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5G Rollout and Key Guiding Principles for Telco CEOs

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Most telco operators today are priming for the rollout of 5G wireless technology. The majority are doing trials, some are busy acquiring spectrum, and a minority are deploying 5G in focused areas. But all still face uncertainty about what the future might hold given untested use cases, regulatory issues, and unproven economics. As a result, most are proceeding cautiously. While many have made progress developing their technology and pilot strategies, few have moved beyond the early stages of developing their business cases and commercial plans.

No matter which stage operators find themselves at, five key principles will help guide the formulation of their strategies and help them better prepare for what might lie ahead.

 

5G strategy must be led by the CEO.

The journey from second-generation wireless technology, when voice was still king, to the data-focused fourth generation has been evolutionary, with legacy mobile networks gradually repurposed and improved over the course of two to three decades. Fifth-generation networks are altogether different. 5G promises a step change in service—lightning-fast speed, incredibly low latency, and the capacity to carry massive numbers of connections simultaneously—ushering in all sorts of new communications possibilities for work, play, and in between.

Yet the stakes for operators are high, as 5G requires big up-front commitments at a time when future rewards are still far from clear. For example, one way or another, operators need to commit to building costly new infrastructure. Yet strong returns on those investments are unlikely to lie in a mass-market offering, as was the case with previous generation technologies. Instead, they’re more likely to reside in specific new use cases, from the Internet of Things (IoT) to fixed wireless access (FWA) to ones not even dreamed up yet. But when those will start bringing in significant new revenues, and customers, is uncertain.

In addition, regulators are releasing a few different bands of 5G spectrum simultaneously. This adds further complexity, since bands used for different mobile technologies require different network upgrades, pushing up-front capital expenditure to unprecedented levels. Important too is the fact that it looks like network sharing will play a significant role, which could reduce the cost of 5G. But the long-term strategic implications of a commitment to network sharing—perhaps even with a competitor—are difficult to predict.

A CEO’s top priority must be to decide the company’s strategic stance. Some operators will choose to be network leaders, committing to fast, national or regional rollout to secure first-mover advantage. Others may opt to focus more narrowly, perhaps on certain regions or cities, use cases, sectors, segments, or clients. Operators who serve stadiums, shopping malls, or private hotspots could focus on these areas first, for example, while those with a manufacturing client base could lock in these clients by helping facilitate smart, autonomous systems. The choice will depend on each operator’s existing customer base, appetite to invest, and ambitions.

 

Don’t focus on RAN alone. Understand the investments required across the entire 5G architecture.

Radio access network (RAN) decisions are important and rightly get a lot of attention. That’s because RAN accounts for the lion’s share of mobile operators’ costs given the large number of sites in a network. These will need to be upgraded, and most operators worldwide have plans to do so by 2025. In addition, many small-cell sites will be needed to extend the coverage of mobile networks to indoor areas where outdoor signals do not penetrate well, or to add outdoor capacity in areas with very dense data usage. This will trigger a whole new set of considerations besides cost. The network design, access to adequate cheap infrastructure, and deployment timelines are all key to profitability.

Yet 5G will require investments in all network domains, not just RAN. These are rarely discussed. Here are some of the most significant:

  • Core network. Equipment manufacturers are still developing the technology for core 5G networks. That presents some tricky decisions for operators, balancing the desire to be fast to market with the need for solutions that will be future-proof. Initially the choice shouldn’t be that difficult. Since many elements of current 5G technology build on 4G networks, mobile operators can take an evolutionary approach to infrastructure investments, upgrading existing 4G core networks to support 5G ones and adding new 5G functionalities as needed. This incremental approach also makes sense from a financial perspective, given that investments can be kept down when revenue remains uncertain.

But there will come a time when network upgrades are no longer sufficient to support the new use cases, and new build-out will be required. When should that shift—with the accompanying costs—be made? Indeed, some argue that it makes sense to build a greenfield core network, deploying stand-alone architecture and advanced 5G capabilities from the very start. The advantage is that the operating model can then be entirely cloud-based, and much of it automated. However, that may be a risky option until equipment makers have finalized the technology road map. And even once that is settled, the network would need backward compatibility with 4G to allow for handovers of the use cases that will run on both.

