Vodafone CTO: AI will overhaul 5G networks and Internet economics

Scott Petty is not for buying Nvidia's chips or building his own large language models, but he thinks AI could fundamentally change the network.

Iain Morris, International Editor

July 4, 2024

6 Min Read
Scott Petty, Vodafone's CTO, giving presentation.
'We are about to drop into a trough of disillusionment,' says Vodafone CTO Scott Petty.(Source: Iain Morris/Light Reading)

The chatbots that have sprung up with generative artificial intelligence (GenAI) can be tasked with imitating specific wordsmiths. Cue such rib ticklers as a Shakespearean sonnet about 5G, or a Dickensian account of London's fiber market.

But if GenAI could magic up a self-appraisal in the style of Scott Petty, some of its output would be withering. The technology is probably the most "overhyped" for many years in the telecom industry, said Vodafone Group's chief technology officer (CTO) at a press briefing this week. "Hopefully, we are reaching the peak of those inflated expectations, because we are about to drop into a trough of disillusionment."

Despite this seemingly bleak take on the immediate future, Vodafone looks more heavily invested in AI than most of its peers. Even so, Petty has several clear principles. He is not, for starters, about to expose Vodafone's data to publicly available models like ChatGPT. Nor he is up for creating a large language model (LLM) from scratch.

Instead, a team of 50 data scientists works on fine-tuning LLMs like Anthropic and Vertex. Vodafone can expose information to those LLMs by dipping into its 24-petabyte data "ocean," created with Google. Secure containers within public clouds ensure private information is securely cordoned off and unavailable to others.

No Nvidia, please

All this means Petty is also not about to follow several other telcos, including Swisscom within Europe, and buy directly from Nvidia, whose graphics processing units (GPUs) are needed for LLM training. The chipmaker's zero-gravity share price is largely to blame for that "peak of inflated expectations," the phrase Gartner coined to describe part of the hype cycle around new technologies.

"This industry is moving too quickly," Petty explained. "The evolution of particularly GPUs and the infrastructure means that by the time you'd actually bought them and got them installed you'd be N minus one or N minus two in terms of the technology, and you'd be spending a lot of effort and resource just trying to run the infrastructure and the LLMs that sit around that." Partnerships with hyperscalers remain Vodafone's preference.

It is not hard to see why. According to Petty's estimates, the performance speed of LLMs has improved by a factor of 12 in the last nine months alone, while operational costs have decreased by a factor of six. A telco that invested nine months ago would already have outdated and expensive technology. Petty, moreover, is not the only telco CTO wary of plunging into Nvidia's chips.

"This is a very weird moment in time where power is very expensive, natural resources are scarce and GPUs are extremely expensive," said Bruno Zerbib, the CTO of France's Orange, at this year's Mobile World Congress. "You have to be very careful with your investment because you might buy a GPU product from a famous company right now that has a monopolistic position."

The latency game

A related concern for both execs and other telco CTOs is what AI in all its permutations could ultimately mean for networks and their design. As resistant as Petty sounds to a direct investment in GPUs, he reckons LLM processing may eventually need to happen outside hyperscalers' facilities. "To really create the performance that we want, we are going to need to push those capabilities further toward the edge of the network," he said. "It is not going to be the hype cycle of the back end of 2024. But in 2025 and 2026, you'll start to see those applications and capabilities being deployed at speed."

The drivers of that change include Apple's plans to host AI on its latest iPhones. This could mean linking a small language model on the gadget to an LLM in the cloud and using a voice-based application as the user interface. Minimizing latency, a measure in milliseconds of the roundtrip journey time for a signal, may be far more important than maximizing the peak load a network can support.

"The time it takes for that data to get up and back will dictate whether you're happy as a consumer to use that interface as your primary interface, and the investment in latency is going to be critically important," said Petty. "We're fortunate that 5G standalone drives low latency capability, but it's not deployed at scale. We don't have ubiquitous coverage. We need to make sure that those things are available to enable those applications."

Data from Ericsson supports that view, showing that 5G population coverage is just 70% across Europe, compared with 90% in North America and 95% in China. The figure for midband spectrum – considered a 5G sweet spot that combines decent coverage with high-speed service – is as low as 30% in Europe, against 85% in North America and 95% in China. Non-standalone 5G, which hooks a 5G radio access network (RAN) to a 4G core, is "dominating the market," said Ericsson.

In the UK, Vodafone has promised to spend £11 billion (US$14 billion) on the rollout of a nationwide standalone 5G network if authorities bless its proposed merger with Three. With more customers, additional spectrum and a bigger footprint, the combined company would be able to generate healthier returns and invest in network improvements, Vodafone says. But a UK merger would not aid the operator in Europe's four-player markets.

The new economics

What might help is a different economic model for the Internet, and Petty expects to see it in the next five to ten years. Today's Internet is largely about advertising spend on popular search terms. In the world of device-based GenAI, "you are not going to come to my search engine anymore," he said. "I need to interface into the LLM or the bot that's running on the device to make sure the experience with Vodafone is better than it is with other operators."

Petty believes this could lead to companies building privacy-based versions of GenAI with no dependency on advertising. Google, he points out, is already doing trials of paid-for search. "How that model evolves will dictate where the economic funding in the Internet is, and then how we can build our networks to support that," Petty said.

Could operators charge AI stakeholders for the rollout of those edge networks? "This will see an evolution of a two-sided economic model that we probably didn't get in the growth of the Internet in the last 20 years," said Petty. But it would not, he argues, be unlike today's market for content delivery networks (CDNs).

"Most CDNs are actually paid for by the content distribution companies – the Netflixes, the TV sports – because they want a great experience for their users for the paid content they've bought," Petty said. "When it's free content, maybe the owner of that content is less willing to invest to build out the capabilities in the network." Like other industry executives, he must hope the attendant debates about net neutrality and fair contribution do not plunge telcos into a long disillusionment trough.

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About the Author(s)

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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