CES 2020 is over. In the six days I was in Las Vegas I was lucky to see a great many things from across the IoT landscape and the broader tech ecosystem. I walked more than 100km (I’m sure this isn’t a record but it felt like it should be at times), and now I’m back it’s time to reflect on what mattered, what the key themes were and where the industry is heading…all from an IoT perspective naturally.

IoT is happening. I discussed some of the key assumptions behind connection growth recently in this blog [1]. We expect consumer IoT connections to almost double between 2018 and 2025, to 11.4 billion, and forecast the smart home will be the largest and fastest-growing consumer IoT segment.

GSMA Intelligence’s definition of smart home covers appliances including fridges and washing machines; infrastructure, for example routers, extenders and other networking devices; security products; and energy monitoring devices including smart plugs, lighting, air conditioning and thermostats.

But not everyone has smart or connected devices in their home. Reasons differ as to why this is but the top three responses from our Consumer Insights Survey are they don’t see any benefit in using them; think devices are too expensive; and privacy and security concerns, which is understandable in the current climate (see chart, below, click to enlarge).

[2]Integration and compatibility challenges come lower in terms of importance, but as this question was addressed at non-users it is possibly not a surprise. We would reasonably expect these to have featured more highly had we sampled existing users (as anyone who has found themselves shouting at an awkwardly stubborn voice assistant will testify).

During our GSMA Intelligence seminar at CES, Do your customers know what IoT is? we discussed all things IoT: how enterprises transform their operations, how operators and vendors are planning their connected device strategies and work together. Challenges pertaining to IoT adoption remain, across both enterprise and consumer segments, but we all agree IoT offers a sizeable opportunity.

Russell Gyurek, director of the IoT CTO Group at Cisco, who participated in the IoT ecosystem panel said it is clear “that while IoT has become a mainstream topic across a number of sectors and verticals, end user concerns are hampering adoption in some areas, namely, perceived value in association to cost, security and privacy, and implementation complexity.”

“Cisco is actively engaged across the market ecosystem to resolve these issues and drive the realisation of IoT value.”

There was a clear recognition across the panel participants that ecosystem collaboration is key to realising IoT value. So what are my key takeaways from this year’s show?

Coming together to simplify the smart home
Once again we saw a vast array of connected consumer products being announced, from pillows to panties! Whether or not these represent realistic use cases which create value is up for debate. This year certain smart home devices were omnipresent and very much support our view on how the market is developing. I saw a plethora of security/surveillance cameras scattered throughout the show, with smart lighting (bulbs, light strips and switches) and smart door locks not far behind.

Hundreds of manufacturers are competing using dedicated applications, platforms and various connectivity protocols. While smart speakers have been trying to address integration concerns, creating ecosystems around virtual assistants (such as Amazon’s Alexa) has led to a largely bifurcated market depending on your choice of voice assistant and the lack of true interoperability has stubbornly remained. This is a widely recognised issue, though, and initiatives around standardisation and security (Connected Home over IP and Open Connectivity Foundation) echoed throughout the show. This signposts that major manufacturers are coming together to work on standards under the shared belief that devices should come with privacy and security built in from day one, but also be able to seamlessly integrate with each other.

This will deliver clear benefits to consumers and developers alike. It also addresses some of the abovementioned consumer barriers and concerns. With big tech now focusing on interoperability within the home, an interesting challenge to telecoms operators is whether or not they can use this to their advantage and deliver services OTT in what could prove to be an interesting role reversal.

More robots
The cuteness factor in robotics prevailed: LOVOT (the huggable robot); Samsung’s Ballie (robot that rolls around the house); and Charmin’s RollBot (toilet paper delivery bot) all captured attention at CES. However, in addition to those companion robots more enterprise oriented use cases were displayed: highlights included Guardian XO’s exoskeleton to aid humans lift heavy loads and Omron’s cobots which help power factory automation.

Health matters… even more
The focus in 2019 on wearables and sleep was extended this year to include medical sensors for home diagnostics and monitoring to measure blood glucose, fertility, arrhythmia, blood oxygen and, in some cases even communicate with health professionals. We see this category growing in the future as increasing proportions of the society use medically prescribed devices to manage chronic diseases. 2020 is also the first year that sex tech officially made it onto the show floor – possibly an attempt to right the wrongs of the prior running.

