Telco 2.0™ Research
The Future Of Telecoms And How To Get There
The Future Of Telecoms And How To Get There
Summary: Government imperatives around economic growth, climate change, healthcare and education may be superseding concerns about "the market". Telcos may face a future in which they are smaller fish in a larger ‘ICT' sea.
Recently, Telco 2.0 attended the ITU Telecom World Conference and Exhibition in Geneva, organised by the International Telecommunications Union. At one level, it was depressingly quiet - the lack of any relevant advertising while walking between the airport and the Palexpo halls was startling. The show floor itself was dominated by "national pavilions" run by various countries' trade missions and stands from a strange selection of minor vendors, with the largest mainstream presence from ZTE and Fujitsu.
The Trade Show at the ITU World Conference was quiet but the Political Halls were busy
Image Source: Reuters Blog
Others like Huawei and Cisco just had meeting-room space, while Ericsson, NSN and ALU didn't even have that. When a supposedly major telecoms event has acres of empty space, and random "filler" booths for companies demonstrating portable diesel generators or massage chairs, you have to wonder about the importance of the role of the UN's communications agency.
But although the trade-show floor might have been deserted, the Forum conference sessions were a different world. Hundreds of representatives from governments around the world were milling around, as well as a strong set of vendors, operators, industry fora and commentators. The VIP attendee list included a roll-call of ambassadors, ministers, regulators and others. Capturing the senior flavour of the event was perhaps best illustrated when the Forum Dinner was introduced with the phrase "Your Excellencies, ladies and gentlemen".
In many ways, it all provided an interesting opportunity to step back from the coal-face of operator business models and vendor pitches, and view the broader communications sector from a slightly higher viewpoint. And what we found most striking was the notion that in many ways it is governments which are becoming the prime movers for next-generation telecom investments, services - and therefore ultimately business models - and not the telcos themselves. In short, there seems to be a growing, internationally-accepted view that:
"The future of telecoms is too important to be left to the telcos".
[Ed, strategies for this scenario will be explored further our forthcoming Strategy Report "End Game Scenarios for Fixed and Mobile Broadband".]
It is worth a quick diversion to give a little background to the ITU, as it is one of those bodies that can seem amorphous and ill-defined unless one is exposed to it directly. Everyone in the telecoms industry has heard of it, but the combination of UN statesmanship and deeply-technical standards sit together a little incongruously. Many in the industry would be hard-pressed to define exactly what it does and would dismiss its day-to-day importance compared with, say, GSMA or 3GPP or TIA.
Headquartered in Geneva, founded in 1865 and with a slogan "Committed to connecting the world" it bears all the hallmarks of an UN agency rather than a normal trade body. It has 191 nations as members at a top level, along with 650 operators, regulators, vendors and other bodies as "sector members" involved in one or more its three sectoral responsibilities - radio-communications, standards and development. One of the few organisations with a ".int" web address, its styles itself as "the global focal point for governments and the private sector for communications and IT" (together, ICT). As this note points out, the importance of that focus, and the intensity of power concentrated there, is expanding significantly.
Although much of this document focuses on "development" issues around the use of ICT in both major economies and the developing world, its standards and radio-spectrum work have broad ramifications for telco business models as well. In particular, it runs the 4-yearly World Radio Congress, which defines which frequency bands are to be used for which purposes, setting international law which is then adhered-to by regional and national regulators. It also defines certain standards which enable worldwide interoperability and scale economies to be developed.
For example, many people have started referring to WiMAX or LTE as examples of "4G" mobile technologies. Yet the official definition does not yet exist, as the ITU is still working through applications for what is currently called "IMT-Advanced". Any references to 4G wireless today (step forward, Sprint / Clearwire) are purely marketing-led. Ironically, the WiMAX Forum made huge efforts a couple of years ago to have ITU recognise its technology as a part of 3G, so that it became legal to deploy in certain tranches of spectrum allocated to a mere handful of permissible systems. Without that recognition, it would have been technically illegal to use WiMAX in bands like 2.5GHz in many places, such is the ITU's hidden power.
Political Bodies are not always boring
It is sometimes easy for those of us enmeshed in the telecoms sector to overlook the politics that go on within and between the various industry groups. The average person would probably be hard-pressed to explain exactly why there are so many bodies and exactly where their boundaries of responsibility lie. There is an alphabet soup of acronyms: GSMA, 3GPP, ETSI, OMA, OMTP, MEF, IEEE, GSA, CDG, NGMN, IETF, TIA, 3GPP2, IEC, ATIS and many more with fuller names like the WiMAX Forum, Femto Forum, Bluetooth SIG, IPsphere and the Liberty Alliance. Some are standards bodies, others are "market representation" fora, still more are commercial alliances.
