& cplSiteName &

MWC14: What Are Telcos For?

Graham Finnie
Heavy Lifting Analyst Notes
Graham Finnie, Consulting Analyst
3/5/2014
50%
50%

Frustratingly confined to my sick-bed throughout this year's Mobile World Congress, there were one or two small consolations to be taken from missing the greatest telecom show on earth: I could get a cup of tea whenever I wanted one; and I could switch off the media noise and watch the garden birds preparing for spring.

But most of all, I could, for once, see the show from the outside looking in. Instead of burrowing my own topic-specific tunnels through the forest of booths and their caffeinated sales folk, I could see what matters to Joe and Jane Public.

And from that perspective, nothing, really, could be plainer. To the world at large, it's all about apps and devices. The big stories as viewed from my sick-bed were, in no particular order:

  • Samsung Galaxy 5
  • Connected watches
  • Mirrorlink
  • Connected automobiles
  • Windroid
  • E-ink device displays
  • iPro smartphone lenses
  • Smartphones for seniors
  • $25 smartphones
  • Connected fitness bands
  • Smartgloves
  • Smartfabrics
  • And, on the apps side, Facebook, WhatsApp, Openchat, Mastercard's Masterpass in-app payment scheme, surgeons using Google Glass, Opera Max data compression, and so on and on.

From this point of view, the network (and its supply chain) is little more than an afterthought: annoying when it fails, but otherwise invisible. SDN, NFV, NG-OSS and all the acronyms that keep those inside the network industry awake at night are of no more interest to the world outside than, say, new kinds of road surfaces, or the latest gas turbine.

No doubt that sounds a little unfair to those who toil heroically to keep their networks relevant in an end-user environment that is changing at frightening speed. The fact that telcos have been able to cope (just) in an environment where they control less and less of the device (and app) value chain is little short of miraculous.

But the world can be an ungrateful place, and viewing MWC from the outside in raises a larger and even more uncomfortable question in my mind. If telcos over the past 20 years have steadily lost control over the devices connected to their network, as well as most of the applications that run on them, what will they be selling to Joe and Jane Public in, say, 10 years' time?

It's hard not to follow the logic of the past ten years and answer: nothing but a connection and the bandwidth that goes with it. TV, telephony, messaging, and all the rest, on this reading, will have gone the way of every other app -- disappeared into Whats App, Facebook, Amazon Prime, Netflix, and other start-ups yet to be born. No longer will these apps and services be called, absurdly, "over the top" -- they will constitute 100% of what customers value.

There are, of course, no sure bets about the future. Many telcos are still deeply embedded in the business of providing services, and won't easily abandon a core source of value and stickiness. In fixed networks, triple play is still the default package in many countries. In mobile networks, a different kind of triple play (voice, messaging, bandwidth) rules. But for how much longer?

The question then will be whether telcos can develop enough ancillary capability to earn more money from their consumer customers, not just directly but indirectly. Ancillary capability means not only the services themselves, but the service enablers, perhaps paid for not by the users but by content and applications providers, or by enterprises. Things like security & parental control, guaranteed delivery, QoE, analytics, and other goods that network operators are well positioned to provide.

Small wonder, in light of that list, that network neutrality -- or rather, its absence -- matters so much to the telcos. With so much at stake, we have not, I think, heard the last of that debate.

Whatever the outcome, a great deal is at stake. If telcos can't uncover new sources of revenue (or persuade regulators to give them special breaks) the relentless focus on cost-cutting will continue. But if they can, new vistas will open up for both them and their suppliers. One way or another, service innovation -- or its absence -- will be the key to the future.

— Graham Finnie, Chief Analyst, Heavy Reading

(8)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
MordyK
50%
50%
MordyK,
User Rank: Light Sabre
3/6/2014 | 11:19:43 AM
Re: The future of Telcos
All this pessimism in regard to the carrier's future is disheartening. The carrier's have so much unique value ot offer, but they simply have to change their culture and start thinking like webco's instead of their old telco ways.
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
3/6/2014 | 12:36:49 AM
Just because
Just because we didn't hear much about networking doesn't mean it's unimportant. When service providers are doing their jobs, the network is invisible, and consumers and businesses can access it without having to think about it.
nasimson
50%
50%
nasimson,
User Rank: Light Sabre
3/5/2014 | 9:46:20 PM
The future of Telcos
What an insightful article! The future of telcos is an often discussed subject. There are no easy answers to how telcos will win back the OTT market that they very stubbornly & unwisely left to the internet space. First it was other services, now it is messaging, pretty soon it will be voice. Telcos will find their bread and butter going to OTT. Perhaps Telcos only utility will be outdoor and the non-WiFi spots in indoor.
Gabriel Brown
50%
50%
Gabriel Brown,
User Rank: Light Sabre
3/5/2014 | 10:02:22 AM
Re: Telcos
Yes, probably. Maybe. It's hard to say for sure because WiFi is fundamental to the smartphone market. It has helped to grow the overall market for mobile data. In that sense, it has been very useful to MNOs.

