enterprise, GSMAi

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.

There is a strong case to be made that artificial intelligence (AI) is now the most central topic in technology. While the computer science that underpins AI has been in development since the 1950s, the rate of innovation has gone through multiple step changes in the last ten years.

The technological reasons for this are well understood: the advent of neural networks; an increase in semiconductor processing power; and a strategic shift away from AI systems that rely on parameter-driven algorithms towards self-reinforced and multiplicative learning, machines that get smarter the more data they are fed and scenarios they negotiate.

Development has been open and collaborative. The benefits of AI in process efficiency and, potentially, accuracy are clear. For this reason, R&D activity, pilots and commercial deployments stretch to virtually every sector of the economy from healthcare to automotive manufacturing to telecom networks. A recent Vodafone survey indicated a third of enterprises already use AI for business automation, with a further third planning to do so. Take-up on this scale, at this rate, could put AI on a level with prior epochal shifts of electricity, the combustion engine and personal computing.

Two sides to each coin
Whether that actually happens depends on how the technology is managed. I spend a lot of time talking with major telecom and technology companies. While it’s clear AI is a major point of interest to nearly everyone, the discussion is still pitched in generalities. Paraphrasing:

AI is the Fourth Industrial Revolution
We know AI is big and we want to do something with it, but we don’t know what
We’re moving to be an AI-first company
How can we win with AI?
We’re a far more efficient company because of AI
The ebullient tone is to be welcomed.

Far less talked about, however, are the ethical and legal implications that arise from trading off control for efficiency. It’s fairly clear that cognitive dissonance is at work – the benefits blind us to the risks.

How do you answer these?

A crucial faultline is the balance between programmed and interpretive bias. That is to say, how much are machines programmed to act based on the way humans want them to act (reflecting our value sets) versus their own learned ‘judgement’? This has a direct bearing on accountability.

To make this point, let’s pose a series of questions that draw on how AI is being used in different industries.

Autonomous vehicles
If a self-driving car faces the inevitability of a crash, how does it decide what or who to hit? If that same self-driving car is deemed to be at fault, who bears responsibility? The owner? The car manufacturer? A third-party AI developer (if the technology was outsourced)?

Criminal justice
If an algorithm is tasked with predicting the likelihood of reoffending among incarcerated individuals, what parameters should it use? If that same algorithm is found to have a predictive accuracy no better than a coin flip, who should bear responsibility for its use?

Social media
If Facebook develops an algorithm to screen fake news from its platform, what parameters should it use? If content subsequently served to people’s news feeds is deemed intentionally misleading or fabricated, does responsibility lie with the publisher or Facebook?

I chose these for a number of reasons. One, these are real examples rather than hypothetical musings. While they emanate from specific companies, the implications extend to any firm seeking to deploy AI. Second, they illustrate the difficulty in extracting sociological bias from algorithms designed to mimic human judgement. Third, they underline the fact that AI is advancing faster than regulations and laws can adapt, putting debate into the esoteric realms of moral philosophy. Modern legal systems are typically based on the accountability of specific individuals or entities (such as a company or government). But what happens when that individual is substituted for an inanimate machine?

No one really knows.

A question of trust
Putting aside the significant legal ramifications, there is an emerging story of the potential impact on trust. The rise of AI comes at a time when consumer trust in companies, democratic institutions and government is falling across the board. Combined with the ubiquity of social media and rising share of millennials in the overall population, the power of consumers has reached unprecedented levels.

There is an oft-made point that Google, Facebook and Amazon have an in-built advantage as AI takes hold because of the vast troves of consumer data they control. I would debunk this on two levels. First, AI is a horizontal science that can, and will, be used by everyone. The algorithm that benefits Facebook has no bearing on an algorithm that helps British Airways.

Second, the liability side of the data equation has crystallised in recent years with the Cambridge Analytica scandal and GDPR. This is reflected in what you might call the technology paradox: while people still trust the benevolence of the tech industry, far less faith is placed in its most famous children (see chart, below, click to enlarge).

[1]In an AI world, trust and the broader concept of social capital will move from CSR to boardroom priority, and potentially even a metric reported to investors.