Vehicles, present and future
Ever popular, next generation vehicle technology took over an entire hall again this year hosting concept cars and flying taxis. In addition to the usual suspects, players not typically associated with auto tech such as Panasonic, Sony and LG Electronics also showcased how their technology will feature in the cars we will all be darting around in soon.

Data and AI
An omnipresent topic at events these days, and growing in importance as more and more devices are being connected. After all, IoT is all about data and the value it generates. Vendors are looking to create services and experiences: cases in point are LG Electronics’ vision of “everywhere is home” and Samsung announcing this as the “age of experience”. Both these highlighted the importance of AI in creating personalised experiences to make our lives more convenient.

LG Electronics president and CTO I.P. Park noted extensive cross-device collaboration will be necessary to enable AI systems of the future, with collective intelligence imperative to expanding capabilities beyond simple automation to achieving AI’s Level 4: reasoning.

AI also derives value beyond the consumer realm; Omron displayed FORPHEUS, AI-equipped robotic table tennis tutor capable of emotional intelligence to motivate the player. John Deere showed how it leverages AI to power its See and Spray technology to differentiate between weeds and crops. It is worth noting, though, that 95 per cent of the AI compute required is on-board. As this becomes the norm for industries such as farming, the case for edge compute could really start to make sense.

IoT is not just about devices being connected, it is about the benefits it delivers to end-users, be it consumer or enterprise. CES 2020 proved that the industry has started to move in the right direction.

– Sylwia Kechiche – principal analyst, IoT – GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/blog/intelligence-brief-what-is-hot-and-not-in-iot/
[2] https://www.mobileworldlive.com/wp-content/uploads/2020/01/GSMAi_smarthome_consumer_demand.jpg

In terms of share price performance, 2019 was a mixed year for the telecoms sector. A number of companies delivered positive returns, even if many underperformed their local market indices. In Europe the telecom sector (covering fixed and mobile operators) achieved positive returns (around 6 percentage points in terms of total shareholder returns or TSR), but still trailed well behind the broader European market, which delivered returns of more than 20 per cent. The US was generally more positive, with T-Mobile US and AT&T outperforming the S&P 500, supported by generally positive news around competition and consolidation.

Share price performance across Asia was more muted, but with a number of notable weak performers. A number of operators in both China and South Korea ended the year at 12-month lows. In India, share price performance of the locally listed operators was sharply polarised: while Bharti Airtel delivered a positive TSR of 37 per cent, Vodafone Idea posted a decline of just over 80 per cent.

Consolidation: risks on the downside
In-market consolidation deals are generally seen as positive by the financial markets, with the assumption that easing price competition and scale/merger synergies will generate incremental shareholder value. Hope springs eternal for further consolidation in the European telecom sector, a region which remains highly fragmented with far more operators than markets such as the US and China. A number of consolidation deals over recent years have given the promise of more to come, with hopes over the course of 2020 the EU competition authorities could take a more relaxed stance.

An important factor will be the focus on 5G and the desire to see Europe take a leading role in the technology, given perceptions (and indeed the reality) the region lost its mobile technology leadership with the transition from 3G to 4G. However, recent news flow suggest Margrethe Vestager (reappointed as Competition Commissioner [1]) would be more supportive of cross-border deals than in-market consolidation. While these deals have a poor track record in terms of value creation for shareholders, such a stance may be driven by a desire to see the emergence of regional champions.

The outlook in the US will rest on a single key decision, the final approval of the proposed T-Mobile and Sprint merger. While the deal was approved by both the FCC and Department of Justice, the final hurdle is a court case [2] brought by thirteen states and the District of Columbia, which argue the deal will be anti-competitive. After almost two years of overhang since the original merger announcement, 2020 will at least bring closure on the issue, but at the same time could herald a major redrawing of the competitive landscape in the US.

Politics: the wildcard
Telecoms is generally seen by investors as a fairly defensive sector and can be something of a safe haven in terms of heightened geopolitical risk, but the sector also faces a range of more specific and localised political factors in 2020. The upcoming US presidential election will increasingly loom large in news flow and investment decision-making as the year progresses. The Trump administration is generally seen as relatively sector friendly, certainly from a policy perspective, even if the trade dispute with China caused some friction.