Whatsapp has, arguably, destroyed value for mobile operators. But it provides a lot of value to end-users and that encourages people to get smartphones and data plans. WiFi is a little the same.
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
3/5/2014 | 9:54:02 AM
Re: Telcos
Won't wi-fi turn out to be more of a revenue reducer for mobile operators as it is currently constituted? If free or low-cost wi-fi does become ubiquitous, fewer users will need pricer data plans.
Gabriel Brown
50%
50%
Gabriel Brown,
User Rank: Light Sabre
3/5/2014 | 9:43:06 AM
Re: Telcos
I'm also skeptical about the $33 billion Whatsapp figure. But pretty obviously mobile operators have been outwitted and outmaneuvered in the provision of what at one point was expected to be a core service: sending messages and pictures.

I also doubt WiFi roaming will make much overall difference to operator revenues. But there are some parallels in that mobile operators are, largely, ignoring what is obviously a useful and well-used technology. I've argued that mobile operators should engage with WiFi. The difficulty is to figure out how they can better exploit the technology. That part isn't obvious.
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
3/5/2014 | 8:28:40 AM
Re: Telcos
Colleen -- It's not obvious how mobile network operators are losing revenue without wi-fi roaming. I'm also curious (skeptical?) about that $33 billion Whatsapp figure.
clleenl-2
50%
50%
clleenl-2,
User Rank: Light Beer
3/5/2014 | 5:28:21 AM
Telcos
Hi Graham,

Isn't roaming WiFi the shimmering star for the telcos, and that's why they've been working so hard on developing Next Generation Hotspot aka Hotspot 2.0 with Passpoint certification? They can see there's a lot of money that's been left on the table - I read somewhere that Whatsapp accounted for $33 billion in less telco sales last year. Roaming WiFi would certainly recoup that and, at the same time, make connecting to hotspots easy.

 

Colleen O'Shea
http://wifitrends.blogspot.com

 
More Blogs from Heavy Lifting Analyst Notes
A dedicated cloud-hosted core is important to making the mobile network commercially attractive to Internet of Things (IoT) service providers.
Huawei has announced a new approach to measuring the quality of a user's gaming experience.
Heavy Reading has identified four use cases that are key to cable virtualization and that prove cable is ready to turn concepts into action.
The next iteration of cloud deployment will deliver considerable benefit, but also impose new requirements and create new challenges for even existing virtualized products.
Separating fact and fiction in the brave new world of NFV.
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
LIVE NOW!
Friday, December 2, 1:00PM EST
The SDN Approach to IP & Optical Integration
Sterling Perrin, Senior Analyst, Heavy Reading
UPCOMING COURSE SCHEDULE
Friday, December 2, 1:00PM EST
The SDN Approach to IP & Optical Integration
Sterling Perrin, Senior Analyst, Heavy Reading
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
Women in Comms Introduction Videos
Korn Ferry Consultant: How to Find, Cultivate & Be the Best Talent

11|30|16   |   4:10   |   (1) comment


Erin Callaghan, a managing consultant for Korn Ferry Futurestep, shares strategies for companies to improve how they recruit and for women to ensure they don't get lost in the pipeline.
LRTV Custom TV
We Can Make the World More Sustainable

11|29|16   |     |   (0) comments


GeSI is a global e-Sustainability Initiative organization bringing together 40 big multinational companies around the world. According to GeSI's report, information and communication technology can make the world more sustainable. Luis Neves, chairman of GeSI, shared with us his opinion at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
Finding a New Way to Engage Customers & Drive Revenue

11|29|16   |     |   (0) comments


Mobile revenues are declining. Digicel, a player in the Caribbean telecommunications/entertainment space, has found a new way to engage customers and drive revenue. John Quinn, CTO of Digicel, shared with us its story at Ultra-broadband Forum (UBBF2016)
LRTV Custom TV
Do You Really Need Gigabit Infrastructure?