This point is of heightened importance for telecom and tech companies given their central role in providing the infrastructure for a data-driven economy. Perhaps it is not surprising, then, that Google, Telefonica and Vodafone are among a vanguard seeking to proactively lay down a set of guiding principles for AI rooted in the values of transparency, fairness and human advancement. The open question, given the ethical questions posed above, is how actions will be tracked and, if necessary, corrected. Big questions, no easy answers.

– 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/wp-content/uploads/2019/01/Jan-31-GSMA-AI-ethics-blog-Jan19-v2.docx-Chart.png

Depending on your perspective, CES either feels like it took place eons ago or it’s fresh in your memory. Personally, it seems pretty recent. I’m still seeing reviews of the show in the media. I haven’t finished logging all of my CES meetings in Salesforce. And, we’ve got an extensive, survey-based report coming up that, while not informed by CES, bears witness to a lot of what we saw there.

So, what’s the report about? Drones? Autonomous transport? Robots? The future of self-cleaning cat toilets? Nope, none of the above. It’s about Edge computing. That’s right, call it what you will, Edge cloud; Distributed Compute; Distributed Edge Cloud, there was plenty of Edge-related stuff going on in Las Vegas earlier this month. It might not always have been positioned as such, but it was there if you were looking.

If you’re not familiar with the Distributed Edge Cloud concept, it’s fairly straightforward and very powerful. At its simplest, it’s about siting compute and applications (including network functions) closer to the user. Doing so positions it as a way to deliver low latency communications where a specific use case requires them. And where edge nodes are able to host workloads from various players, the concept opens up opportunities to expose applications in the way public cloud players do, all while lowering backhaul burdens. Of course, it’s also positioned as a space where operators and public cloud players will battle to deliver value to the enterprise.

So, what did we learn in Vegas?

The Edge comes in many shapes and sizes
If you compare U2’s lead guitarist (The Edge) circa the release of albums The Joshua Tree, Achtung Baby and Songs of Experience, you’ll see he’s changed over the years, but we always know who he is.

The same can’t be said for Distributed Edge Cloud. Talking to people (operators and vendors) for our report, it was clear that everyone had a different definition of where the edge of the network was. Within an operator’s network. In the enterprise. In a user device. This definitional tension is about more than just semantics: it sets out issues of ownership and monetisation (in other words, who will benefit). It was also front and centre at CES with lots of different vendors positioning themselves as edge players, whether than means delivering home gateways, IoT gateways or high-end phones.

My favourite: an instantiation of Amazon’s Greengrass (extending AWS to edge devices) on a robot, putting the “mobile” into mobile edge computing.

It’s not just about nodes
Given its presence in smartphones, IoT and computing devices of all sorts, Arm was omnipresent at CES. But, rather than connect around something sexy like drones, wearables or artificial intelligence (AI), I took time to catch up with it about Fog Computing. While sometimes used interchangeably with Edge Computing, the two are not the same.

As former OpenFog Consortium chairman Helder Antunes put it: “Fog computing is an end-to-end horizontal architecture that distributes computing, storage, control, and networking functions closer to users along the cloud-to-thing continuum.”

Key here is the concept of an end-to-end “architecture.” We can quibble over the differences between Edge and Fog, but there’s an important reminder here that placing compute closer to users involves more than just nodes. It requires sites for those nodes, applications to run on them and management systems to get those applications deployed. Again, this is more than just semantics: different participants in the edge ecosystem will deliver different components. Where our study, for example, saw operators deploying the majority of nodes, it suggested webscale companies as deploying the majority of workloads.

It’s not just about enterprise
Part of the massive buzz around edge computing is the potential it holds for helping operators (and others) enable the digital enterprise: nearly 45 per cent of the operators we surveyed saw the enterprise sector as generating the most value from distributed edge clouds. CES, however, highlighted a clear role for supporting consumers. To be fair, commonly cited use cases like AR/VR, connected car, and mobile gaming all imply a consumer component. The same, however, holds for home IoT gateways, which do more than facilitate sensor connectivity. None of this is a revelation, but with a tight focus on the enterprise (and new operator revenues), it’s important to recall the consumer value proposition.

