Episode 4: Social Media Bans, Sovereign AI & China's AI Token Economy: What's Next for Telecoms?

Peter Jarich (00:00)

Hi everyone, and welcome to Intelligence and Noise, the podcast from GSMA Intelligence, where we take a look at what's going on in the industry and we try and put it into context. So, stripping away some of the noise to hopefully lend some intelligence. Hopefully, those of you who already know that's what the name's all about. We'll then take some time to maybe think about what we're not talking about, why we should be talking about it a bit more. We do this.

Within the context of the CEO newsletter that comes out from the GSMA and that we play a part in. If you are on the distribution for that newsletter, congrats, you're important. You've done well in life. You are a CEO. If you're not, don't worry. We're giving you some ideas of what's in it anyway. So, yeah, you're on that fast track.

So, as always, I've got Tim Hatt with me here. Hey Tim, how's it going?

Tim Hatt (00:57)

Morning, Peter. Good. How are you?

Peter Jarich (00:59)

Good, good, good, doing okay. I think it's been—

Tim Hatt (01:02)

You know—

Peter Jarich (01:03)

You know, some of these weeks seem busier than others, and I can't say that this has been like, you know, we didn't have a big SpaceX IPO. We didn't have any sort of big monumental thing taking place. At least if you're over sixteen.

So, if you're under sixteen, or maybe under eighteen—

And we're gonna get to that, but as is my want for kicking off always, I'm gonna begin a bit with my anecdote of the week. And for those of you who have paid attention already, I've got my NBA hoodie on. I'm trying to see if you can actually see. It does actually say Eastern Conference, from which the Knicks—yeah, I know, I know.

Tim Hatt (01:54)

We can see it, we can see it. No problem.

Peter Jarich (01:58)

I don't have this for the Knicks. I did not buy it for the Knicks. I bought it for the Bucks, but that's fine. It is all good.

And what I think is interesting here is just making a connection here. So, it's a week ago, this drops on Thursday, a week after the Knicks had the big parade to celebrate. And what I think is interesting there is if I looked at what I saw, and I'm pulling this up just to remind me.

For one, it was the first ticker-tape parade that they actually had. But they deployed around 10,000 police officers for security around the parade that included heavy weapons folks, explosive detection canines, transportation, transit, drones, the whole nine yards, which makes sense. You know, huge, huge, huge thing, right? It was 1973 was the last time that the Knicks could claim this sort of a victory. And, you know, there was gonna be lots of folks out there.

But what I think is interesting, though, and we looked at this in the past, right? And we talked a bit about, I think, around the FIFA World Cup, you know, the importance of connectivity and whatnot. Just another great reminder, right? And I mean all of that, right? You think about the connectivity that is required to make all of that work.

You think of the connectivity that is, you know, all the people who are along the parade route. I cannot imagine how much traffic was going across the network, the kind of contention, all of the social media. Just insane.

So, a little bit different in terms of thinking about this. And I think we're gonna dig into maybe how, if this was taking place in other markets, maybe a good section of the people on the parade route would not be able to post on social media.

But one last interesting thing here. This is—I'm not sure—this is from Decathlon somewhere. And I don't think if you're at your local Decathlon in the UK or in France you can see NBA gear. I don't think they license it. I've never seen it in the UK or France or anywhere else. This came from China. So it's a reminder, Tim—

This—this drops, and you're over in Shanghai visiting your—

Tim Hatt (04:25)

Yeah.

Peter Jarich (04:26)

—local Decathlon in Shanghai, you can find some—you can find some fun stuff. You too can be a Decathlon and be a hoodie owner.

Tim Hatt (04:35)

If I get a spare minute, Peter, I'll be heading into Decathlon trying to get a Toronto Raptors jersey, my team, and see what I can find.

Peter Jarich (04:43)

Super cheap, super cheap compared. I mean, Christmas shopping. This was—I did a lot of Christmas shopping last year when I was there before Christmas. You can get licensed NBA gear. I mean, obviously NBA is huge in China.

