Operators Striving For Network Effects: MWC Models And Muddles

March 4, 2024

Written by Alex Lawrence

Last week Mobile World Congress brought together reportedly over a hundred thousand people from across telecoms and beyond. Nobody can reliably tell you what happened, as there were so many aspects to the event from consumer hardware through to quantum cryptography. This is the first of a series of articles picking up on interviews, conferences and booth visits to piece together a partial view of some of the issues on the table today.

Open Gateway Or Opening Pandora’s Box

Both last year and this year the GSMA was very clear about its members’ interest and investment in the Open Gateway project to deliver a unified set of APIs into telecoms networks as a platform for growth and delivering new ways to monetise the network’s properties. One year on this appears to be starting to bear fruit, with announcements including a tie-up between Telefonica and TikTok.

This is an area where there is clearly still much work to be done and it’s far from clear to what extent this opportunity will benefit the telecoms providers. Last week McKinsey claimed that this could be a $300bn revenue stream, it depends on a lively environment of developers to use the APIs. This is an area which telecoms players have struggled with historically, so it’s no wonder that companies such as AWS and Accenture are keen to act as marketplaces to help developers discover and use the APIS. With existing developer communities this is a relatively straightforward lift for them, but it also disintermediates the networks.

In itself this isn’t a problem, but it raises the question of competition within the future API marketplace. As a unit, the telecoms providers could negotiate a position and a revenue share compared to other players in the market such as aggregators. This could maintain the network providers’ position in a way that makes the APIs useful.

However, this would contrast starkly with current competition and anti-collusion regulations. As things stand today, price fixing in telecoms is one of the areas which regulators are most at pains to combat. We could find a situation in which global entities such as AWS or Accenture are able to negotiate separately with the different network players in each market and from country to country. While technology access would be standardised, as things stand the network operator’s pricing cannot be, and that would erode their negotiating positions.

In an environment such as this, the nature of the competition has changed. The telecoms community as a whole should benefit by leveraging network effects that extend beyond national and network boundaries.

There is an equivalent example in the world of Open RAN. Today there is a reasonably well-understood model of how the RAN should be disaggregated into different elements. It was by no means inevitable that we should have the number of elements we have, or that the elements would be divided up as they are. However, a broad consensus has been reached about what the modules in an Open RAN environment look like and how they interconnect. Competition now is based on making the best elements, or clusters of elements, within that agreed system.

Looking back to Open Gateway, this is almost the opposite. Where Open RAN was about disaggregation within networks, this is about aggregation across them. The nature of the competition is different, as are the players. Telecoms regulators are excellent at preventing price collusion in areas where telecoms providers compete, but in this case who are they competing against? Each other, or the other parts of the API ecosystem that are looking for shares in this $300bn opportunity?

Loss of REASON?

Hall 7 tends to be away from the flashier exhibits, but there was a fascinating demonstration from the UK’s REASON (Realising Enabling Architectures and Solutions for Open Networks) project. They were showing four high-definition video cameras which were streaming images in real time to a VR headset – by aggregating the uplink across Wi-Fi, 5G and Li-Fi. This was all being coordinated through a piece of software like a RIC, but for multiple access technologies – enter the mATRIC.

This is a brilliant example of a use case for open networks. Up to now we’ve seen them do similar things to already existing networks, just a bit better or cheaper. This could be qualitatively different, enabling a service to leverage the different networks around it, and even steering traffic over the most suitable access technology or technologies at any given time to meet the service’s requirements for latency, bandwidth etc.

The demonstration here used a private network. 6GWorld asked what would happen in practice in an environment where, for example, Airtel owned the Wi-Fi access, Jio owned the 5G and a third party owned the Li-Fi.

“We have already had some… questions about that from our operator partners”, our hosts commented. “Technically there are no problems, but they are not comfortable with the idea of any data being shared or coordinated between competitors”.

We don’t have to take that comment at face value, as this is distilling a problem down into a phrase. We’re looking at either user data or metadata being shared between companies that are meant to be commercial rivals. From a commercial standpoint, a regulatory one and for consumers themselves that must raise concerns. That’s perfectly reasonable.

However, it does raise some red flags.

Solutions such as this spectrum aggregation solution from REASON are an initial dip into what a future ‘network of networks’ might look like – one which doesn’t rely on clamouring for more spectrum and a whole new network, but something which uses available resources much more shrewdly. This could take advantage of the network effect caused by having multiple network owners’ infrastructure deployed in any given area.

Presented with an opportunity to solve some major problems with capacity constraints and use available spectrum resources in smarter ways, there needs to be a regulatory and commercial conversation as well as a technology one in order to benefit both consumers and operators. Here again, the nature of competition would be changing from ‘choose my network, not theirs’ to ‘choose my network AND theirs’.

We don’t have the frameworks in place yet to manage this, but it’s clear that we need to start thinking about them quickly.

Paragon of Virtue?

Bill Chang, CEO of Singtel’s Digital InfraCo, appeared in a GSMA conference session exploring the industrial opportunity for 5G and spoke about their Paragon service. Launched in 2022, this is a combined offering of 5G, edge and cloud capabilities, along with a variety of third-party software designed to support specific industries.

So far, so unremarkable. As Chang noted,

“Enterprises out there do a trial in one country and that’s okay, but they hardly ever move beyond that,” thanks to the fact that services and technologies in MEC are not uniform from country to country. Few major enterprises have the desire to upgrade their capabilities differently on a country-by-country basis.

As a result, Singtel is taking their platform to market for telcos worldwide. By having operators globally able to deliver the same end-to-end system, using the same APIs and a developer marketplace, it has the scope to offer a consistent experience for companies with presence in multiple countries.

“We want everybody to take advantage of network effects,” Chang observed.

“You stop selling connectivity, there’s no margin in that. Instead you say “I’m enabling your mining, I’m enabling your factory, I give you full control and I take care of the complexity”. Then you can choose your margin.”

Note – at 6GSymposium in April we will dig more into the business models, commercials and practicalities of enabling what comes after 5G. You can find out more here.

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