ANALYST Q&A

Nicole Peng

SVP Mobility,

Canalys

Daryl Schoolar

VP of Worldwide Telecommunications Insights, IDC

Paolo Pescatore

Founder and TMT Analyst, PP Foresight

Radhika Gupta

Head of Data Acquisition, GSMA Intelligence

Q: What will be the key attractions at MWC23?

Nicole Peng (NP) It’s year five of 5G. It will be exciting to see leading players finally show monetisation paths. From smartphones and XR to robots and electric vehicles, a growing number of devices and applications are leveraging the powerful and maturing 5G infrastructure globally. As the mobile industry moves into a period focusing on sustainable business models, the acceleration of 5G implementation will allow more companies to reap the results from early investments and prepare for a global business rebound in the coming years.

Daryl Schoolar (DS)

I think private mobile networks will be one of the most discussed topics. It seems no matter where a company fits into the mobile ecosystem, that company thinks it can make money through offering some part of a private mobile network offering. There is some logic to this thinking. Private networks come in a variety of configurations, management and ownership models. Furthermore, unlike many of the new revenue growth opportunities that we often hear about, private mobile networks are a reality today with commercial deployments.

Paolo Pescatore (PP)

The showfloor will be awash with demos, with vendors selling network offerings and operators seeking to bring immersive content to life thanks to the power of gigabit connectivity. Beyond all the glitz and glamour, a key theme will emerge that it is time to deliver on the promise of 5G. Building upon recent events, expect to see a lot of focus on satellite connectivity and eSIM. Usual buzzwords including cloud, automation, orchestration and private networks will be prominent throughout the week. Take some time to check out 4YFN, the start-up event where you might just find the next disruptive big thing. Don’t be surprised to see adjacent industries that will heavily rely on the power of mobile such as automotive.

Radhika Gupta (RG)

The overarching theme Velocity is exciting with specific topics covering 5G Acceleration, Reality+, OpenNet, FinTech and Digital Everything. I am expecting to see innovations covering AR, VR and XR devices, network infrastructure innovations and energy efficiency. I also look forward to experiencing haptics in the metaverse and CV2X demos, meeting robots and riding in drones. Most importantly, I expect sustainability and green energy to be a central focus for most of the products and services on display.

Q: What excites you most about returning to Barcelona?

NP It is my first year returning to MWC from China since the pandemic. The value of face-to-face meetings is evident, so I am looking forward to seeing business leaders and industry peers coming together to discuss sector-critical challenges for the next ten years, such as sustainability and AI. It was great to see China joining the rest of the world and reopen its borders this January. This change means many Chinese companies and executives are returning to the show this year, demonstrating innovations, forming partnerships and joining the industry discussion to explore future opportunities.

What excites me the most about returning to Barcelona is probably the same thing that excites most attendees, seeing old acquaintances in person again. Online is no substitute for face-to-face meetings. The other thing that excites me about returning is the same thing that has always made MWC my favourite event of the year, the quantity and quality of discussions on the mobile communications industry. The variety of these conversations and different viewpoints on the industry provides context to my research, second to none.

It is amazing to see how MWC has grown from the early years in Cannes to now being the must-attend show in mobility. There are very few events that bring together key decision makers from different companies across all verticals all under one roof. Expect to see a real cohesive effort towards getting business done at this congress. This builds upon a core belief I have seen at other shows in a post-pandemic world with a greater focus on quality rather than quantity of people.

I always look forward to coming back to MWC to learn about the latest developments shaping the industry, as the event offers a glimpse of the future and the capabilities of our industry to contribute to that vision. Over the past few years, the ecosystem has expanded and is no longer limited to telecoms providers or vendors, and this is what excites me about the show: the opportunity to meet with the wider ecosystem participants and understand their role and contribution.

Q: What do you see as the mobile industry's key challenges?

NP Last year was an extremely challenging year for players in the mobile industry and highlighted how the industry has benefitted significantly from globalisation. The pandemic, geopolitical pressure and macroeconomic headwinds have set back cross-regional development and collaboration, and led to increased trade barriers and material costs. These costs have been passed on to end users in many markets where the move to digitalisation has stalled dramatically. Fortunately, many governments have realised the role of digitalisation in economic reform and recovery, and the mobile industry will be a driving force toward the path of collaboration.

There are three key issues mobile operators continue to wrestle with. The first is cost containment and reduction for both capex and opex. The second is better management of operations and service delivery complexity. The third key challenge involves data management. The amount of data available to mobile operators from their networks continues to grow. Data is central to delivering services, but mobile operators must make sure it is secure and properly stored. At the same time, mobile operators also need to find ways to better monetise that data. Concurrently keeping data secure and monetising it is a major challenge.

PP Operators’ margins are being squeezed and the ongoing wranglings between regulators and big tech is showing no sign of easing up. Major uncertainty awaits. Prices are all heading in the wrong direction; no one is immune, with consumers all feeling the pinch and tightening their belts. Many companies are scaling back on investments. People will be forced to make some decisions over the coming months on their devices, services and subscriptions. Some will downgrade, others cancel altogether.

Global economic uncertainties will continue to pose challenges for the mobile industry in 2023. High inflation and depreciation of many currencies conflated with the rising capex demands, required to fuel the next wave of growth and invest in green energy technologies, will keep margins under pressure. The decline in smartphone shipments in 2022 also points to the continued supply-chain disruptions and reduced purchasing power of consumers amid high inflation. Reduced device availability, especially in the midrange or low-cost segments, can result in the slowdown of a second wave of 5G deployments and adoption.

Q: What about opportunities? Where should operators channel their energies?