A change of administration could raise new challenges. Topics which could see more stringent regulatory decisions under the Democrats include net neutrality and antitrust policies.

Political factors in Europe tend to be less clear-cut, though a proposal from the UK’s Labour party to part privatise BT had a significant (albeit short term) effect on the share price and was a further reminder to always expect the unexpected. A new European Commission took office in December 2019: beyond the consolidation issue noted above, there may be greater support for network sharing and the scope to spinout network assets.

Can 5G impact revenue growth?
Isolating a single factor as a key driver of share price performance can be a challenge, but 5G is likely to dominate sector news flow in 2020 and will certainly have a major impact on share prices. The initial readings for 2019 are not overly positive. South Korea, for example, saw some positive KPIs around consumer 5G adoption and ARPU uplift. As noted earlier this has not fed through to improved share price performance.

The biggest challenge is the range of moving factors encapsulated by the single phrase 5G:

Will a growing number of 5G handsets and increasing adoption lead to the return of device subsidies and a hit to operator profitability?
Will pricing discipline hold in those markets where 5G is priced at a premium to 4G, allowing a period of sustained ARPU uplift?
Capex has shown some signs of an uptick in markets including the US and China as operators begin 5G deployments, while remaining flat in Europe. A growing number of network sharing deals in Europe will help on this front, with markets generally cautious around the prospects for higher capex until there is greater clarity on the likely returns.
Spectrum auctions are expected across many markets in 2020 to release vital 5G spectrum, which will add to pressure on sector cash flow even if capex remains under control.

What to expect in 2020
Making share price predictions for the sector or individual companies can be challenging at the best of times, with 2019 showing a range of outcomes across regions and within individual markets. The market consensus is generally cautious for the year ahead, with the broad expectation the telecom sector will underperform local market indices.

What is certain is there are an even broader range of factors which will influence share prices in the current year as compared to 2019, with most decisions and key events likely to produce both winners and losers.

It would be nice to predict an overriding theme, preferably a positive one, which could see a rising tide lift the overall sector. While 5G is likely to be the dominant theme in 2020, the broad range of uncertainties the issue brings will make it hard for markets to come to a clear agreement on the impact of 5G, whether positive or negative. Ultimately, near term share price performance and valuations will more likely be driven by local considerations, whether political or around consolidation and competitive factors.

Longer term, upside to telecom valuations will likely require a new sector growth story. This will depend on emerging revenue streams in new consumer services (beyond more-for-more speed upgrades) and by operators taking a more proactive role in the ongoing process of enterprise digitisation. 5G will certainly play a key role in both these areas, but success will also require factors such as new business models and more agile organisational structures.

– David George – head of consulting, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/featured-content/top-three/vestager-remains-eu-competition-chief/
[2] https://www.mobileworldlive.com/featured-content/top-three/states-hit-back-in-sprint-t-mobile-merger-case/

I’m far from being a CES veteran. I think you need at least a decade of attending under your belt before you can call yourself that. But, I’m more than half-way there and put it on the GSMA Intelligence travel agenda in 2019. In part, that’s because CES has evolved beyond being a consumer show to look at everything from consumer technologies, to content and media, to enterprise digital transformation: if you’re trying to understand the evolving tech landscape, CES probably has something for you.

Beyond the evolution of CES, however, the evolution of the GSMA Intelligence content agenda is at play here. As we’ve expanded our focus on IoT, enterprise transformation and the digital consumer, a trip to CES is essentially mandatory.

Building on things like our massive survey of consumers around the globe, and our Future of Devices research (our most-read premium report of 2019), we go into CES 2020 with a solid idea of what we’ll see and what will be making headlines. We also go into the show with a clear set of questions we’re looking to learn, grouped around a core set of topics.

5G
With 5G services moving from theory to reality in 2019, we got a glimpse of what the 5G future will look like. There are still plenty of questions about where it goes next, and how fast.

Phones and 5G. Will we see plenty of new 5G smartphones get launched? At prices affordable enough to drive 5G service adoption? Will flagship devices be 5G by default?

Phones and functionality. What types of features and functionalities will be table stakes in a 5G phone? What will 5G phones integrate in order to take advantage of 5G’s capabilities?

Beyond phones. Smartphones aside, what other form factors will we see 5G creep into? Tablets? Laptops? Cameras? Smart home devices?

