Mobile World Congress 2018 Roundup
The Mobile industry is in the state of transition. In multi-dimensional shift that touches every layer of the stack, every company in the ecosystem, and every country in the global economy, MWC provides a platform to understand and feel the movements of the tectonic plates. Chetan Sharma Consulting participated in a number of sessions and panels throughout the show. We also had formal and informal discussions with several key executives in the industry and of course, we did our usual rounds of the show floor. This note presents the summary of our observations from the show.
Connected Intelligence and 4th Wave: Regular readers would know that we have been exploring our thesis of Connected Intelligence and 4th Wave for the past six years. This year, MWC’s underlying theme was “Intelligent Connectivity.” I guess the notion is becoming more mainstream now. Another important discussion was around how Connected Intelligence interfaces with UN’s SDGs and how technology can play an important role in solving the big global problems. It was good to see GSMA focus on critical areas of infrastructure, unconnected, economic growth, poverty, etc. Mobile services are what is driving the ecosystem and the global economy. 4th wave was a discussion topic for many operators. Music to our ears.
It was all about 5G: Given the noise around 5G, it was no surprise, the biggest theme from the show was 5G. In fact, all the other sub-themes were discussed under the broader umbrella of 5G. So, what was the difference from last year? More trials, plans for deployment, more use cases, actual data from some of the trials, regulatory progress, and more. However, some of the basic concerns around the business case loomed large. There seems to be a consensus that while other markets are important and good work is going on (e.g. Korea and Japan), 5G leadership might come down to US and China because and revenue and unit scale respectively. Amongst all the countries, I thought US made quite a bit of progress with more concrete plans in the near-term. T-Mobile and Sprint were quite vocal about their respective roadmaps leaving AT&T and Verizon to ponder on their 5G roadmaps. The big two will have to quickly go back to the drawing board. They might find themselves following the two smaller operators vs. leading them. By placing too much optimism in the high-band deployment, they might have left themselves exposed to a more complete strategic roadmap that T-Mobile outlined. Expect quite a bit of 5G activity in noise and substance for the remainder of this year. We have two new research papers coming out on the subject, so stay tuned.
5G Optimism: GSMA expects 5G connections to reach 1.2 Billion by 2025. In terms of markets, US is expected to be the most aggressive with almost 50% of the consumers on 5G by that time period. Japan with 45%, Europe 31%, and China with 25% will follow. IoT connections are expected to reach 25 Billion by 2025. The total impact of the mobile industry on the global GDP was estimated at 4.5% which is quite remarkable though not surprising.
Regional 5G: For the past four generations, China has followed the global markets and players, but it wants to play a significant role this time around. Their solo tryst with TD-SCDMA was a spectacular disaster so they want to be more standards compliant. With Huawei as the dominant infrastructure player, China sees an opportunity to make its mark on 5G. We will see Nordics deploy 5G as well. But, not everyone is eager to get on the bandwagon. Europe is taking a more cautious approach. Despite heavy government pressure, operators want to have a clearer understanding of Return on Infrastructure Investment before it dives in.
5G Business Cases: Bottom line is that each operator should create a very clear business case and roadmap for their strategy in a given country and do scenario planning to be able to respond to different market events. Absent that, they might rush into or be left behind without fully understanding the implications of their decisions. Operator boards should take an active interest in 5G strategy and planning. Winners and losers are created with each network technology transition. 5G won’t be any different. In fact, this transition might be the most consequential yet. Business cases can come in different flavors depending on the specific competitive and financial environment in the country – churn reduction, cost reduction, revenue gain, new businesses, marketing gains, leadership, etc.
5G Use Cases: It has been clear for some time that enhanced broadband is the near-term 5G use case. However, industry was discussing more concrete use cases. DoCoMo’s booth as always was the guiding light for the industry with some forward thinking display of use cases some of which are already underway. The areas were manufacturing, agriculture, logistics, healthcare, utilities, smart cities, etc.
5G Devices: Qualcomm showcased their x50 chipset for 5G that goes with the LTE x24 chipset. It is involved in a slew of trials worldwide and expects handsets to start showing up in early 2019. Intel focused its attention on the Olympics – the one that just transpired and the upcoming one in 2020. Both companies think 5G enabled notebook is a winner.
5G Regulations: The role of regulators in 5G was hotly debated. From clearing the spectrum to creating a balanced playing field, there were lot of asks. Given that we are well into the Connected Intelligence cycle, role of regulator is a critical one. We have argued before that we need an entirely new way of looking at regulations or else we might see market failures at different levels in the coming years. Ajit Pai had a clear message that US wants to lead in 5G and the government will do whatever it takes to pave the way for the next generation. While in theory, Europe wants to lead and reclaim the glory days of GSM, it might have to wait until 6G for the leadership opportunity.
5G: Marketing vs. Technology: We know that marketing has already won. As we suggested last month that 5G race is truly about the 5G icon. Companies who get it could reap early returns. Keep an eye on T-Mobile USA and Sprint.
5G Branding: 5G branding games were in full display – 5G is now, First in 5G, 5G Now, Intelligent 5G, Advanced 5G, 5G Beyond, Perfect 5G, 5G: Quantum Revolution, 5G: A Future Beyond Imagination, and more. Once you have perfected 5G, I guess it is time to move on to 6G.