It’s not just about latency
The top business driver for Edge computing per our survey of operators and vendors? Application latency.

On a scale of one to five (the latter being “extremely important”) the overall rating was 4.2. This aligns well with a focus on edge computing support for use cases including critical communications and AR/VR, and it makes sense when considering the second most-cited business driver, user experience.

The problem? Latency often captures all of the attention, detracting from everything else we want to accomplish with edge computing. Operators, for example, will be looking at more than an improved user experience thanks to latency improvements. They’ll be looking for transport efficiencies and potentially regulatory compliance around how and where data is handled. And, on the user experience front, low latency is only one part of the story. Think about all of the low-power IoT devices launched at CES: if forced to do lots of processing, battery life and application performance will be compromised. But if that processing can be pushed up to (offloaded to) an edge node, app performance and battery life should benefit.

It’s not just about operators
For many people, the distributed edge cloud concept is inextricably linked to operators: mobile operators, in particular.

Long before 5G networks got trialled, we talked about Mobile Edge Compute, which was born from early efforts at integrating compute with RAN platforms. That evolved into something more holistic (multi-access edge compute), but the mobile and operator bias remains. 5G, for example, dominated as the chosen “most relevant” access technology in our survey, with Wi-Fi and fixed options bringing up the rear. Meanwhile, almost none of the operators we surveyed expect webscale players to generate the greatest economic value from edge compute.

Cue Baidu: in tandem with CES, the Chinese behemoth announced OpenEdge, an open-source edge compute platform, highlighting edge as a critical component of its AI, Big Data, and Cloud strategy.

Whether or not we need another edge platform (open source or otherwise) isn’t the point. That cloud players are actively targeting the edge and putting development (and outreach) efforts behind it, is.

– 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.

For an IoT industry analyst, CES is a real treat.

[1]Naturally, some connected devices on show left me scratching my head (connected underwear, anyone?) But I look at it through the lens of how we segment IoT at GSMA Intelligence: consumer vs. industrial or enterprise opportunities. We see both being massive markets (see chart, click to enlarge), but the latter growing at a faster rate. However, after wandering through the CES halls for a few days, I came to a few new conclusions about consumer tech. More than just consumer tech, though, they tell us something about IoT as a whole.

IoT is meaningless without data and analytics. Ginni Rometty, IBM CEO, dubbed AI as the “world’s greatest natural resource” during her keynote, and a technology that will empower revolutions across multiple IoT segments from smart cities to healthcare, transportation to robotics. There’s a lot to digest there… and I fully agree. We often highlight the fact that connecting devices alone isn’t what IoT is about. The real value comes from IoT data translated into actionable insights. So I was glad to hear that event organiser CTA recognised that as well, announcing a new megatrend at CES Unveiled: the data age. An age where consumer choices or business decisions are reached and supported by data. This was an underlying narrative during the show – how to translate sensor intelligence into tangible results. As one example, John Deere, a CES first time exhibitor, showcased just that. It brought its connected harvester to the showfloor and I even managed to hitch a ride in a self-driving tractor. Pretty impressive. The reasons behind implementing precision farming are clear, go beyond cost saving and yield increase to feeding our ever growing population. John Deere achieves this via a mix of connectivity and data analytics.

Voice brings the smart home together. Google’s presence at CES was overwhelming. “Hey Google” was plastered all over the monorail, a Google “fun ride” was just in front of CES’ central hall, and a slew of device manufacturers added the “Works with Google Assistant” sticker. Google also had people in lots of partner booths. Why’s that important? It flags that Google is spending some serious bucks on integrating with partners. Fear not, Amazon Alexa was not forgotten and added to new products, quite often alongside Google. As a result of increased reach, according to GSMA Intelligence’s new Consumer Survey, smart speakers’ household adoption has doubled to 15-20% across the US/Western Europe [2]. Although (typically) absent from the show, Apple made its way into the spotlight as well through new Home Kit partnerships. Why is this important? One simple reason: smart speakers have emerged as the prominent voice-control computing platform for smart homes [3], leading to the ‘resurrection’ of voice as a user interface. An open ecosystem offers the ability to scale up and extend market reach.

