The thinking behind my telecom predictions
Maarten Ectors
Innovative Technologist, Business Strategist and Senior Executive | Bridging Technology & Business for Lasting Impact
I made some telecom predictions 4.5 years ago and recently which have gone viral. Some readers have rightfully pointed out that I have not provided any arguments to base them on. So let me do exactly that.
Why 5G is a money trap?
Many 5G business cases were written more than 5 years ago when many, myself included, thought that autonomous taxis were only a few years away. Counting these millions of data hungry robot devices was a cornerstone of new 5G revenues. The Metaverse and cloud gaming would need 5G in spades. Also 5G was better prepared for lower power devices. Network slicing and other advanced techniques would allow private 5G deployments. The list went on and on.?
The reality today is that most of those new revenue sources have not been realised or at best have been exponentially smaller.
5G costs were modelled in a time of historically low inflation and Huawei was still a preferred supplier. Debt could be acquired easily and new revenues would pay loans back. Now without those stellar new revenues and high interest rates, financial models look very bad. Add that Nokia and Ericsson have been more expensive because of chip supply issues and having less competitive price pressure. So the next steps are:
Telecom operators need to do massive cost reductions
The era of open source powered bit pipes
Without any non-essential team, telcos will go back to their bit pipes roots, selling some connectivity solutions but moving away from trying to be everything to everybody. Cost will be king. The remaining parts of 5G rollouts will be done on the cheap.
At the same time we will be seeing open source hardware thriving in telco. RISC-V can be made into super cheap Intel and ARM alternatives. Open Source Software Defined Radio will end up on a chip. Making the cost of consumer base stations
Meta and others started OpenRAN which Ericsson and Nokia only half heartedly embraced. Telecom operators will have no other choice than to go 110% in this direction if they want to aggressively reduce their costs.
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The innovators angle
SpaceX is close to doing one of the biggest IPOs in history. This will allow it to raise large amounts of money. That money will be used to exponentially improve Starlink. More laser communication between satellites, bigger storage on each satellite for a better CDN, faster upload/download, more active users per satellite, take 4.4K satellites to 42K,…
There will also be money to acquire spectrum and Helium. With lots of telecom operators merging, governments will be welcoming more competition and lower data plan prices. SpaceX will be able to get spectrum on the cheap.
Its Helium acquisition will enable it to bring long awaited innovation in how telecom networks are deployed. By flooding the enterprise market with 5G OpenRAN to fibre base stations, companies and building operators will be able to deploy their own microcells in their offices and buildings. AI will manage this decentralised network at a scale we have never seen before. With the volume of equipment going up the price of base stations will come down and now consumers will be able to have WiFi+Broadband+5G modems at under $150 or cheaper. This makes it that to cover a city and densely populated urban areas, only a limited number of SpaceX macro cells will be needed.
At the same time SpaceX will work on making Starlink antennas cheaper so each Tesla and afterwards any moving, flying or sailing vehicle will have one. Those vehicles will become 5G base stations for our mobile or even next-gen mobiles will be able to connect directly to Starlink.
Every company or individual who sets up their SpaceX base (station) in such a way that a minimum of other subscribers will be able to “roam on it” will see their bill reduced. Have enough “roamers” and you get a free data plan or even get paid.?
Leave the city and drive 100km away and your car or the robot taxi that drives you will automatically switch to Starlink.
Customers will love the idea of getting paid to run a telecom network and the press will provide free marketing to SpaceX for which advertisement costs go to zero, just like at Tesla until recently.
Conclusion?
Large heavily indebted telcos like Vodafone will not survive. Small telcos will need to merge. Nokia and Ericsson will be disrupted by OpenRAN. SpaceX will technically improve to become the viable rural and in transit solution. Helium will be a prime target for a SpaceX acquisition. Hope now my predictions make sense.
Leader, Engineer, Organizer
1 年This looks more like wishful thinking instead of a set of fact based predictions. It completely ignores government investment in the west to fight against Huawei dominance. It also ignores the only company (in US) that has significantly spent to successfully build out 5g network to profitability or their European counter-part in Deutsche Telekom. Meanwhile, most of Ericsson's issues do not come from 5g, where it is growing in India, but from their one-time .5bill payment to US Justice. Nokia, while networks are down 11% yoy, has likewise benefited from new 5g markets (and apple licensing). Meanwhile, enterprises and municipalities are deploying 5g IoT at an accelerating pace leading to some of the lower costs for modems you speak about. While some weak companies may fall, overall the future of 5g is rock solid both by traditional telecoms and decentralized users like Helium. Starlink on the otherhand will see ridiculous competition coming from Amazon who have proven to have no remorse in driving out their competition. I cannot wait 5 years to see what happens!
Driving innovation in Connected Business
1 年Interesting discussion. I would also rather follow Dean's arguments, though. Having said this, the problem of the Telcos imho is not their existing 5G networks - it is rather the lack of applying its capabilities on an industrial scale. For once, I am not a big fan of PMNs, as in theory, those should be operated way cheaper by a Telco. The lack of application and broad market entry into this B2B space by the telcos will hurt them for some time. Plus the fundamental issue that they still only operate on a "bit pipe" model, shamefully neglecting Ecosystems as a key market for "Smart Connected" services & enablement. We also have looked into LEO. It will definitely grow in importance - but -as Dean also argues- as a fallback and rural alternative rather than as a replacement for Mobile or Fixed Broadband. Besides, I think a significant potential is still in the infrastructure market (TowerCos) as we have seen the first phase (separation from Telco) now slowly moving into consolidation, creating leaner and more efficient Infrastructure players within or across countries. On the same logic, operators will likely not go bust but will experience huge transformations...and those might indeed look different for small and large players
Chief Enterprise Architect at Al-Futtaim
1 年It was not difficult to predict that 5G will be difficult to succeed fast. Such a dense netword would require gargatuan amounts of infrastructure, as well as antennas in very close proximity to people, something our society is not ready yet. When WAP for 2G was introduced everybody was overjoyed and were predicting a great success. I was the odd one out who claimed that with the low speeds of 2G it will be a failure. I was so right! Luckily 3G saved the day.
All things in-building wireless. DAS, small cells, multi-carrier/multi-service and radio planning.
1 年All of this points to even less money for carriers deploying in-building and, probably, small cells. The world desperately needs a Helium type model for private business to install in their buildings and campuses. Wi-Fi to LTE / 5G works remarkably well, so maybe that is the answer. CBRS was designed to fill this space, but the carrier's unwillingness to interconnect has meant death for that model. Maybe with some humility, the carriers will allow CBRS to interconnect so long as certain design goals are met. Like the lower power, pre-approved, repeaters that are sold by Wilson and others. Verizon and AT&T, in particular spent all that money on gold-plated 5G networks and they still use a coverage map in their TV ads. It's almost business malpractice.
Solutioning
1 年Did anyone think that Helium was a success? I loved the idea, but it just didn't make sense to most people. It seemed to be floundering for quite some time.