5G Spectrum: There were some important news on the spectrum front. Ajit announced spectrum auction for 24, 28, 3.7-4.2 GHz bands in 2018. Ofcom also announced auction candidates for UK. The mid-band is a critical band for 5G and other countries seem to be clearing ways for their operators to deploy 5G in the band. US’s mid-band (except for Sprint) is suspect for now. Also of importance was Ofcom’s ruling around BT’s access network infrastructure being available at reduced prices to the broader ecosystem.
Devices: In the absence of Apple, Samsung continues to steal the device game (absent the year when devices were blowing up). S9 won kudos. ZTE had probably the first foldable device that holds promise for future. Am sure, Apple was taking notes. Apart from that nothing much worth noting on the devices front. After the success in launching Jio in India, Samsung is winning recognition and contracts on the infrastructure front.
Maturity of 4th Wave: In the context of the 5G evolution, operators are realizing they need to have their 4th Wave story in place. It is an open question if consumers are going to pay premium prices for 5G or not so a focus on 4th wave services are essential for operators to stay long-term viable. While a competitive access network is table stakes, without 4th wave services in place, operators will veer towards the classical utility model.
Interstellar Communication: While there was a lot of 5G Glitz and Glamor, I thought Vodafone (along with Nokia and PTScientists) stole the show with their stunt of sending the 4G basestations to the moon. However, some of the innovations coming out of the project related to weight, energy, and efficiency will find its way into the broader ecosystem. It seems like space is becoming a key component of the communication story with satellites launching all the time, cars flying through space and time, and probes being placed on the moon. All very exciting to the inner geek in all of us.
AI/ML: AI and ML found their way in a number of keynotes and sessions both how they applied in network transformation but more importantly on the applications and services layer. With incredible amount of data that is surfacing from all sides, AI is a critical skill for any organization to develop, especially the operators. However, their challenge is to hire and retain the talent in a world where Google is offering baseball salaries to promising engineers.
Automation: Automation was discussed in the context of network automation and impact of automation on jobs. Operators around the globe are focused on reducing the complexity of the network and automating tasks across the operation. Setting up the automation is an essential step towards 5G.
Net-Neutrality: Net-Neutrality wasn’t a big topic except for the session when US and EU heads faced-off. There wasn’t much movement on the positions, so it was a wasted opportunity to explore other areas like platform regulation which Ansip touched upon, but the moderator didn’t probe the issue further.
GDPR: Privacy, Data, and GDPR was hotly debated. Some folks think that GDPR will help reign in the giants and open up a new data economy. The march towards data regulations seems inevitable.
Connected/Autonomous Cars: Connected cars continue to be showcased at a lot of booths. Beyond just connectivity, players talked about computer vision, AI/ML, and the broader vision of Smart Cities.
Industrial IoT: IoT was embedded in most discussions. The notion of sensors and data was everywhere. It seems like Europe and Japan have taken the lead in Industrial IoT and US has fallen behind. China due to sheer scale has the highest number of sensors deployed.
Blockchain: When talking about the future, how can blockchain be behind? It is being applied for authentication, AI, roaming, fraud detection, financial transactions, advertising, and other application areas though still at a very nascent state.
Smart Glasses: While Snap glasses have been mocked for lack of market traction, I thought they laid the foundation for what’s to come. Microsoft, Intel, Deutsche Telekom, and others have been working on glasses that go far beyond the initial vision of just photo/video capture to power information edge device. I think the form factor is getting to a point that it is going to be quite exciting in the next few years in this space.
Facial Recognition: PwC and Mexia One had the facial recognition-based entry system setup for GSMA. It worked really well. No lines and one can just walk through the gate without checkup or stopping. Automated facial analysis has so many applications beyond security which is the near-term use case. Real Networks, Intel, and others were also showcasing their computer vision technology. This technology will become pervasive very soon.
Facebook TIP: Facebook TIP program has been making impressive gains. A number of European and Asian operators have been actively participating in the program. So far, US operators had stayed on the sidelines, but Sprint announced its participation at MWC. The community work in some key areas of mmWave and ML/AI are already providing some good advancements that could be in incorporated in connectivity solutions of tomorrow.
Smart Cities: While there has been technical progress on the smart city front, little movement on understanding the business models and repeatable frameworks that can get cities online in a much expeditious way. This is an area where private-public partnerships must come together with a clear data and revenue generation/sharing strategy and so far, no large city has cracked the nut on this one.
Crypto: Crypto-tokens anyone?
Chatbots: After the initial enthusiasm has died down, chatbots are finding their purpose in customer service and engagement use case scenarios with Telefonica and Orange leading the way.
Regulatory Changes: We have been pretty vocal in our papers as well as our work around the globe that the industry needs new regulatory frameworks to deal with the changing ecosystem or chances of market failure will increase. I discussed the principles of new regulatory regime in the Predictions panel at the Ministerial programme.
Lack of Internet Players: Last few years have seen the Internet industry rockstars like Zuckerberg, Pichai, Hastings, etc. This year there wasn’t anyone who captured the imagination of the attendees though there was active participation at the lower ranks.
Best Parties: Siris Capital, Qualcomm, Facebook
Best Booth: Ericsson, DoCoMo
Best Demo: DoCoMo’s 5G Robot Live Performance
What were your observations?
Your feedback is always welcome.
Disclaimer: Some of the companies mentioned in this update are our clients.