So let's get on to the news of the week. And I think we usually do—I take the news that actually got included, and you take the news that didn't. I don't know, do we wanna flip it around this week? Do you wanna talk about—you have children, so maybe, maybe you can talk about the news that didn't—that got chosen.

Tim Hatt (05:23)

Yeah, I'll kick it off. So, I think the story we want to feature first is around the social media ban in the UK. And just quickly for viewers, this has been big news in the UK. But for those that are outside the UK or maybe haven't heard it, the Prime Minister has announced a social media ban—a blanket ban—for people under the age of 16. It will take effect next year. It includes a number of the major platforms.

The government has still got to work through exactly how it will be enforced, but it is a line in the sand and it follows on the heels of the Australia ban announced several months ago.

And I think it's interesting on a number of angles, and we're gonna get into that, Peter. And of course I've got a view as a parent and I've got a view as an analyst. But I do think that we're at a point now where there's a recognition around how you look at social media from a social good perspective and how you look at it from a commercial perspective.

I think both those angles are interesting, but what was your initial reaction when you saw this?

Peter Jarich (06:27)

There's a ton, I mean—

I mean, honestly, my initial reaction is, one, not too surprising, right? I mean, this isn't the first, it won't be the last. Australia—

Tim Hatt (06:32)

Yeah.

Peter Jarich (06:35)

—got a lot of the big news when they launched, and a lot of what you've seen in the UK, they've said will be modeled off of what took place in Australia. You've got no shortage of other markets that have done similar things. France in particular, if we're looking at some bigger markets.

I mean, what I think is interesting is, and you saw this coming out of the government, is they know, look, nine out of ten parents say that they were on board with this or that they wanted this, and a majority of young people. How they define young people, I'm not sure, because I'm guessing that there's a lot of—but I think it's interesting because this is also coming on the heels—and maybe folks who are outside the UK don't know this—but it's not too long after it was decided that 16-year-olds will get to vote in elections.

And so I think it's a really interesting—I don't know how to process this idea that we're saying at sixteen we believe you are responsible enough to vote and educated enough and informed enough to vote, but up until then we don't want you on social media. And even after that we're gonna place some limits.

It's a really—it's a sticky one, right? And I don't know if that means we—yeah, I mean, as a parent, I'm guessing you're kind of happy about this.

Tim Hatt (07:54)

It's the best news I've had in months. Talking to other parents, have not heard—I mean, anecdotally—anybody say anything other than, "Thank the Lord."

And I think for a couple reasons, but I think it's—and we'll get into the numbers—but fundamentally, I think this is all about understanding how people's content consumption shapes their way of thinking, their social interactions, potentially worldviews. And we've seen no end of stories the last, really, decade around harmful content consumption, seeing things that are not appropriate for that age group.

There is a lack—the big tech companies have not been able to put in place systems to stop that.

Let me just put a few numbers out there first. This is—some of these are from our consumer survey and some are from Ofcom in the UK. And I—

I was pretty shocked by this. So, if you look at 10- to 12-year-olds, over 80% have their own phone. Okay? You get up to 13- to 15-year-olds, 97% have a phone. 16- to 17-year-olds, 99%.

Peter, when I was growing up, I don't think I got my first phone until I was about 25.

Peter Jarich (09:09)

Well—

And I think what you're hitting on here is there's like a real—someone maybe has done this. If not, they should, maybe us. Like, there's a chart you could look at which says, okay, we're all pretty clear for, like, under-five-year-olds that social media ban probably—there's not gonna be too many people that are gonna have an argument, right?

But every year you creep up, it becomes a little more fraught, right? Where, yeah, I mean, we're pretty sure if you don't need your four-year-old on Snapchat. And maybe you don't need your five-year-old and your six-year-old or seven, and then you go ten, twelve.

And so it's interesting because I think your point there about device ownership also goes to the idea of, as you creep up, right? Of—and then you get to that—is it fourteen, is it sixteen, is it seventeen, is it thirteen? And that ownership really tracks with that, right?

Tim Hatt (10:00)

And that—okay, so right, but then let's put social media. So, that was device ownership. Social media usage: 10- to 12-year-olds, 81% use social media. 13- to 15-year-olds, 95%.