Ageing baby boomers get connected. Independent/assisted living solutions were on full display at CES this year and went beyond just alerts based on basic connectivity. The ultimate goal is to allow seniors to maintain independence for as long as possible, using a combination of wearables, beacons, sensors, and cameras with an AI overlay. Using AI powered platforms alongside sensors adds value and helps to manage daily activities. For example, Hive Link Connected Care learns a seniors’ routine using multiple connected devices and alerts the caregiver when an anomaly and/or inactivity occurs. Similarly, CarePredict monitors ADL (Activities of Daily Living), training neural nets based on individual behaviour and enabling preventative actions once changes in daily activities have been detected. Such services can also be an add-on to the carer’s existing smart home security service, e.g. Wellcam, an Alarm.com service. This is still a nascent market with “a trial and error” approach to service provision. The addressable market is rather large – according to the United Nations there are almost 1 billion people aged 60+ globally and this will double by 2050 to almost 2.1 billion, equivalent to 13% and 21%, respectively, of the total population.

Wearables get healthier. Omron is a great example. The company essentially miniaturised a traditional blood pressure monitor and turned it into a wrist watch, Omron HeartGuide. It isn’t pretty but that isn’t its purpose. Managing medical conditions using medical grade devices and analysing data via a secure platform with a built-in AI engine, which then reports to a physician for a diagnosis and treatment, is an ultimate goal. This can result in reduction in healthcare spend (which accounted for 18% of GDP in the US in 2017). Net net, it delivers a real and measurable value. Understandably, the US is an outlier here – private insurance offers more opportunity for health device adoption to manage costs. Other barriers to adoption include behaviour (patient and clinician) as well as reimbursement structure and regulation. But we’re seeing a real definitive shift towards a more preventative approach to healthcare – and wearables can help.

My favourite new tagline. #LikeaBosch is the tagline of a new global image campaign to highlight the company’s capabilities to deliver connected experiences. It was funny. It also drove home a message that there are still things that can be connected and interconnected to deliver better experiences. Should they be? Well that’s another question. Probably not everyone needs a connected coffee machine or lawnmower.

– Sylwia Kechiche – Principal 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/wp-content/uploads/2019/01/IoT.jpg
[2] https://www.gsmaintelligence.com/research/2019/01/future-of-devices-smartphones-ai-immersion-and-beyond/717/
[3] https://www.gsmaintelligence.com/research/2018/08/smart-home-from-niche-to-mainstream-by-2025/687/

Last year, I kicked off a weekly column series from GSMA Intelligence and I’m excited to bring it back for 2019. Over the next 12 months, there will be columns from me and some from across my team of analysts (the ones from my team will likely be more insightful and better written – you’re welcome).

In any event, we’re now in the middle of the season when people (including analysts) take stock of the year that’s come and gone, make predictions about the one just beginning, and maybe even throw in a few resolutions. In past years, I’ve dedicated columns to recaps and predictions. I’m not sure why I’ve skipped resolutions. But since resolutions are some of the only things I can actually control in the industry, I’ll kick this year off with my mobile and communications-related resolutions for 2019. Think aspirations/commitments for how I want to work with the industry – things I hope to do in the New Year.

Here we go…

5G: Worry Less
This is going to be a big year for 5G. As a certain Head of State might say, it’s going to be HUGE. This is the year we’ll see commercial services (mobile and fixed) begin to ramp up and get the first crop of 5G smartphones and other devices. We’ll get a better understanding of how services will be marketed and priced. And, as the kinks get worked out of service offers and marketing plans – as well as networks – we’ll see lots of critiques. Devices will be called out as too expensive. Services too. In some cases, I’m sure the initial user experience will be deemed lacklustre while focusing too much on mobile broadband and not enough on innovative services. Some of this might be valid. None of it will matter much in the long-run. In the midst of this, I plan to ignore the worrying, recognising these initial launches for what they are – market testing and optimisation exercises that will set the stage for mature services and networks in 2020 and beyond.