  • Transport network. Many operators’ transport networks still aren’t ready for 5G. Fiber-only will become essential because fiber can best support 5G capacity as well as latency requirements and small-cell deployment in urban areas. This will take time and money.
  • OSS/BSS. There has been no shortage of talk about new network capabilities ushered in by 5G, from leveraging latency to enabling more quality guarantees. Yet, most operators still see investment happening in the network, rather than the enabling layers like operational support systems (OSS) and business support systems (BSS). These are the very systems needed to be able to market, sell, price, provide, and operate the oft-touted new use cases, such as connected cars and mission-critical solutions.

 

Pinpoint the cost-saving opportunities.

Most operators believe the shift to 5G will be expensive. They have a point. When network upgrades are no longer sufficient to support the increased traffic, operators will need to build new macro sites or small cells, which will be the primary driver behind network cost increases.

However, what many overlook are the opportunities to keep costs in check. First, many operators assume they will have to fund nationwide coverage like the first generations of mobile networks. Not so. As discussed above, they need to pick their geographic, client, and use-case focus with care. Indeed, blanket coverage should be avoided without a clear idea of how to monetize deployment.

In addition, whatever the extent of coverage, there are ways to temper investment costs. For example:

  • Where possible, upgrade and retrofit existing macro sites.
  • To densify networks, build new, small cells instead of macro ones, installing them on lampposts, traffic lights, and so on. The best locations for this infrastructure will vary by city and operator.
  • Optimize the network rollout with the help of analytics to know exactly who is using what level of data.
  • Consider network infrastructure partnership options. There may be cities and municipalities keen to push ahead with 5G development that will agree to the use of their infrastructure if it helps deliver certain public services—such as emergency service communications. And operators should not dismiss sharing with other operators, particularly if they are considering deployment in an entirely new location.

 

Embrace cooperation. Your future depends on it.

Far too often, we see companies plowing ahead with their technology strategies without sufficient regard for other stakeholders with whom they will need to cooperate.

Take vendors. Operators have always had to cultivate relationships with them, of course. But with 5G, much more depends on how they work together. That’s because in the past, it was relatively simple to move in lock-step with vendors as technology options were limited and spectrum released were aligned to a specific technology. Today, with so many technology choices and different bandwidths, operators could find their decisions leaving them out in the cold if vendors settle upon other technologies that then become industry standards, or that are compatible only with certain spectrum bands.

This aspect of the business will be further complicated by the fact that operators will have to work with a much broader range of vendors. This is largely due to the growth of software-based networking, which has removed many of the high barriers to entry and prohibitive costs that kept newcomers at bay when hardware dominated the sector.

 

Relationships with business customers could also prove particularly important in the 5G era, as locking in the right ones early could turn out to be more important than fast deployment. These “anchor” B2B customers may be willing to partner with telcos, as well as other ecosystem players, to experiment with use cases. But that will only be the case if operators can develop much closer relationships with customers than ever before, given how deeply they will be involved with their operations.

Then there are relationships with competitors to consider. In a world of network sharing, they could prove pivotal to success, as players frozen out of strong partnerships could suffer higher 5G costs and a slower rollout.

Finally, much will depend on relationships with government agencies and regulatory bodies, given their power to influence the industry’s economics. Their decisions on which and how much spectrum to release first—low bands (700 MHz), mid to high bands (3-4GHz range), or mmWave—will be a key component of network costs. Early release of higher bands forces operators to build out new capacity earlier, thus raising costs. How the spectrum is auctioned will also determine costs: auctioning off, say, two small chunks and one large piece in a market with three or more bidders could push bids for the large, more desirable chunk, very high. In addition, some governments extract coverage and network-sharing commitments from operators in return for spectrum—commitments that could determine whether rollout will end up being profitable.

In some cases, local government authorities also determine infrastructure access rules, such as whether to allow more than one network access to street furniture or to public hotspots.

All this makes clear why your 5G strategy cannot be built in a vacuum.

 

Prepare now for 5G’s operational challenges.