Peter Jarich (10:13)

No.

Tim Hatt (10:14)

16- to 17-year-olds, 98%, i.e. pretty much everybody.

Now, one other—look at the breakdown. It's not just—some people will say, okay, well, social media is a broad category. YouTube, 90%.

TikTok among 10- to 12-year-olds, over 60%.

Okay, so the issue—at my point I'm getting at—is two things. One, the platform usage has become near ubiquitous in some of these young age categories over a very short span of time. And two, the level of content consumption that can happen multiplies and it's not controllable.

And so I think this gets to the point about how—

Peter Jarich (10:53)

Yeah, yeah, yeah.

Tim Hatt (10:53)

—this gets to the point about how tech and social media companies, and we're gonna see this in the AI era, get on top of content consumption when so much of it is generated beyond—

Peter Jarich (11:04)

It—it—

Tim Hatt (11:05)

—their own direct control.

Peter Jarich (11:06)

It's a—it's—it's—I mean, there's stuff they could do. It's not easy. Obviously, we've seen a lot of the pushback, right, of the impacts on young people and lawsuits that are making it clear that these companies need to grapple with it.

You know, I think there's some big questions out there, right? You called out some of the usage of some of the different apps.

Bringing it back a little bit to the comms side and maybe some of what we look at. It's interesting that comms apps are kind of excluded from this, right? So it won't be WhatsApp. It won't be—I think I've seen that, if you're basing off Australia, Discord might be there.

That's the other piece I think that, as I think about sort of some cognitive dissonance here, right? The rolling thing for me is one thing, right? Because I think it's really weird of what we're thinking young kids can handle and they can't.

Maybe it's just because I didn't get to vote at 16 in the US. I'm just jealous. But the other part is, I mean, isn't WhatsApp a—I mean, WhatsApp isn't social media, but it's not not social media. I mean, if I have a—I mean, my village, I think I've mentioned, use this example a lot of times, right? But my village has a WhatsApp group. People post pictures all the time and they have responses back and forth.

And, right, it's meant for—

It's meant for communications, but are we not gonna have under-16s who are subscribing to massive, massive WhatsApp groups that maybe post objectionable content, maybe—or maybe post things that we don't want kids seeing?

But let's turn this—

Tim Hatt (12:41)

So, good.

Peter Jarich (12:43)

—back around to, I think, a bit, and maybe this is another—going back to you, Tim. If I look at the, you know, frequently asked questions doc that was put out by the government, right? Last piece, right. Number eight: How will age verification work?

And of course I love the last line: Ofcom will set out in coming months different options for effective forms of age assurance, which means we—we don't quite know how this will work.

But one of them, coming back to some of what we do, is obviously what telco is already doing in terms of age verify, right? I mean, you looked at that in something we did recently.

Tim Hatt (13:14)

With it.

Tim Hatt (13:15)

That is—you're right. So, the API dimension is very essential to this. We've done some analysis and we're going to be releasing our Open Gateway H1 deck in a couple of weeks.

And if you look at the APIs deployed so far, a huge bulk are around ID verification, age verification, device checks.

And the tie into the social media is that I think where we're going is mobile networks are going to be central in assuring the rules here, so that people over the age of 16 can lawfully access the platforms.

If you're under the age of 16 and that age verification API flags that you are, you're not gonna be able to access it.

And so the implication here is for telco operators that are offering these APIs and their partners, it's a seamless way to ensure lawful access to the social media.

And I think we've seen so far, like, 20 to 30% of the APIs deployed are on these verifications. We've seen some evidence from the UK and early, you're getting millions of hits on the APIs when they're being tried by operators. And I do think we're going to see that in other countries.

Peter Jarich (14:23)

Yeah, I think the stats that you had from the last time we looked at this, because in the UK, right, the big UK operators have already done this, right? And I think, if you remember correctly from the report, it was looking at something like five million checks per day, with an estimate of somewhere between ten and twenty cents apiece.