Although they frequently "liaise" with each other, many encroach on each others' turf - and ultimately compete for a finite pool of money from membership fees. In particular, the "value chain" for standards seems to have expanded in recent years, with separate bodies often now working sequentially on requirements, recommendations, specifications and actual standards.
The invention of a "universal charger" for mobile phones is a good example. The Chinese government mandated the use of micro-USB for domestic use in 2006. Then handset-industry body OMTP recommended use of the standard for its members in September 2007. The GSMA then announced an "agreement to adopt" the technology in February 2009. Finally, the ITU defined it as a standard in October 2009.
Perhaps the biggest change in the "industry body industry" in recent years has been the rise of the GSMA. Employing a large staff and exploiting a large budget, its remit has extended far beyond its original scope as a mobile operator trade association. It has a very specific (and, unsurprisingly, MNO-centric) view of both technology and policy issues. While clearly the huge success of GSM mobile services has given it strong justification as a force for economic and social change, various other groups privately express concerns about its power. It is often seen as fighting for the status quo, particularly in terms of the influence of traditional operators vs. the Internet - again, not surprising given its membership.
In particular, some of the GSMA's recent "initiatives" could be seen as thinly-veiled encroachment into the standardisation process in areas like digital payments, IMS RCS (rich communications suite), IPX network interoperability, roaming hubs and so forth. That said, it is very wary of possible accusations on anti-trust grounds and steers well clear of specific recommendations on business models. Another big shift has been the overlap between the 3GPP (mobile industry standards in the GSM family of technologies) and ETSI (European fixed telecoms standards), collaborating on areas like IMS.
Telco 2.0 has written previously about the impact on business models of the standards process, and continues to believe that a lack of innovation might sometimes be attributed to "sins of omission" rather than "sins of commission". The lack of a SIM-free option for LTE, for example, acts to freeze out certain models that are seen elsewhere in technologies with a more open and flexible approach to subscription/authentication methods.
But while the GSMA appears to be shifting towards being a converged body, focusing beyond mobile into elements of the fixed communications domain (from "M" to "C"), the ITU is itself shifting from "C" to "ICT" (Information and Communications Technologies). Throughout the event, numerous references to ICT were prominent - mitigating climate change, helping development in emerging economies, new business models and regulatory challenges.
The ITU appears to be thinking in terms of a much broader remit than that of the traditional telecoms industry, embracing the Internet, national-scale architectural projects, and enterprise solutions as well as mainstream telecoms. It can be no coincidence that the Secretary General, Dr Hamadoun Touré, made glowing reference to Skype's easy and convenient video-call capabilities, during his speech at the ITU Forum Dinner. Coming from someone frequently rubbing shoulders with diplomats, the political nuances of that comment were unlikely to have been accidental: governments should think of the Internet as essentially equivalent in importance to conventional telecoms.
A major theme at the Geneva event was that of "national transformation" using ICT. Many governments have paid great focus to communications networks in recent years as a means for improved economic growth and social inclusion. ("Digital Britain", "Multimedia Super Corridor Malaysia", Saudi Arabia's "Economic Cities" and so forth).
National ICT Transformation is a Major Modern Policy Objective
However, many of the authorities in the more liberalised markets have started to become frustrated at the slow pace of rollout of fibre networks and ubiquitous and affordable high-speed mobile communications. While initially, the frustration focused more on consumer protection in terms of pricing, competition for telecoms and broadcasting provision, and coverage/availability, the concern has recently focused more on the links between infrastructure and vital national projects.
Various major public projects are become intricately dependent on both networks and their ability to support new software and computing paradigms. Examples include:
Delivery of social and municipal services, via the Internet or conventional communications systems.
Together, these types of projects are seen by governments as essential to 21st-century development. Critically, while they are all dependent on improved communications networks, they are much less dependent on traditional telecoms "services". Although traditional products like voice telephony and SMS are still important as enablers, it seems unlikely that telcos' recent "innovative" in-house services like dedicated content, IPTV or IMS video-sharing have equally important roles.
The USA‘s not-so-smart Grid at night - can Telcos help (see "Telco 2.0 Use Cases Project"?
In general, the new class of national infrastructure services rely more on basic IP or Internet connectivity, plus application hosting and support. Despite rhetoric suggesting that X-ray images or public-safety emergency broadcasts are also "content", the stark truth is that they are parts of far deeper ICT infrastructures and control systems, with the actual telco network an enabler rather than an integrated "delivery platform".
The net effect of this has been that government focus now lies squarely on "access". The powers-that-be want pipes as a priority, not services. They may also need hosting and integration/outsourcing expertise, but that is an area where the telcos intersect with the IT behemoths.
The net effect of this has been that government focus now lies squarely on "access". The powers-that-be want pipes as a priority, not services.
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