4G: Worry More
Where 5G gets the spotlight this year, there’s a real risk that 4G innovation – at the service, device and network levels – could get ignored. Consider the case of operators looking to move people onto their 5G networks. It would make sense for them to prioritise 5G device innovation and direct capex into delivering the best, most competitive 5G experience. Right? Sort of. LTE will continue to carry the bulk of mobile data traffic for the foreseeable future; it will remain the primary mobile broadband asset for most operators. In markets where 5G hasn’t been rolled out, it will be the best option. In markets where 5G has been deployed, LTE will need to deliver a compelling fall back, evolving to integrate features (higher throughput, lower latencies) promised by 5G. Development of 5G innovations and ecosystems cannot come at the expense of 4G. I can’t do much to drive the direction of LTE R&D. But, I do plan to be vigilant – looking for instances of LTE innovation (product and service) and highlighting them as much as possible in order to make it clear that betting on 5G isn’t an “all or nothing” proposition.

AI: Build Something
By this point, we’ve all come to grips with the fact that Artificial Intelligence (AI, in its many forms) will fundamentally impact the way fixed and mobile services are consumed and delivered. From the camera settings on your smartphone, to the service package offered at retail, to the placement and maintenance of network assets, AI will likely be involved. The AI revolution, however, is less about the sophistication of the technology and more about its accessibility. As AI capabilities have become easier and easier to integrate into existing software and hardware solutions, companies of all stripes (including operators and network vendors) can put it to use for their own needs – evolving its application and potential in the process. Standing on the side lines, of course, is no way to understand this dynamic. For my part, then, I’m going to put AI to use within GSMA Intelligence. No, I’m not sure how. But trying to understand and deliver insights about a major industry shift (potentially the major industry shift) by simply talking about it just doesn’t make sense.

Multi-play: Ignore the Big Boys
We officially launched our multi-play (fixed and video/content, alongside mobile) coverage in 2018 and it was a good year to do so. After all, it was the year that AT&T acquired Time Warner, Vodafone picked up a variety of Liberty Global assets, and a comedy series from Amazon (not HBO or Netflix) took home five primetime Emmy awards. There was a lot more that happened, but you get the idea; 2018 provided plenty of examples of how the fixed, mobile and content industries were co-mingling and evolving – creating a new content and communications landscape. And yet, as it often does, the headline news focused on a small sub-set of players. The big ones. The ones shaping that new landscape. And everyone else? The content and access strategies of smaller operators? The specialist content providers? They can easily get overlooked. Obviously, there’s no way to ignore the big players, but there’s only room in the market for so many carriers like AT&T and Vodafone or content providers like Amazon and Netflix. To that end, I plan to spend more time this year focused on the smaller players – for lessons and insights that impact a broader set of market participants.

IoT: Focus on Users
In the same way that multi-play conversations often revolve around the machinations of a few big companies, IoT conversations often get derailed by a focus on a few valid but short-sighted (big picture) considerations. How many connections do we have? Which technologies are getting used? How much revenue are they generating? Who’s getting their share of that revenue? This all overlooks a very fundamental reality; everything begins with the use case. Whether for consumers or enterprises, the broader market success of IoT (those big picture metrics) depends on how it’s getting used and what it delivers – in line with the specific requirements of a given enterprise vertical or consumer segment. Companies that understand this are the ones who stand to benefit. We’ve spent plenty of time at GSMA Intelligence delivering insights into the size of the IoT market and what’s driving it. In 2019, I want to take us back to basics, with a deeper focus on the “how” of IoT vs. the “how big.”

Some of these will be easier to stick to than others. On the IoT front, for example, we’re wrapping up a massive survey of enterprises which will deliver insights into how IoT is getting used and the demands of specific verticals. Regardless, you can hold me to all of them. As we roll into the final stretches of the year, feel free to check in on how I did (Twitter [1] or LinkedIn [2] – they’re good ways to find me). And if you want to send me your resolutions before that, I’m all ears. You might even convince me to add some to my list!

– 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://twitter.com/pnjarich
[2] https://www.linkedin.com/in/peterjarich/

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/