The 2018 Mobile World Congress (MWC) was another exciting event with over 100,000 attendees. Strand Consult was pleased to attend and participate in many stimulating meetings. Strand Consult’s Research Note on the MWC Preview was well-received, particularly our comments about the event’s Women4Tech focus on women in the mobile telecom industry.
For years MWC has largely been an event of and for men both in speakers and attendees; women were the “eye candy” in the exhibition hall. Even though at least half of all mobile consumers are female, the vast majority of the board and the top management of the industry and GSMA itself is male. As such, Strand Consult was underwhelmed by GSMA’s execution of the Women4Tech theme. While there were excellent presentations and discussions by women, GSMA scheduled them on Thursday, the last day of the conference, when most of the MWC participants have left Barcelona. While GSMA may pay lip service to role of women in the technology industry, the implicit message of the schedule is that the important presentations take place during the Ministerial Program Monday-Wednesday.
One of the highlights of MWC was a panel called “The Future of the industry: Transatlantic Digital Policy and Regulation” featuring Dr. Jim Young Kim, President World Bank; Sunil Bharti Mittal, Chairman of GSMA, Marcelo Claure, Sprint CEO; Andrus Ansip, Vice President, European Commission; and Ajit Pai, Federal Communications Commission Chairman. Pai had a clear and compelling message for MWC: that the US intends to be the global leader on 5G based the policy pillars of spectrum, infrastructure, and light touch regulation. Last year as the new FCC Chairman at MWC, he announced his agenda; this year, he reported that he fulfilled those goals. In 2018 he and the agency are on track for a new set of milestones.
The EU, unfortunately, cannot claim a similar success. Looking at the his speeches from last year and this year, EU Vice President Ansip recounted the slow pace on 4G and hoped that the same wouldn’t happen with 5G. But it is clear with the its current plan and approach, the EU will not succeed on 5G. The takeaway for investors is clear: investment will move away from the EU to the US where there is a more attractive environment. If 5G was a horse race, the US and China are two stallions, and the EU is a donkey. Indeed, we already knew in 2017 that the EU was not on track for 5G, and this year’s event confirms that assessment. See Strand Consult’s note following the 2017 MWC After seeing Ansip and Pai, ask yourself where you would put your money if you were an investor, the US or EU?
GSMA also erred in its selection of CNN’s Kristie Lu Stout as moderator for the panel, a person who clearly was uninformed about telecom policy, demonstrated a prejudice in favor of net neutrality, failed to ask objective questions; and sidelined Mittal and Claure from the discussion. Pai has advanced 78 items at the FCC on 28 distinct policy areas in 2017, but Stout kept asking him inappropriate questions on net neutrality, as if that was all that mattered. Ansip was also put on the defensive, attempting to justify the EU’s misguided. He offered, "I think Europe and the US can agree on the need to preserve the freedom of the internet economy," but Ansip could offer no evidence that the EU has the superior approach. If anything, we can see that the EU continues to fall behind the US. Ansip also asserted on net neutrality that, "It's not so easy to change the rules in the EU," and "There is predictability in Europe." But he failed to mention that net neutrality in the EU has already been hijacked by a few national regulators in the Body of European Regulators for Electronic Communications which are pushing for interpretations that exceed the legislative norms. As Strand consult describes in EU Net Neutrality in Year 1 - Unintended Consequences for operators, content providers, and consumers, a report based on the official documentation of 29 European nations, litigation is underway in many countries challenging the EU rules. Moreover, there is zero evidence that the legislation has increased innovation in the EU, what Ansip and the European Commission promised it would do.
Takeaways from Mobile World Congress
Attendees to MWC found plenty of content on the popular buzzwords: Internet of Things, AI, blockchain, robotics, small cells, 5G and smart cities. There was reminiscent of the 3G hype that failed to live up to expectations. Strand Consult prefers a sober, objective approach to look at 5G from four angles: Technological developments - what happens when; Distribution - how should these solutions be marketed and sold; Business models - how to earn money; Regulation - how does regulatory policy affect the possibilities of marketing, selling and earning money on these solutions?