Operator opportunities. Will we see operators fully leverage 5G as a component of their strategy to move deeper into consumer electronics and digital lifestyle businesses? How?

IoT
If it’s a connected device, but not a smartphone, tablet or laptop, is it necessarily an IoT device? CES probably won’t help with creating one true definition of IoT, but it will help chart the path to 25 billion connected devices.

Standards evolution. As IoT matures so do the standards. In order to scale the market, though, they need to be interoperable. Where will progress on this front go?

Smart home. Many people claim to be smart home adopters. For most, that’s only partly true. Will new innovations be compelling enough to drive more than one or two devices into the home? Will the smart speaker really be the controlling hub?

Platforms. Today, we’ve got multiple protocols, platforms and vendors. True fragmentation. There are signs the industry is coming together. Too little too late?

Operator opportunities. With so many players vying to take a lead in providing smart home solutions it is a tough space for operators to move into. Will we see some more attempts to capture this space and will these focus on the enterprise or consumers?

Enterprise/Verticals
There’s a reason why it’s now called CES and not the Consumer Electronics Show. Enterprise solutions are an increasingly important part of the event. The organisers are keen to highlight the role of non-traditional exhibitors (think P&G, John Deere, and DuPont) and we’re keen to see what they tell us about digital transformation.

Drones, drones, drones. As unmanned vehicles capture the skies, will the primary CES focus be new use cases? Enabling innovations focused on security, management, and control?

Cars, cars, cars. Autonomous cars will again be on the show floor for, if only because they draw people into a booth. As with drones, the key question is where we’ll see the focus. New models and entrants, or ecosystem enablers focused on computing, sensors and entertainment?

5G and private networks. Dedicated, localised wireless coverage is in demand: operators, vendors and integrators are all targeting the opportunity. As CES embraces the enterprise, will we see this demand reflected? If not, does it say more about the opportunity or the CES enterprise focus?

Operator opportunities. Will operators show up at CES ready to make noise on the enterprise front and, if so, in what form? New service offers, partnerships, or end-to-end solutions?

Content and media
Among those non-traditional exhibitors is NBCUniversal, a clear nod to the role of media in the life of the digital consumer. But the CES focus on content is more than video.

XR, for real. How do we go from having tech-ready consumers to actual adoption of AR and VR technologies? If compelling use cases are key, will we see new use cases which promise scale in the next two or three years, and will these target consumers or enterprise?

Gaming glory. Gaming has always been a CES focus. Will we see mobile industry priorities like 5G, AR, and edge computing show up?

5G opportunities. How does 5G really fit with the future of content and media beyond connectivity? If it’s mostly around production, will that be enough to drive excitement?

Operator opportunities. Content in all its forms has been a major driver of mobile traffic and a major focus for operator service strategies. Will this be reflected at CES, if so, in which spaces and, if not, why not?

Everything else fun. When people (like non-work friends or tech-focused relatives) say they’ve always wanted to go to CES, it’s because they think it’s all about gadgets and fun technology demos. And, to be fair, a lot of the GSMA Intelligence team will be looking to understand which of those are not (strictly) work related.

National Pride. Just like MWC, the CES exhibit hall has its fair share of national delegations, highlighting national R&D priorities and favoured happy hour drinks. But is it beer, or wine or aquavit that is most conducive to innovation?

Google versus. Amazon. In 2019, Google and Amazon were in a battle to get their voice assistant technologies integrated in any and every possible connected device. How will that battle work out this year? Will it move into new territory?

Terry and Mandy. Yes, content is part of the GSMA Intelligence content agenda. No, attending the NBCUniversal Keynote on Wednesday with Mandy Moore and Terry Crews won’t strictly be informing that content. It may help with questions like whether or not Mandy will go back to singing or if Terry is really as massive as he appears on TV.

Green tech thinking. Sustainability is officially one of the conference topics. The sessions dedicated to it seem somewhat sparse, but quality always trumps quantity. Will that quality be apparent in what vendors come to talk about?

These aren’t the only questions to be asked (or answered) going into CES. However, as we look to get a grip on the shape of technology innovation circa 2020, they’re a place to start. If you’ve got others, shoot them our way (in the comments). We will be putting together a wrap-up analysis of our views post-show and it’s always helpful to see what’s on people’s minds.