I mean, that's not nothing, right? So I think that, as an important piece of the puzzle for solving this sticky issue and helping out parents, helping out where we think, as we want to—as the governments decide we want to go—there's also—that's good, but it's also a revenue opportunity, right? And a maybe unsung, not quite clear use case or not quite always visible use case for APIs, Open APIs.

Tim Hatt (15:06)

Yes.

Peter Jarich (15:08)

Definitely. Even though you're spot on with that, even though we're only talking about API or with social media here specifically, the same concept of using the APIs for verify, you know, offer, you know, is relevant when you talk about scams or consumer fraud to be able to identify missed callers or high-risk callers or things like that.

And we're starting to see, you know, the APIs deployed in that space. So I do think this UK moment—sometimes you need something from the top to clarify and crystallize the situation. And I do think we're going to see a lot of social media companies now looking at APIs for this type of verification because they are ubiquitous, interoperable across country, and they're seamless.

Peter Jarich (16:02)

Yep.

So I did wanna—I did wanna call out the other story that did make it into the newsletter that we're not gonna be talking about a lot, but I think we'll be coming back to was sort of limits on AI applications and sort of limits of how we're thinking about AI, in part the pullback and in some markets on Anthropic and on their latest models.

And then also what I think is particularly interesting, because I haven't seen a lot of discussion around this. And I don't know, maybe it's maybe it's just gotten into the news and I missed it, right? But it's the Google liability for inaccurate AI Overviews in the courts in Germany, I believe, which is interesting.

I think we're gonna come back to that, right? I think it's—that feels like a bigger deal than we're talking about. But it also links in to the topics that didn't make it in.

And one of those was sort of off the back of Critical Communications World Conference in London recently, where Vodafone announced their work with Airbus on Ruggedized Solutions.

Tim Hatt (17:13)

Mm-hmm.

Peter Jarich (17:13)

It does go back exactly to where I was talking about earlier in terms of how you keep things like parades, how you keep things like outdoor mass gatherings safe.

So remind you that this all comes together and that I don't just throw on something in the morning to decide what the story is I'm telling.

Yeah, I spent lots of time, lots of time thinking about this.

But the other one that didn't get chosen that I think we wanna talk about is a bit of, you know, what Orange was saying off the back of VivaTech. Those of you who don't know, VivaTech is the big tech event in Paris. I was there last year for GTC Paris. It's huge, it's overwhelming.

And they took some time there to talk a bit about ecosystem development. And I think the short story of how we're thinking about this year is that—

If we think about the first story, right? And the under-16 social ban is all about, what does it mean? What does it mean? Is it the right decision? How is it going to impact traffic?

Right, telcos are going to be in a horrible place because it's going to impact traffic. I mean, most models already have under-16s using less data anyway. So that's kind of built into a lot of the models.

But the real story there is, right, more about what telcos can do in terms of enabling solutions.

I think from an Orange perspective, right, the whole sovereignty is so often about: How do I control these solutions? How do I control data? Where does data reside?

And what I think the Orange story is pointing to from a sovereignty perspective is: How do we build out national capabilities?

Because the story was really about them helping ecosystem development to invest in, to help smaller businesses get their products to market, right? Helping to provide them with a route to market.

I read that one—am I reading that one right?

Tim Hatt (18:58)

Yeah, you are. I think so, you are.

Just for context, just a quick 20-second level set for our listeners. The story here is, you know, Orange has announced last year, not this—not this week, but last year—a French tech ambition looking ahead to the end of the decade.

And a big part of that is stimulating startups and others in their broad ecosystem and the French tech ecosystem in general to be able to develop world-leading technology.

And this is part of Europe's wider agenda to redress the competitive imbalance with the U.S. and China.

Fast forward to now and VivaTech, and we're talking about—and I think what's changed and the interesting thing coming out of this story is the ability to develop startup capabilities that adhere to sovereign compliance requirements, but are also set up to deal and do business in a new type of era.

And so what I think there is interesting, you start to look at not just tech capabilities, but you look at how startups think about their supply chain, their procurement, you know, their tech stacks.

And Orange is really trying to play an overall leadership role here in assuring that.