Strand Consult has studied 5G closely well beyond MWC. While it is clear that 5G will be exciting, it is less likely that mobile operators and infrastructure providers will be in a position to monetize the value created. The largest value creators will likely be the makers of connected devices and companies that create services on top of the mobile network. In many areas, this is reminiscent of the migration from feature phones to smartphones in which the value was realized by the phone makers (Samsung, Apple and others) and those offering the services used on the phones which were purchased in the app store.
Mobile operators and infrastructure providers are less likely to experience ARPU growth and increased CAPEX in the coming years. Competition on infrastructure is so tough and has been so tough for many years, which makes it hard to expect many good news from infrastructure providers who find it difficult to earn money.
At Strand Consult we have focused on a large part of these challenges over the last 5-10 years. These are the things that are the foundation for mobile operators and infrastructure providers to realize the 5G dream that will connect billions of devices to the internet. In any case, the will be no 5G to speak of if infrastructure is not built. That’s why Strand Consult focuses on 10 Steps to reduce cost for mobile infrastructure and improve regulation. In connection with our project The experienced mobile coverage - what is bogus and what are the facts? we have looked at how to measure and secure access to good infrastructure. In connection with How to become a successful MVNE we have looked at how operators can build efficient distribution in the 5G market through partnerships. When it comes to policy and regulation, we offer extensive knowledge on net neutrality and training with our workshop Next gen telecom policy and regulation - Workshop for leaders in the telecommunications industry
Looking at what happened at CES in Las Vegas in January combined with what was said at MWC, it is clear that the smart life does not require new hardware. It is fascinating to see the market flooded with products that convert old hardware to intelligent hardware. Visit Best Buy and Home Depot and search for Google Home and Alexia and see the hundreds of products that combine old hardware with new technology. See how Ikea has launched intelligent lighting systems compatible with Google Home and Alexia.
You can turn your 20 year old vehicle into a smart car with on board diagnostics (OBD2) and a mobile app, available from Amazon. Check out AutoPi solution that lets you talk to your car as if it were KITT from from the classic Knight Rider. The sales figures of Google Home and Alexia suggest that consumers already buy and use these Internet of Things, AI, and Smart Home solutions.
The price for connecting devices to the network is marginal. At MWC, T-Mobile launched its IOT offer with a flat price for a SIM card that lives for 10 years. Other operators launched similar concepts and before IOT has grown, the price of connectivity will probably come down to about €1/device/year. At this price, many new devices will need to come online before operators will be able to realize a business case that makes shareholders happy.
Many at MWC talked about the market power or Amazon, Facebook, Google, and Apple; the need for regulation; and how net neutrality and privacy regulation are being being applied as platform regulation. The big internet companies tried to protect their business models by advocating for hard net neutrality. Now they reap what they sow: the boomerang of regulation is coming back to hit them.
There is exciting technology in 5G small cells which is compatible with a variety of networks. There are many interesting products for fixed 5G and 5G small cells, already being deployed in the US, but alas not in the EU, which continues to fall behind. However small cell networks require a paradigm shift in thinking about cost and deployment, particularly for pole attachment, backhaul and power consumption. There is a race now for cities to become test beds for the technology and how some cities will lose out. In the research note The Mayor From Hell: San Jose, California’s Sam Liccardo. How greedy politicians prevent good mobile coverage we have described the challenges that operators face when deploying 5G.
Most MWC attendees are European and most agreed that the EU is behind the US and East Asia (China, Japan, and South Korea) when it comes to 5G. One will not find 5G business cases nor success stores in Europe. Europe was once a leader in high technology for mobile infrastructure, devices, and services. But is gone, just like so many other industries which have fled the continent that has become toxic for investment, innovation, and entrepreneurship.
While MWC was long on hype, it was short on discussions of the value chain, business models, and regulatory policy. These are the issues about which investors care about, but which MWC did not address. Simply put, money makes the world go round and we are still waiting for MWC to “show the money” on the mobile telecom industry.
In all, it was a good week for telecom nerds
MWC still delights attendees, even if many presentations were Déjà vu from the year 2000. 5G is clearly an evolution, and commercial products are combinations of 4G, 5G, NB-LTE and other technologies. The event offered little for operators to learn how to rollout infrastructure, to find partners for business models, and to address the regulatory challenges that impede its business. Fortunately, Strand Consult can fill the gap no longer addressed by GSMA. Contact Strand Consult for help with these issues.
Read Strand Consult predictions and reviews of the last 13 years of the MWC.