In our 2017 paper, “Mobile Network as a Platform: Planning for the 5G World,” we explored the role of LTE in the disruption that took place over the last decade. 5G promises to create an even bigger platform for ingenuity and transformation.
LTE was successful because of what I call the “Synchronous S-Curve” effect that occurred as result of contemporaneous evolution of the smartphones and the centralized cloud. In our recent paper, “Connected Intelligence 2030: Quantifying the Disruption for the Next Decade,” we set the stage for what’s to come in the coming decade.
For the wireless industry, the growth of 4G LTE along with smartphones and cloud clearly were transformative as they collectively shaped the global technology ecosystem and the economy at large. Our Connected Intelligence thesis states that we are in a unique technological evolutionary cycle wherein many seismic trends are occurring at the same time. As has been proven over time, the magic of serendipity happens at the edges, at the intersections of domains and industries.
In our six-part series on 5G platform and innovation this year, I have been discussing some of my observations and suggestions on how the wireless ecosystem can come together to address an unprecedented set of opportunities that will come before us in the next decade:
- Industry’s 5G Moment: Will Operator’s Rise to the Challenge
- 5G: Fixing the disconnect between Technology and Finance
- Monetizing 5G: Lessons from the 4th Wave Cycle
- 5G means Rethinking Network Metrics
- 5G: AI in the Network
In this last column, I will attempt to round up the observations and the roadmap for the coming decade.
At our recently concluded senior executive summit, Mobile Future Forward, we completed an end-to-end world’s first live surgery demo (you can read about it here and watch the actual demo here.) Last year, we opened the conference with our favorite robot, Pepper (another industry first.) The purpose of these demos is to illustrate the potential roadmap for the industry and what’s to come. Clearly a lot of work needs to be done before such experiences will become mainstream, but there is no doubt that there is a tremendous amount of research and product work going on to make these innovations possible. 5G is one of the key building blocks in these experiences. Of course, 5G is not needed in every possible scenario, but 5G will be a critical fabric necessary for building many of the new applications and services that are not possible today.
However, before these products and experiences can become a reality, a number of pieces need to fall in place:
- The structure of the wireless industry is likely to look quite different coming out of the 5G cycle than going in. There are early indications of how this might pan out but operators, regulators, and the encompassing ecosystem needs to adjust to the new realities, fast.
- 5G arrives at an interesting point in the industry’s evolution. For the first time, the network upgrade cycle is taking place amidst declining or flat service revenue growth for the operators. In the U.S., the service revenues declined for three straight years before returning to modest growth recently. The story is the same for other mature markets. Even operators in developing markets are facing challenges. It is time to rethink the operator operating model. There is a path to revenue growth and EBITDA expansion, but it is complicated, as it requires new business models, infusion of software-driven network management, investment in vertical expertise, and rethinking the business from the ground-up.
- There are a number of variables that go into the economics, revenues, and EBITDA equation. While the industry is figuring out new revenue areas from 5G, the management teams must be prudent about how they plan their Capex/Opex while maximizing EBITDA. They must articulate a compelling narrative that tells their story of investment and rewards. CEOs must lay out the vision and roadmap for the company in both quantitative and qualitative terms. The 5G ecosystem will be very different from the previous four generations, and as such the degree of uncertainty will increase. To manage expectations, the technology and financial teams must work more closely together than they have in the past. The financial teams must have a clear understanding of how a dollar in network investment is related to the revenue and EBITDA output. One must develop a framework that clearly connects these dots. Operators who manage this profitability journey effectively by taking advantage of advanced software tools will be rewarded by the financial markets.
- 5G will undoubtedly create new opportunities and if the last cycle was any indication, 4th Wave will be at the center of the ecosystem revenue expansion. If 4G enabled the 4th Wave curves, 5G will be defined by them. If operators are not sanguine about how they run their networks, their role in the 5G stack will be a diminished one despite enabling it. By taking a more software-centric approach to network and services, they can become healthy competitors on the 4th Wave curve.
- The single biggest network management challenge that the operators face is that of the managing of the video traffic. While new sources of traffic will emerge in the next few years, the single biggest source of network congestion is still likely to be video that will itself undergo significant evolution from SD to HD to VR to holograms. Traditional optimization techniques are just not adequate. 5G is also not an adequate response to the problem. We have to learn to apply AI to manage the traffic in real-time. Furthermore, new types of traffic streams will tax the network. We built the most accurate cellular data traffic model early on that predicted how the next ten years of growth might look like. The 5G data growth model is much more complex and unpredictable as the number of variables are likely to growth exponentially. We need new ways to address this traffic dilemma. This encapsulates traffic management at the RAN, Edge data centers, core, and the cloud. New elements of the network that help orchestrate and optimize the traffic are needed that learn and apply intelligence in real-time. Operators should be more open to working with startups who are often nimbler and more innovative in addressing these opportunities. There is a straight line from the use of software for automation and network management to reduction of capex and Opex. CFOs should take notice and actively work with their CTO office to plan the 5G roadmap.
- Additionally, there are new types of data both ephemeral and permanent that will need to be understood for it will lead the industry to new billion-dollar opportunities. How operators handle data will be key to how they are able to monetize the 4th wave more effectively, how they are able to build the data platform that attracts developers and new ideas, and how they build sustainable advantage for the decade.
- Industry needs to also upgrade their measurement metrics. Instead of speeds and feeds, a better measure for the industry to aspire to is consistency – consistency in user experience for customers across sites and time periods throughout the day. Right now, there is wide gulf between the average user experience and the readings during congestion times at congested sites. To really measure the network performance, the industry will benefit from network consistency metrics.
- The combination of 5G and AI will be potent. It will transform not only network management but help solve numerous hard problems – drug discovery, precision farming, cloud gaming, holographic entertainment, edge robotics, VR surgery, and much more
Ten years ago, writing for our first Mobile Future Forward book, in an essay titled, 15 trends that matter, I wrote that the next 10 years will create more progress than the last 100. Given how the various puzzle pieces of Connected Intelligence are coming together, I can say with confidence that this will be true for the coming 10 as well. As we wrap up the last few days of this decade, one must take pause and marvel at all the progress we have made over the last 10 years. Then, we must try to understand the ecosystem forces that are likely to shape industries and nations and the role 5G might play in the intersections of domains and industries.
Tighten your seat belts.
Chetan Sharma is CEO of Chetan Sharma Consulting, an 18-year young management consulting firm and is an advisor to CXOs and boards of companies in the wireless industry. Over his 25 years in the industry, he has worked with operators on all five continents and has the rare distinction of advising management teams for each of the top 9 global mobile operators. Chetan has written 15 books on various wireless topics and his research work has helped shape many strategic decisions and dialogue in the industry. He is curator of industry’s premier brainstorming summit Mobile Future Forward. More information at www.chetansharma.com. You can follow his musings at @chetansharma
"Industry Voices" are opinion columns written by outside contributors--often industry experts or analysts--who are invited to the conversation by Fierce staff. They do not represent the opinions of Fierce.