You know, and I think, I think it's interesting. I've been sure to get your perspective on this because it's not just Orange in France that's doing this. We see it with Lilliad, we see it in others, we see Deutsche Telekom in Germany, but the pace in Europe around the sovereign AI dimension and bringing the ecosystem with it is really fast.

I mean, what's your take?

Peter Jarich (20:28)

No, I think—and if you go back to—no, if you go back to, and I think if folks out there haven't seen it, either if you're a customer, go and check the platform. If you're not a customer, or bug us, we'll send you a link.

But I mean, you saw that definitely from the roundup that we did, the post-MWC roundup on sovereignty, which was dominated by European providers, right?

I think two reasons, right? MWC—a lot of European carriers there, a lot of European ecosystem, but also this is where a lot of the discussion has been taking place around sovereignty.

And it wasn't just, "We need AI compute here," right? Yes, that's a lot of the—every time you see AWS talk about, "We're investing in Spain," or you saw, for example, you saw all the investments taking place a few weeks ago in France, right? If I'm investing capacity, that's part of a story around sovereignty.

But you did hear—it was the broader story of: We need scale and we need that scale to invest.

And it's not just about data sovereignty. It's not just about where does that data reside.

And we hit that a bit last week in terms of talking about sort of the space angle, but it's also having an ecosystem that can support us.

And you see it, I think, particularly from a French perspective. And I've called out France as an incredible example of how you can sort of take some of these sovereign thoughts to the extreme—maybe not full extreme, but—

Right, where they're pulling back use for government agencies of non-European conferencing solutions, right? No Zoom, no Teams, right? They've pulled back use—or they're pulling back use—of things like Windows on devices, right? On government devices.

They're pulling back—government had a medical record sharing solution that was built on Azure, right? They pulled it back, said, "Nope." Right?

And so you're seeing this idea of, well, if we want to do that, that only works—

Tim Hatt (22:26)

Okay.

Peter Jarich (22:26)

—if you have credible national solutions, or at least European solutions.

And I think you saw that understanding. What's interesting, though, is this does sort of question, like, where in the stack are we talking about?

There was a good piece from the AI Now Institute that was looking at some of this that was basically talking about, hey, let's look at an example of someone like Lovable.

Right? Lovable is a vibe-coding solution. Swedish—shoot. Hey, this is great. Good example of European tech capabilities, how we can build sovereign capabilities.

They're still building that off of the foundation models from other companies that aren't—that aren't European.

So it does get really, really tricky.

But this is a good first step, obviously, in terms of—for me, it is also just expanding this conversation of what's sovereign, because I think we sometimes hear people talk about, "Well, telco says trusted providers and sovereignty is about trust."

And that's so narrow in terms of the view. I think it misses the mark.

Tim Hatt (23:29)

Absolutely. And this whole question of what exactly do you mean by sovereignty, I think, is very much a live question.

You know, we're doing some research and we're going to be putting out our next Telco AI Q2 deck also in a couple of weeks.

And the deep-dive part of that is around, you know, sovereign AI and how that links into telco monetization strategy.

But I think more broadly, there's a question of, to your point, is it just data sovereignty? Is it compute? Does it mean developing the technology homegrown supply ecosystem? Does it mean all the above?

And I think the reality, Peter, what we're seeing is that in the early days, it sort of was a whole bunch of mishmash of things.

Some people just made a solution—

Peter Jarich (24:10)

Yeah, yeah, yep, yep, a hundred percent.

Tim Hatt (24:12)

—sovereign, but not their compute stack. Now we're moving to a point where—

Peter Jarich (24:15)

Or it's—it's—it's just—or just marketing.

Tim Hatt (24:16)

It's marketing. And it's marketing. But now we're moving to a point where you're getting deeper integration, and I think you're getting a full-stack sovereignty play.

And I think that's what the Orange story makes is interesting.

Peter Jarich (24:27)

It does, it does make it a little bit more confusing as to what sovereign means, which is—

Tim Hatt (24:31)

Yep.

Peter Jarich (24:32)

—why I think that anyone thinking through this is a business decision.