– Peter Jarich – head of GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

The tricky relationship between operators and mobile spectrum is nothing new. For the past 20 years we’ve seen countless auctions and bandwidth assignments across the globe, often surrounded by much wailing and gnashing of teeth from the operators over the cost, division of the bands and any perceived advantage for the competition.

The spectrum issue typically comes to a head around the launch of a new generation of mobile network technology, as operators feel the pressure to secure fresh licences to maintain a competitive advantage. In the long term, a lot of 5G rollouts will ultimately rely on the availability of fresh spectrum, particularly in the low- and mid-bands. But, in the meantime, operators can also look to technologies including carrier aggregation (CA) and dynamic spectrum sharing (DSS) to manage their 5G network assets.

Auctions in 2020 will see 5G snowball
As with previous generations of mobile technology, the speed of 5G rollout will largely be dependent on the availability of suitable spectrum. It’s no surprise, then, that the next-generation forerunners such as South Korea and the US are those where 5G bandwidth has been available for over a year now. And a number of major auctions are expected within the next six months, with new spectrum specifically earmarked for the technology in 27 markets as of Q3 2019 [1]. There’s already considerable excitement about the recently launched sale of C band spectrum in the US, while China is poised for massive expansion in rollouts in 2020, aided by spectrum assigned without cost to the carriers.

In Europe, the case is less clear. We’ve seen been some unexpectedly high bidding in early 5G auctions, and operators in the region risk being squeezed if governments prioritise revenue over rollouts.

The bandwidth issue: coverage versus capacity
For perhaps the first time, the focus on 5G spectrum is shifting from network coverage capabilities to data capacity. The disparity between bands was a factor in 4G, but is set to become core to the 5G consumer experience. The mobile spectrum bands in use today can be divided into three tiers:

Low-band: <1GHz
Mid-band: 1GHz to 6GHz
High-band: >6 GHz

At the recent ITU WRC-19 conference, delegates identified more than 15GHz of fresh high-band mmWave frequency bands [2] suitable for 5G use. These are needed because ultra-low latency and very high bit-rate applications will require larger contiguous blocks of spectrum than those available in lower frequency bands.

In the US, early 5G networks have been built using the 26GHz and 28GHz mmWave frequencies, offering very high capacity but poor coverage: acceptable for dense urban areas, but increasingly problematic as you move out into the suburbs. Increasingly, the speed of 5G rollout will be dependent on the availability of mid- and low-band spectrum.

The lower the frequency of a band, the better the coverage, but spectrum in the sub-1GHz bands is in scarce supply. In 4G, low-band frequencies have been used to cover huge areas, but many operators have gained an edge in urban areas using the mid-band. And this pattern is already emerging in the 5G world, with the majority of existing 5G networks using mid-band in initial urban deployments.

But even the mid-band frequencies may not be sufficient to bring 5G to the masses. Network propagation in these bands is limited, while in-building penetration is relatively weak. To complete 5G, operators will need to begin to utilise low-band spectrum, which will almost inevitably mean refarming.

Make do and mend: the importance of refarming
So why can’t operators simply re-use old spectrum from obsolete networks?

Operators face a fairly unique challenge in this technology generation, since the worlds of 3G and even 2G are far from dead. Huge volumes of connected devices, from industrial IoT to emergency services, are still using 2G networks.

Meanwhile, as 4G migration gathers pace a number of operators are already talking about switching off 3G, potentially freeing up valuable low-band spectrum for refarming to 5G.

GSMA Intelligence’s Network Transformation 2020 [3] report found only a third of operators (31 per cent) identified spectrum refarming as a top-three RAN priority despite many of the same operators highlighting spectrum scarcity as a key barrier to 5G rollout. This low focus on refarming, particularly in Europe and the Americas, seems at odds with many operators’ future plans, given that half of those we surveyed said they plan to phase out their 2G networks by the end of 2020.

Managing spectrum assets to maximise the future of 5G
The widespread rollout of 5G using mmWave spectrum is not realistic: the very limited coverage of these frequencies demands enormous infrastructure investment. At the same time, there is simply not enough mid- and low-band spectrum currently available to provide the huge data capacity 5G will require. But there are some short-term solutions to these challenges which will allow operators to better manage their network assets.