NP Opportunities arise from satisfying the needs of digitally savvy consumers. While the trend of ‘digital everywhere’ prevails in mature and developing markets, operators are playing many roles – from providing increasingly integrated digital-life services to bridging the digital divide. More importantly, operators drive the digitalisation of a local economy by collaborating with the broader tech ecosystem. These increase the touchpoints with end users who bring significant lifetime value from ‘sticky’ digital life services. Understanding consumers of the future and market differences are still fundamental for defining strategic positioning.

In the short-term mobile operators need to channel their efforts towards building up their 5G subscriber bases, especially with business customers. I know operators want to move up the service value stack to offer more advanced 5G services beyond basic connectivity, but that takes time. Mobile operators in many cases still need to work out the use cases, deploy new network systems and develop their go-to-market strategies. However, selling value-add services requires commercial relationships. The bigger the subscriber base, the more commercial relationships the mobile operator will have when the time comes to start selling more advanced 5G services.

Mobile operators are still rolling out 5G and the focus is now on standalone. We are still at an early phase of 5G rollouts and the promise of true 5G has yet to be realised. Ultimately, it opens up new use cases in the enterprise segment which demand ultra-low latency and fast dedicated connections. The promise of network slicing is evident as it provides operators with a significant means to help recoup their 5G investments. Now they must deliver on this. For now, it seems unlikely that consumers will pay a premium for a superior experience.

The 5G narrative has long looked to enterprise use-cases to drive 5G monetisation opportunities. On the consumer side the emergence of interest in immersive experiences (particularly in gaming) and fixed wireless access are currently seen as the most-promising opportunities. As the industry prepares to unlock numerous industrial and consumer use-cases in a second wave of 5G rollouts, operators should channel their energies on expanding 5G coverage, deploying standalone networks, and forging partnerships for edge and cloud deployments. The arrival of 5G-Advanced in 2024 and 2025 will open 5G to new verticals, and preparations in 2023 will lay the foundation to a move to the network upgrade.

Q: With 5G well established in many countries, how important will 6G be as a theme going forward?

NP The next-generation technology promises to address many critical constraints that current 5G technology has, such as latency, security, energy efficiency and IoT integration. The telecoms industry is expected to be at the forefront of managing energy consumption as data traffic and infrastructure continue to grow. Further developments to boost energy efficiency and to minimise relative consumption via 6G networks will become more crucial than ever. Inevitably, the timeline of 6G implementation and technology roadmap will be an important item in any country's sustainability target discussion.

Very. Mobile generations have a bilateral relationship. What takes place with 5G will help shape 6G, and what mobile operators believe 6G will eventually be will influence their 5G investments and service strategies. Because of this, it is important to start talking about 6G now, even if the commercial impact will not be felt until the end of this decade. The technology will eventually help drive billions of dollars of investments in both 5G and 6G. Given what is at stake with 6G, it will be important to the industry going forward even as 5G continues to develop.

Feels like every new generation is coming round far more quickly than key stakeholders would like. For sure, it’s a bit too early to be thinking about 6G when 5G is still not widely available. However, it is important to consider what 6G should be and have an open collaborative approach towards framework and standards. We should not underestimate the sheer amount of work needed for the transition towards 5G (including mmWave) and providing much needed coverage in many unconnected areas. For this reason, 4G will still play a crucial role in the short to medium term.

As 5G progresses towards mass adoption, the next focus will be on beyond 5G, with 5G-Advanced taking the lead as it starts to be deployed in the next couple of years. 6G is still in its conceptual stages and is attracting R&D investments from countries and enterprises. However, with WRC-23 set to take place later this year, we can expect increased interest in spectrum-related discussions for 6G. The meeting will tackle consideration of spectrum resources to expand 5G services but will also discuss and set the initial agenda for WRC-27, offering some initial insights into future 6G spectrum considerations.

Q: Name one thing that is overhyped right now – and also under-hyped

NP Fintech has been used too narrowly, with most only thinking of the overhyped aspects such as blockchain, NFTs and cryptocurrencies. While these areas have attracted much attention, they only encompass part of the scope of what fintech can offer. The services incorporate many technological advances and improvements to existing systems and business models. New services have the potential to bring significant improvements to financial services and the customer experience but often need more attention. There are opportunities to be fully explored by mobile industry players, given the limited collaboration to date.

The most overhyped topic is metaverse. I think the metaverse has many years to go before it will really matter to mobile operators. I am surprised we haven’t heard more around eSIM and iSIM. After years of discussions, eSIM is finally becoming a commercial reality. The ease of switching mobile operators thanks to eSIM, and eventually iSIM, could have a real disruptive effect on the mobile industry.

Unfortunately as an industry, we have a proven track record of overhyping what promises to be the next biggest thing. Therefore, it is probably best not to cite any areas that are under-hyped. Let’s keep them under the radar to ensure they exceed expectations (a very rare thing). The metaverse is massively overhyped right now. There is a lack of consumer appetite to fork out so much money for a clunky device without a strong content offering. While the enterprise segment might seem appealing, companies remain unconvinced and are cutting costs. This is a longer-term opportunity which requires huge investment.

It is clearly the concept of metaverse, which I believe is currently on a gradual transition from hype to reality. Undoubtedly, the arguments over whether metaverse, as described theoretically, will come to fruition or not makes it over-hyped. However, heightened interest in the innovations providing the gateway to the metaverse, such as XR devices and applications, and the potential to transform our day-to-day lives means metaverse will continue to attract significant attention. Despite the initial hype fading somewhat as the challenges have become clearer, the interest has not waned completely and a less hyped version will evolve.