But it also does point out, and I think more than anything, right, the Orange moves show sort of the fuller roles telcos can play.

Because I think a lot of this has been around, the role for telcos is maybe they develop their own cloud solution.

Or, hey, you're the trusted provider of connectivity, you're the trusted provider of cloud. You can help, you know, you understand regulations.

But again, I think that is so narrow-sighted. Like, that is so—it is a really pedantic way of looking at this just based on some regulatory side of things versus—

What Orange shows us is that telcos have a role to play in terms of developing the ecosystem, which is more broadly where we want to get to in terms of sovereignty, right?

It's a—we want to have capabilities, right? We want to be a place.

I think it's, you know, it seems really hard, but when—and this, as an American coming to the UK, I always thought was interesting. Like, you go to the grocery store, the number of—this vegetable was, you know, made in the UK. There's UK fruits and vegetables.

And there's such a pride in that. But it's about, look, well, hey, you know what? We kind of control our food chain, right? We—this is critical. We actually own this.

I think it's the same sort of—it's the same—it's not that hard to understand. It's the same concept of tech needs to be thought of in the same way as the food supply chain, as critical to our people, critical to our security, critical to what we want.

We need to control that, but we can't if we're getting all of our food from somewhere else.

Same thing: telcos have a role to play in that. I think the Orange example shows us that.

And to be fair, and just—just one—I mean, I think although a lot of times I don't think of—and people don't—they think of Silicon Valley as startups, and they think about maybe some of what's taking place in other areas and the huge startup ecosystem in China, and you see all the cool small players in Israel.

I mean, if you look at a lot of the rankings, France is in the top five, top ten, depending upon where you're looking at. So they do have a solid startup ecosystem to build from.

Tim Hatt (26:41)

And it's clear they've got an industrial strategy. I mean, France is one of the leaders in Europe.

We had Macron at WEF this year in Davos basically selling the country as a place for AI. And, you know, we've got the infrastructure, we've got the power, we've got the expertise.

My question is, do you think that what we're seeing so far, these developments from Orange, the top-down leadership—

Can't—to your point on Silicon Valley. Do you think we're going to see genuine tech hubs develop in France or other parts of Europe to drive this?

Peter Jarich (27:13)

Yeah, I think it's, you know, the value that Silicon Valley has had—and again, I know I mentioned the Nova event that we're having the last time—is that you get those economies of scale, right?

You get that ecosystem where, if I leave this company, I can go to this other company.

You also have, you know, regulatory—sort of regulatory foundations where, you know—

I worked for a company once, a research firm that had a fairly solid non-compete. And I lived in California and I signed a non-compete, but I basically told my HR department, ever said, "You know that this is—I—this is useless, right? Because I live in California, where there is no such thing as a non-compete."

And so I can sign this, but there's no way to enforce it where I live. Like, yeah, just sign the stupid papers. Like, fine. It means nothing. That's—that's—that's cool, right?

But that sort of thing is important, right? Because it allows people to work, to go work for OpenAI and then say, "Yeah, I got some better ideas, and I'm gonna go start Anthropic," right?

And I mean, and that's where you saw Anthropic come from. And you see this sort of cross-pollination that—it does require some scale.

And you see a lot of building on that.

I think it is always interesting, and this is one of my favorite parts of CES, is when you go to the floor of the Sands and they've got all these little demos, and it's regional, right?

It's, "Come to the Rhône, you know, come to the Rhône region and build your technologies in this tiny region," or come to Toulouse or come to—and so I think, I think there's opportunities.

But it's—it is a good reminder of that.

So, yes, so on that topic, and you mentioned AI, I think in the—

On our lines and on the road, marketing—cue the Willie Nelson, cue the Willie Nelson reference. I don't think they've got there yet. Next time. Next time.

Tim Hatt (29:15)

Same time.

Peter Jarich (29:15)

And Willie, if you want to sponsor the podcast, we will let you sponsor it for free.

I know that when this drops, I will be just back from DTW. So—

Next week we can talk a lot about everything autonomous networks. They launched some work around NTN and satellite integration.