Uncertainty about how quickly demand for 5G services will grow, and their profitability given the investments required, tends to focus minds on how best to build the network. What gets overlooked are the operational challenges that will ensue, of which there are many. For example:

  • Networks will be significantly more complex. There will be more frequency bands. A recent auction of 5G spectrum in Italy offered three different frequency bands, on top of the six bands currently used for 2G, 3G, and 4G, making a total of nine bands for use by operators. As a result, network load will need to be balanced between 3G, 4G, and 5G across many frequency layers, and handovers managed not only between the different technologies but between different vendors too.
  • Network slicing promises great advances in customer experience and delivery, as well as new business models. But its true potential, whereby operators provide dedicated virtual networks with functionality specific to the service or customer over a common network infrastructure, will only be achieved when end-to-end reconfiguration is possible in real time. That degree of sophistication will require high levels of network intelligence and automation.
  • 5G networks will be highly automated, and IT and networks will converge. That means new tools will be needed for network resource management and new talent. Operators will need engineers with native cloud programming and engineering skills, for example—skills that are currently in short supply in the industry. To lure that new talent, they will have to compete with the high-tech giants and small start-ups whose reputations as fast-moving companies with more flexible work cultures—and in many cases better compensation—could seem more attractive.

In sum, the operating model requires reinvention. Unless operators address these challenges, their deployment ambitions might not be realized.

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Technology Trends for 2019

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The rapid development of technology with acceleration has made it the principal factor for social, economic and political changes in the world.

It has become a large spectrum of human activity and therefore it has a potential of overpowering human minds. Though every single technological up gradation is created and invented by humans, soon it can happen that humans will become lesser powerful in terms of technology.

Going into 2019, there shall be various tech trends that shall shape the entire universe including

Trend 1: Easier access will accelerate adoption of game-changing technologies

Until now, industry players have spoken about innovative technologies somewhat theoretically, without providing a clear picture of how these powerful new innovations will be used. This has left people without a solid understanding of how they will ultimately manifest in our work and personal lives. Think analytics, machine learning, artificial intelligence, blockchain, and containers, just to name a few.

That’s starting to change. The application of game-changing technologies is becoming more pervasive and their adoption is growing steadily. It’s believed that they’ll be firmly embedded in many of the core processes and technologies we use, within the next 3-5 years.

We’ve seen how artificial intelligence (AI), machine learning, robotics, and virtual and augmented reality have started to converge to deliver compelling outcomes in just last year. This is expected to accelerate.

One reason that adoption is increasing, is an improved understanding of how and where to use such technologies. And of course, we’re also seeing growth in the number of skilled people who know how to leverage them.

Easier access is already accelerating adoption of key technologies

Another important contributing factor for more rapid adoption is improved access to such technologies, both from a platform and cost perspective. The hyperscale cloud providers at an infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), and software-as-a service (SaaS) level, such as Google, Microsoft, Amazon, and Salesforce are starting to embed these capabilities into their offerings, or making them available as a platform to be used by third parties.

This is helping businesses overcome the hurdles they’ve faced in the past. Now they can get access to game-changing technologies without having to invest in building their own algorithms and platforms. Instead they can focus on how to exploit these technologies and speed up the rate at which they get business value.

Bots and robotic process automation are already becoming part of our everyday working and personal lives. It’s relatively simple to create a bot that will access all a company’s sales support systems, and provide a consolidated dashboard. These dashboards can be unique to each customer service employee – paving the way for more informed decisions. It’s changing the way we work, the service levels we can provide, and our effectiveness.

3D printing has also been around for some time, mainly based on resin or epoxy-based materials, but we’ve seen this move quickly to metal-based 3D printing, which is opening up a multitude of new use cases.

Trend 2: Identity will emerge as the killer app for blockchain

There’s been a massive amount of investment in blockchain in the last 12 months. In the financial and capital markets, blockchain-based platforms are rapidly starting to dominate. We’re now starting to see this extend to additional settlement areas such as equity trading. There’s also been a proliferation of blockchain-based smart contract platforms across multiple vertical segments, both in the private and public sectors.

The market is starting to see ecosystems of value emerging around the blockchain platform vendors, such as R3/Corda, Ripple, and Ethereum. Platform providers are beginning to align to verticals or specialised applications, and it’s interesting to observe the emergence of ecosystem incubators developing additional applications for a specific vertical, on a particular platform.

It is believed that identity management will emerge as one of the killer apps for blockchain in the next 3-5 years. It’s a topic that’s never quite been resolved in the industry.

