MWC23 has just ended after a busy week interspersed with chilly weather, countless meetings, both planned and impromptu, and several surprises, some pleasant and others not so much. Unlike previous years, this post will not be super long but the first of a series, with the major themes of MWC23 likely to be the subject of sustained debate throughout the year.
But first, we must take a moment to note that returning to MWC after a gap of four years offered pause to reflect on what is truly a great opportunity. MWC in Barcelona continues to be an important gathering, in many ways, the highlight of the trade show and event circuit for the telecoms industry. The show had all of the usual suspects, nearly all in the same locations in cavernous halls at the Fira de Barcelona though I should have counted on muscle memory guiding me as I did wander into the wrong hall on the first morning. The official attendance count from the GSMA was 88,500 but the actual number hardly matters as there was enough energy. The Fira felt full without being overwhelming. The number of attendees was also lower with many exhibitors having cut back on personnel visiting MWC.
It is also pertinent to ask if there was anything truly buzz-worthy at this year’s event. The short answer is no, but that is not a bad thing. The “buzz” on day one was about Nokia’s new logo, which was announced at a Business Update for analysts and media on the Sunday before the official show opening. Nokia should be credited for breaking with a unique and longstanding brand identity as the company attempts an evolution beyond connectivity and network infrastructure. That said, the new logo will take some time to get used to. Beyond new logos, SK Telecom had a massive drone/flying taxi/hovercraft on their booth and were showcasing a VR demo which saw frequent demand with long queues. The only other time we felt “buzzed” was when sampling a glass of Arak at the booth of an Israeli exhibitor at their happy hour slot.
The "burning platform" and the death of the Telco as we know it
But on to more serious business and we want to start the first in this series of MWC posts by focusing on Telcos and their continuing trysts with destiny. Over a decade ago, the CEO of Nokia at the time was Stephen Elop. His legacy is controversial as he neither returned Nokia to its halcyon days as the number one smartphone maker, nor did he arrest their slide into irrelevance as a handset maker. He is still known for the “burning platform” memo, which used the possibly fictional story about a man on a “burning” oil rig in the North Atlantic who was faced with an impossible choice. Be consumed by the raging fire on the platform or jump into the icy seas below. We could not help but be reminded of this memo as we visited operator booths and keynotes at this year’s MWC.
It's not a perfect analogy for sure, but the mobile operator community are currently caught in a no-man’s land, or at a crossroads. In many ways, this is a predicament of their own making. Starting with the early investment cycle in 3G networks, the operators simply had too narrow a field of vision, prioritizing increased revenues from connectivity without understanding that they would need to migrate towards the Internet. In other words, they needed the Internet more than the other way around. Just to use one small example, Google Maps is a very popular app that generates and send a lot of data over the mobile network. But that traffic, even if partially, is ultimately monetized by the ever-increasing data bundles that operators sell. The success and rising popularity of the Internet and applications have made the network more valuable to consumers. It has also meant that new control points started to emerge in the industry ecosystem and things began to spin out of the control of the telco industry.
These new control points have seen value shift towards the Android and iOS ecosystems, as well as towards the over the top (OTT) players, with free apps often acting as externalities for adjacent revenue generating core competencies like search. Faced against this, telcos are increasingly faced with a terrible dilemma, continue grappling with declining revenues while increasing spending on building 5G and digital infrastructure. Perhaps unsurprisingly, the old refrains from the operator community for “fair share” regulations have become commonplace again, with strident calls for action from operators and European regulators, demanding that OTTs and hyperscalers pay a “fair share”. The Orange CEO in her keynote questioned whether telcos would be around in a decade. Of course, she meant that telcos would evolve beyond their current incarnations but the undertones of alarm were palpable at this year’s event. There was a palpable sense of unease and insecurity about what comes next for the telco, with much talk of telcos transitioning to a TechCo end state, though there is no clear articulation from the operators at this stage of what this actually means.
To be fair, there finally seems to be recognition that the operators will not survive with connectivity bundles and subscriptions as the primary source of revenues. There were two primary themes for operators to take note of.
First, operators need to monetize their network features and this only happens with APIs. The GSMA Open Gateway Initiative is the latest high-profile attempt to corral the operator community into agreeing to converge on standardized APIs that can be offered to developers. Despite previous failed attempts, this time the Open Gateway effort is building on the recent CAMARA efforts at creating APIs. While it feels like old wine in a new bottle, converting their networks into something more consumable is increasingly becoming s strategic imperative for the operator community.
Second, operators are beginning to grapple with what Artificial Intelligence (AI) can do for them. Most of the early efforts are focused on the optimization of data flows through the BSS/OSS and RAN components of the network. However, there were some signs that operators are beginning to think about AI in actual product terms as well. The SK Telecom booth had an incubated company called Xcalibur running an interesting demo where x-rays of animals were analyzed using an AI-based model and then uploaded to the veterinary hospital “within 15 seconds”. Xcalibur already claims to have signed up 120 veterinary hospitals across Korea with a subscription-based model.
While there is a path forward, the operator community’s bipolarity was also in view with large scale demos and messaging around the Metaverse. The metaverse, as currently defined or ruined by Meta, promises immersive experiences which will require, you guessed it, premium bundles of high-speed, low-latency connectivity. So, on the one hand, push for network monetization through consumable APIs and increasing automation using AI, while at the same time, continuing to double down on the old strategy of driving connectivity subscriptions. Two steps forward, one step back!
The operator community is once again at a crossroads, and we will continue to explore the themes discussed in this note through 2023. Do watch out for the upcoming posts in this series on MWC, with future posts planned, on private 5G networks, Fixed Wireless Access (FWA) as well the looming shadow of non-terrestrial networks (NTNs), no pun intended.