So, lots of good stuff there. You'll be right now—when this drops, you're in China.

Tim Hatt (29:52)

That's right. Yeah, I will be in Shanghai with a couple of colleagues, Pablo Castells, Pablo Iacopino joining me and one of our analysts in China, Sling One.

We've got a lot on. We're gonna be talking about satellite. We're running an event there on that.

As always, we're gonna be talking about 6G. We're gonna be talking about kind of spectrum stuff. We're gonna be talking about tech. We're gonna be probably talking about competitiveness.

We're going to be talking about quantum and security.

So, I think, as always, the interesting thing when you go to China, and we said this before, you get a quasi-glimpse into the future.

You have to pinch yourself, though, to be like, is this actually the future? Is this just China?

And it's inevitably a bit of both. China has a unique economy and a unique tech structure.

But when we go, it's always an interesting experience. And I think now should be no different, given how much we're seeing.

Peter Jarich (30:52)

Yeah, and I think one of the things that we'll definitely talk about next week, because I know you've been talking about and will be a big topic at MWC Shanghai, was sort of the token economy.

Tim Hatt (31:05)

Mm-hmm.

Peter Jarich (31:06)

This is—you know, it feels like one of those things that we've gotta—there's gotta be a name for it. Maybe, maybe we come up with a name for these things that bubble up, right?

And it is the it topic of the moment.

For anywhere between two weeks and two years.

Right. I always use push-to-talk over cellular as the example that came up. Push-to-talk over cellular was, you know, all anyone could talk about several decades ago until it wasn't, right?

But right now it's the token economy and selling tokens.

And for those folks who don't know, I think it's—it's part of the reason why it's interesting. It's the idea of telcos selling AI packages with bundles of tokens, tokens being essentially what fuels those AI services, its unit of consumption that drives LLMs, drives those services, and you've got telcos bundling that into their solutions.

And the reason why it'll be a big topic in MWC Shanghai—the big three Chinese operators are essentially the first to launch those solutions.

Yeah, I mean, Tim, when we talk next week, what do you think the sentiment is gonna be in China? What's your what's your over-under for it's on the up versus we've already jumped the shark?

Tim Hatt (32:32)

There tends to be bullish sentiment, and that's what I would expect.

I think the token economy is an interesting point because it's all happened so fast. It's kind of come out of nowhere. And, as ever, China has taken a leadership position.

Let's see how it goes. I think we're going to look at that. That's a concept that we see across the AI economy.

I think for me, the questions are around—we talked about this before—do people get it?

Do they understand what that means?

Secondly, how far do you apply it?

And then third, do you start to see the token economy stabilize over time as more operators do it?

Or are we going to get sort of a token economy in China, token economy in India, token economy in the U.S., all with different pricing structures, different value sets?

I think that's what we've got to get to.

Peter Jarich (33:20)

Yeah. Which we kind of have for mobile services.

So, I mean, it wouldn't be surprising, but I think you hit it up front in your discussion of why going to China is always interesting.

It's a bit of a glimpse into the future, but it's always really different.

And, by the way, if you're out there and you haven't seen our analysis on it and you're a customer, click on the link, go search for it. If you aren't a customer, bug us, we'll send you the link.

And then I did a blog post recently on sort of the challenges or things we need to be thinking about. Check that out. That's on our site.

I would say, to your point, though, right? What's taking place in China—and it's huge, right? I mean, you think about this, right? We've seen token consumption scale over a couple of years from like a hundred billion to a hundred and forty trillion, right, in a couple of years, right?

So massive growth, which means obviously the operators can say, "Whoo. Cool, you know, cool opportunity."

But we hit a bit this in the analysis, right? Is that this all came about in part through, you know, combination of supply.

The Chinese operators have built the capacity, right? You've got a society that is AI crazy, you know, the adoption there.

And you can ask why. I read an interesting—and I've got to—we'll find it, we'll put it in the show notes—an interesting article that positioned this through the lens of—I forget what media was, but it was a young journalist from the UK going to China who joined a gym and just talked about how competition in every segment of the economy is huge.