It is believed that moving identity management into a blockchain environment could offer a solution to many of the current challenges, and in addition, open an entire new value chain, centred on identity.

Consider the other value chains that could emerge … perhaps allowing individuals to truly own and control their identity and its attributes, and selectively allowing the use of such attributes by third parties in transactions or interactions. This could fundamentally change how we conduct financial transactions or even sensitive interactions regarding our health ─ all attributes relating to our identity. There’s no doubt that blockchain-based innovation will expand and accelerate over the next 3-5 years.

Trend 3: Companies will learn how to extract value from data, while respecting privacy

Data value management is a topic that will dominate our industry in the next 3-5 years.

Today, almost every company has access to large volumes of data. But it’s what they do with that data that will define the business models of the future. This isn’t necessarily a new statement, but the context and impact has escalated dramatically. Current business models will be re-engineered by the value of the data that’s generated by existing activities. The value of the data will supersede the value of traditional revenue activities ─ an interesting concept in its own right.

The concept of data value management will become one of the most important investment areas over the next 3-5 years due to its monetary value potential, but it will also become one of the major driving forces of investment to create more data. Businesses have strived to become more digital in nature, but those that excel in managing the value of their data, re-engineering their business models, and establishing new revenue streams, will become the true digital business heroes of the future.

Monetisation of data must respect privacy

Of course, ensuring that people’s personal particulars aren’t shared illegally is critical for any business considering going down this path. Regulations regarding data privacy continue to grow, both at a country and vertical industry level. Fortunately, the increasing interest in data value management is spurring massive innovation to address the issue of privacy.

Data sources are growing, the granularity of the data itself is improving, and because of this the potential value that can be extracted is growing even faster. The increasing challenge is how to derive insights from disparate and distributed data sources, without infringing regulatory or basic confidentiality guidelines. Anonymized data analytics at scale is an ongoing challenge and finding ways to gain the rich insights without sharing source data or causing breaking the law will become barriers to growth, if not solved.

Trend 4: The Internet of Everything will change our lives for the better

The number of things connected to the Internet in 2008 exceeded the number of people on earth. By 2020, it’s expected that 50 billion things will be connected, and this goes way beyond ‘things’, it becomes ‘everything’ or simply the Internet of Everything (IoE). The IoE ecosystem will connect the online and physical worlds in ways we’ve never imagined and society will become increasingly technology-driven as a result. There’s not a part of our lives that will go untouched. Automation will take on a new meaning, data value management will be accentuated by the richness of data, and AI will ingest the data to drive intelligent insights and outcomes we’ve never seen before.

The human API will evolve

The IoE will encompass every area of our lives, transforming the way we provide healthcare, and the way we live, work and learn. It will re-engineer our lives through what we increasingly refer to as the ‘human API’ enabling us to interface with various connected systems in ways that are hard to anticipate. The scope of biometrics will expand from what we understand today, to include gestures, emotions, expressions, and many more aspects, triggering automated system reactions to complement, ease, or enhance our activities.

Trend 5: Disruption will drive consolidation among tech vendors

A period of unprecedented change and disruption for major technology vendors driven by factors largely outside of their control is anticipated. Not only are technology consumption patterns changing, but how innovation is driven, products are developed, and intellectual property is shared in an open source and free manner. All of this is driving disruptions that are hard to predict or manage.

The emergence of new technology giants, with very different business models, is driving some of this change – and shifting the landscape at a scale not seen before. The increasing market dominance of the FAANGs – a term coined to describe Facebook, Amazon, Apple, Netflix, and Google – and a resurgent Microsoft, are leading this disruption.

FAANGs don’t buy their technologies from original equipment manufacturers (OEMs) like HP, Dell, Cisco, or IBM. Instead they source technologies or components from original device manufacturers (ODMs), write their own code and build their own solutions. This diminishes the addressable market for OEMs.

The rise of the FAANGs will cause a shake down of the OEMs

The effect of all this on OEMs will be significant, and in some market areas OEMs are already competing for roughly 40% of the total addressable market. As time goes on we’ll have a lot of big fish competing in a smaller and smaller pond – and it’s foreseen that the big fish will start eating the small fish… I believe that the vendor landscape is going to undergo a metamorphosis over the next 3-5 years and those that emerge, will look very different.

 

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