"Everything has gone digital in no time," said Telefónica boss José María Álvarez-Pallete López as he made a resolutely physical and very non-digital appearance at this morning's Mobile World Congress (MWC). Social-distancing norms made audience members – masked-up without exception but all breathing the same air in a windowless hall – look as isolated and friendless as possible. Unlike Álvarez-Pallete, and as if to prove just how important telecom is during the pandemic, the heads of China Mobile and Deutsche Telekom decided to beam in by video link.
For all the oddities this year, some of the gripes were all too familiar. MWC would not be MWC without the attack on regulators, never there to defend themselves, by the CEOs of Europe's largest telecom operators. That was mixed in with some newer corporate virtue-signaling on climate change, diversity and what Orange boss Stephane Richard, in an unconscious nod to the enduring influence of Donald Trump, called "fake news."
Investors don't seriously care about any of these issues unless there is money to be made or saved. They receive airtime only because millennials with principles might otherwise boycott your products, go on strike, or simply "cancel" you online. Fortunately, at least, there are cost savings to be had from investing in greener technology, and the telecom industry wields data to show it is part of the solution. Globally, it is responsible for only 0.4% of carbon emissions, and it can help decarbonize other industries already at ten times that level, according to Mats Granryd, the director-general of the GSM Association (MWC's organizer). Just don't ask him about all the international flights to MWC.
But diversity is an even tougher one. These days, from a corporation's perspective, it usually involves making favorable noises about the most fashionable identity group rather than genuinely ensuring that no one is denied opportunity. The GSMA would have been wise to leave the issue alone during a panel whose participants comprised four middle-aged white men and no women (Granryd plus the bosses of Deutsche Telekom, Orange and Telefónica). The lack of an "all-inclusive panel" was not normal at MWC, apologized Granryd, setting the Twitterati up for some righteous indignation about the lack of all-inclusive company boards in telecom.
We need to talk about the cloud
And the issue of fake news brings telecom squarely up against its old frenemy – the hyperscalers, or, as they used to be known, the "over-the-top" players. These conduits of fake news are the same unregulated infrastructure providers to which consumers have entrusted all their personal data without hesitation. They are also omnipresent in telecom and at this year's MWC, their ascent facilitated by the deals that Deutsche Telekom, Orange, Telefónica and other major telcos have concluded since the last MWC in 2019.
"How can it be that WhatsApp is not treated as a communications service? How can it be that Microsoft is evolving the network and connecting the edge and providing connectivity to the customers and not treated as a connectivity provider? How can it be that 80% of the traffic is generated by over-the-top players and they are not even paying a cent for using infrastructure and the buildout cost and getting in exchange all the value of the data of our consumers?" said a visibly irate Timotheus Höttges, the CEO of Deutsche Telekom.
Strong words from a man who last year entrusted his own data systems to Microsoft in one of several public cloud deals between US technology giants and European telcos. But it seems only the regulators are at fault. "We have to find a kind of level playing field in our industry and we need brave politicians who set out the vision for Europe," said Höttges. "If we are not changing the set-up, Europe will fall further behind. There is the US having a single market and the Chinese market being very free on their regulatory rules and we fall apart in Europe with 27 regulations, not a clear set-up of antitrust rules, not a clear set-up about data privacy. Europe has to wake up."
All of that may be true, but it does not alter the fact that a wave of public cloud deals will tilt the balance of power even further toward US big tech and away from a crowd of European operators that look weaker today than they ever did when Zoom was just the noise a car made. Orange's share price is down 10% in the last year and Telefónica's has dropped 6%. Yes, Deutsche Telekom's is up a fifth, to €17.93, but it was worth €84 in 2000. Meanwhile, Google trades at $2,532, 73% more than its value just one year ago.
Worryingly, it is not the telcos that have become more critical during the pandemic, but the tech giants. Before March 2020, it was just about possible to live an ordinary life outside an Amish community and not even know what a smartphone app was. Today you cannot so much as order a round of drinks without one. If a mobile operator in Europe's busy telecom sector had a blackout, the world would cope. A lasting outage at Amazon would be akin to a solar flare.
If nothing else, this MWC shows the cloud invasion of telecom is well underway. So far, the telcos' only answer is to keep striking deals while hoping the same regulators that have been disappointing them for years will suddenly prove useful. The trouble for Höttges and his peers is that US and Asian operators are in much the same position, even if their markets are less stocked with traditional rivals. Would anyone describe AT&T or Verizon as success stories after their recent disastrous forays into the media and Internet markets? If lackluster regulators are the best hope for Europe's telecom bosses, the GSMA should probably start looking for new exhibitors. Anyone for Cloud World Congress?
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— Iain Morris, International Editor, Light Reading