It's the gym she joined versus this other gym versus everyone else. And it's sort of as a microcosm of the Chinese society where, yeah, everyone's going to get some version of—or they're gonna get some, you know, OpenClaw or OpenClaw variant installed on their laptop, or they're gonna buy a Mac Mini or they're gonna buy a mini PC and do this because they know they're competing with everyone else.

And, like, it is a constant: How do I make sure I'm staying on top of things?

Which doesn't necessarily exist elsewhere, plus just government orchestration of, "Let's push this at a regional level," let's have the tech giants—

That combination of things just doesn't exist everywhere.

And I think that that's the big thing that I think makes this an interesting example, but we can't jump too quickly to say this is going to be one that translates everywhere.

Tim Hatt (35:56)

We can't, but you make a good point around it has the potential to.

And one other indicator we're gonna look at is what happens to AI data traffic.

Right now we're tracking it's pretty low. It's still a small fraction, but growing. And by small fraction I mean, like, 0.2, 0.3%.

If tokenization starts to take hold, does that sort of unleash a wave of usage? Because people understand—

Peter Jarich (36:21)

Yeah, yeah.

Tim Hatt (36:22)

—what it is more.

Your point around the consumer-enterprise dimension is really interesting. I think the Shanghai event will be an interesting test case for what tokens potentially look like in a year's time.

And we'll see what comes out of that.

Peter Jarich (36:39)

And I think for telcos—and we hit this a bit in the analysis, but we'll talk about it a bit in the follow-ons—let's also remind ourselves that this isn't just a "put together a package with some tokens and access to some models."

It has to be built into a broader solution, right?

The hyperscalers are doing that, right? They're hiding the stuff behind copilots and behind solutions and behind workflows, and you're buying the end package.

Right. And so a telco that is looking at this as a route to go sort of back to the future and go, "Hey, I'm gonna get back to that old day where I actually sold metered consumption," is probably gonna miss out on the boat.

And you see this a bit, right? And I call this out in the blog post, right? That's what you see from the Chinese operators.

They're not just saying, "Well, here's the one model you have and a package of tokens." It's a, you know, it is a bundle with some extra services, with maybe a package of a whole bunch of different models you can choose from.

It was interesting, you saw this right on time. You know, Mavenir, our friends over there, launched a solution for DTW, right? Right in the run-up to—call up, hey, hey, we have a new AI solution that can also support some of these token, you know, some of these tokenization solutions.

But every model is different and you need to figure out how you put caps, you need to figure out how you do this.

And, like, there was this recognition that it is a cool opportunity, but you've gotta think—you've gotta think bigger.

Tim Hatt (38:12)

And one other last point I would just make on the token is it's an open question. I don't have the answer. I don't know if you have a perspective on it, Peter.

Does tokenization reinforce these kind of local spheres of influence?

If I'm in China and I get access through my mobile operator to a set of models from providers, who are those? Are they Chinese or the international?

Likewise, if it takes hold in India or the U.S. or wherever, do you get a self-reinforcing cycle there, or does it do the opposite?

And you start to have tokens that go beyond borders.

I think it's a very interesting topic, that it's got a lot of different angles, and we're just at the start of it.

Peter Jarich (38:48)

And that's why, just going back to the top, that's why topics of kind in conversations of things like sovereignty, as much as people might say, "Can we stop talking about it?" Like, the Venn diagram of all the things that it touches, right, is just incredible.

We are at the top of our time here.

So, as I've said in the past, wait an episode or two to leave us a rating. We're gonna get better.

But this was a fun conversation. Please, please join us next week, where we're gonna talk more about DTW Ignite.

Always a good show, always a good opportunity to do some carb-loading on cinnamon buns in Copenhagen.

Tim will come back full of dumplings and maybe a Decathlon Raptors jersey.

Sure, let's—let's hope.

So, thank you all very much for joining us. Thank you, Tim.

Tim Hatt (39:47)

Thanks, Peter.

Peter Jarich (39:47)

And we'll talk to you all next week.

Tim Hatt (39:51)

Cheers, guys.