11|29|16   |     |   (0) comments


Altibox is the biggest fiber-to-the-home (FTTH) player and the largest provider of video and TV in Norway. They started out with zero customers in 2002. Now they have close to half a million households and companies attached to their FTTH business. Nils Arne, CEO of Altibox shared with us their story and insight on 5G at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
BT’s Openreach Strategy & Its Updates in 2016

11|29|16   |     |   (0) comments


A lot of developments at Openreach this year in terms of strategy and planned investments. Peter Bell, CIO of Openreach BT, shared with us the updates of Openreach at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
ITU: The Broadband Is Our Future

11|29|16   |     |   (0) comments


At Ultra-broadband Forum, Houlin Zhao, Secretary General of ITU, discussed how important it is for countries, companies and everybody to be working together to help to build the broadband and digital economies (UBBF2016).
LRTV Custom TV
Tackling 5G in Dallas

11|28|16   |     |   (0) comments


Here are our highlights of the 5G North America show in Dallas, Texas with Light Reading's Dan Jones.
LRTV Interviews
Cox Prepping for Virtualization Trials

11|14|16   |     |   (0) comments


In this video interview, Cox's Jeff Finkelstein discusses MSO's plans to test managed business services in early 2017 and tackle Distributed Access Architectures.
LRTV Custom TV
Drivers & Potential of NGP

11|11|16   |     |   (0) comments


ETSI has created an Industry Specification Group to work on Next Generation Protocols (NGP ISG), looking at evolving communications and networking protocols to provide the scale, security, mobility and ease of deployment required for the connected society of the 21st century. The NGP ISG will identify the requirements for next generation protocols and network ...
LRTV Custom TV
Huawei IP 2020 for Future Networks

11|11|16   |     |   (0) comments


Future Networks should satisfy many requirements such as high throughput, extremely low latency, flexible mobility, intrinsic security, networking automation, and so forth. The Chief Architect of Huawei Future Networks addresses a holistic solution, i.e., IP 2020, to achieve these requirements for various future life scenarios (e.g., autonomous driving, tactile ...
LRTV Custom TV
Digital Object Architecture

11|11|16   |     |   (0) comments


Digital Object Architecture provides a basic information infrastructure that can facilitate interoperability between or among different systems, processes, and other information resources, including different identity management systems. Digital objects are networked objects that are named by digital object identifiers and instantiated by an infrastructure service ...
LRTV Custom TV
BT's Openreach Has High Hopes for Long-Reach VDSL

11|11|16   |   06:04   |   (0) comments


Peter Bell, Network Portfolio CIO at BT's access business Openreach, talks about the operator's trial of a new broadband access technology called Long Reach VDSL.
Upcoming Live Events
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Hot Topics
AT&T Debuts DirecTV Now on New Video Platform
Mari Silbey, Senior Editor, Cable/Video, 11/28/2016
Apple Seeds 5G? Seeks 'Multi-Gigabit' Chip Designer
Dan Jones, Mobile Editor, 11/30/2016
Altice Plans FTTH for Entire US Footprint
Iain Morris, News Editor, 11/30/2016
Altice FTTH Bill Could Hit Almost $9.6B in US
Iain Morris, News Editor, 12/1/2016
Samsung Bows to Investors, Considers Revamp
Iain Morris, News Editor, 11/29/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Eyal Waldman, CEO of Mellanox Technologies, speaks to Steve Saunders, CEO of Light Reading, for an exclusive interview about the 100 GB cable challenge, cybersecurity and much more.
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Live Digital Audio

Even when there's a strong pipeline of female talent in the comms industry, it tends to leak all the way to the top. McKinsey & Company says women experience pipeline leakage at three primary points: being unable to enter, being stuck in the middle or being locked out of the top. Each pipeline pain point presents its own challenges, but also opportunities to stop the leak. Wireless operator Sprint is making a conscious effort to improve its own pipeline from new recruits to the C-suite, and it wants the rest of the industry to do the same. In this Women in Comms radio show, WiC Board Member and Sprint Vice President of Enterprise Sales Nelly Pitocco will give us her take on the industry's pipeline challenges. Pitocco, who joined Sprint in May and has spent 20 years in the comms industry, will also offer solutions, share how Sprint is tackling the challenge within its own organization and take your questions live on air.