It is a data-only network, stupid!

The European telecom industry is about to have a massacre. Too many countries with too many micro legislations. There is just no scale in being a Belgian, Luxembourg, Slovenian, Dutch, Swiss,... telco. You still need the same marketing, selling,? OSS, BSS and 5G network. However even if you have 50% market share, you only have 5M to 10M subscribers to split the costs.?

The answer of the telecom industry is to go and cry in Brussels and make Big Tech pay a large part of the bill. Telcos have done the crying for years, without any results. So the answer is probably going to be no, again. But let’s imagine the answer is yes. Big tech needs to pay. Unfortunately this will become quickly like a telco tax and given that the economies of scale problem is not going away and consolidation is going to continue, we soon will end up with one telco in small European country. When, not if, this happens Big Tech will go to Brussels and say, your Digital Markets Act obliges us to open our phones and other platforms to competition, we want a Telecom Markets Act or we cut off all your small EU countries from our services. How long would EU MP go without being able to use WhatsApp, Netflix, YouTube,... if only Belgium is cut off? One maybe two minutes?

So the Telco Markets Act will force Telcos to share spectrum and to allow others to operate base stations and other telecom infrastructure. Big Tech will rightfully point out that telcos have been doing this for years with TowerCOs.

Now that Big Tech can compete with Telcos they will look at the network and say “It is a data-only network, stupid!”. For decades telcos have assumed we all need a telephone number [IMSI] and because there are prepaid phones we need USSD. SMS, MMS, physical SIMs, roaming, tariff plans, SS7,... will all be foreign concepts to Big Tech. Telco networks and standards are bloated with prehistoric concepts that have never been removed.?

Big Tech will take your email or similar as your network identifier, similar to SIP. WebRTC can be used for video calls, text chat and screen sharing. So the conclusion is they do not need anything more.

Spectrum auctions can be completely decentralised with smart contracts on the blockchain. If demand for network coverage at a certain location is high and coverage is low, the price goes down, in the opposite case the reverse happens. Rural places will always have cheap spectrum. Given that base stations are all part of this spectrum market, they can also be validators in the spectrum blockchain. This means that this particular blockchain is completely free but if a base station cheats then it will be removed and no longer have spectrum.?

Usage based pricing will be the new tariff plan but with a twist. Most users will never spend more than €10/month for as much as they navigate online.?

These same users will do their own user provisioning. They can create as many virtual SIMs as they want, as long as the funds associated with each user account are in a positive balance, data will flow. That balance is tracked on the previously mentioned base station blockchain automatically.

TowerCOs and building owners will be able to buy cheap open source base stations in macro cell format. The more users connect to them, the bigger the pay-out. In big cities, each building operator will put up their own mobile network infrastructure because they will be able to earn from the people in and around their building.?

When a user does not find (enough) connectivity in a certain spot, “roaming” is done on the national telco network. Given that this is expensive, the collective of the base stations will have to share in these costs and pay for them from their revenues. This will create an automatic incentive to put more capacity in regions where roaming is done and soon most not spots disappear because spectrum is cheap or in extreme cases could be negatively priced to avoid paying more roaming costs.

Each office or home can put up a small cell base station and connect it to their broadband. Thanks to software defined radio chips becoming a commodity, these small cells will soon cost similar to a premium WiFi access point (€50-200). By offering capacity to the network, users see their bills go down instead of up. If you live in a busy apartment building in the city and your neighbours are not running small cells, then your small cell might actually make you money soon after acquiring.

Each base station gets software through apps that get installed on it. This allows for thousands of base stations to negotiate spectrum and handle billing automatically. However it is also a great way for creating value add apps. The residency app proofs your residency in a digital way by tracking that the last six months you have been at your home address enough time. The Netflix and Youtube apps pay your base station to store content for your neighbours and stream it to their devices. The Xero app, which a company pays for, tracks all the usage of their employees and store it as expenses in their accounting. The Revolut app checks your balance and if you go below a minimum will automatically refill it from your bank account. Thousands of more base station apps can be found in the Base Store.

Now the good news. Telcos don't have to wait for Big Tech to go to Brussels and get the Telecom Markets Act voted through. There is no reason why they cannot split their current companies into three: TradCo, DeTelco, Tappco. TradCo is the traditional business but taken to the bare minimum in people. DeTelco is the business which starts building the decentralised network business as described above. Tappco will receive the bulk of current employees and they will be able to spin off into small app companies that make value added apps on top of the network. Over time TradCo will die. DeTelco will stay small. However if teams do a good job then many new revenue generating telco apps will be launched. If not 3-5 years down the road Tappco runs out of money and everybody is made redundant. There is nothing that will motivate employees more than knowing that every day that passes and no new revenues are generated by Tappco will be a day closer to bankruptcy. For once we will see fast moving Telco employees.

The alternative is simple. TradCo keeps on doing traditional telco only. The Telecom Markets Act comes along. Big Tech does DeTelco and Tappcos and TradCo dies.

Which telcos do you think will become DeTelcos and which ones will stay TradCos and die?