The first is CA, a technology which allows operators to deploy 5G using two or more bands in tandem, integrated together as one big block. This will enable operators to deploy a high level blanket of 5G using mid-band, while adding capacity in dense urban areas using mmWave.

The second technology is DSS. This emerging technology allows 4G and 5G to exist simultaneously on the same band, while adjusting the bandwidth allocated to each generation dependent on demand. This is clearly ideal for low-band rollout, as it will allow operators to continue to use valuable spectrum for 4G, while adding 5G capacity as demand grows. But whether it will be enough to address the looming issue of massive data demand on 5G networks remains to be seen.

Operators can also look to existing models to speed up 5G rollout, such as tower, infrastructure and spectrum sharing. But in the longer term, only the harmonisation of spectrum in the low- and mid-bands will unlock the true potential of 5G. And with the majority of the hyped killer use cases including low latency gaming, VR/AR and automation reliant on standalone networks, there remains a big question over how soon operators can begin recouping the massive investment needed.

But it’s clear from the operators that a perceived scarcity of 5G-suitable radio waves is a barrier to 5G rollout, and governments and regulators must work with the industry to remove spectrum roadblocks if they are to make widespread 5G connectivity a reality.

– Peter Boyland – lead analyst, Ecosystem Research – GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.gsmaintelligence.com/research/2019/10/global-5g-landscape-q3-2019/825/
[2] https://www.mobileworldlive.com/featured-content/top-three/gsma-hails-wrc-19-5g-spectrum-agreement/
[3] https://www.gsmaintelligence.com/research/2019/11/network-transformation-2020/833/

Although the potential to monetise 5G remains uncertain, China is swiftly executing a nationwide 5G rollout, with commercial launches announced this week [1]. Operators in the country are determined to push ahead with the development of standalone (SA) 5G, even though it will likely be more expensive than the alternative of leveraging LTE in support of non-standalone (NSA). The three Chinese operators have talked-up plans to build more than 130,000 5G base stations, covering more than 50 cities by the end of 2019, with Beijing, Shanghai and Guangzhou getting contiguous coverage in their core urban areas. Over the following year, operators will provide coverage for all cities and begin working on SA network upgrades.

If this seems like a big commitment to a nascent technology, that’s because it is. Why, then, does China seem so confident in 5G?

Increasing consumer data demands
Chinese operators are, in part, turning their attention to 5G as a cost-efficient solution to increasing data traffic demand. Data from the China Internet Network Information Centre showed mobile data consumption stood at 7.2GB per user per month in June 2019, some 20 per cent higher than the global average. This grew to 8.4GB in September, meaning operators need to increase the capacity of their mobile networks just to keep up with demand. They can stick to existing 4G technologies, but upgrading to a 5G network provides long-term economic benefits as it operates at a lower cost per bit.

At the same time, 5G will further boost the demand for data, assuming that lower costs result in a reduced price for large data packages (particularly if they can be shared among family members). For example, early indications of 5G pricing plans for the Chinese operators show a 30GB bundle will be 23 per cent cheaper compared with 4G, while a 60GB (or more) bundle will be 50 per cent lower.

Content providers, then, should help spur consumer upgrades to 5G. Video content is a clear 5G sweet spot, particularly as more 4K and 8K content is produced and distributed. The sharing of short videos and live streaming from individual broadcasters in China has been gaining popularity on social media, but the length and quality of videos are currently held back by network performance and data price. In addition, there are about 620 million mobile gamers in China, who generated CNY77 billion ($10.8 billion) in revenue in H1 2019, the China Audiovisual and Digital Publishing Association said. Many of the country’s most popular mobile games are real-time, competitive multiplayer games which suffer from poor image quality and frame rates when network conditions are not ideal. Here the value of 5G is obvious.

Operators can make 5G data more affordable, but they still need consumers to buy 5G handsets. This means consumers need to be able to afford 5G devices. Currently, the cheapest 5G model in China costs around $525 from Xiaomi: in comparison, the lowest-priced model in the UK is the Samsung Galaxy A90 5G at £600 ($770). Going forward, however, China Mobile and China Telecom predict 5G handsets in China will fall below $280 in 2020. Price aside, China offers more phone brands in the market than any other countries. The release and promotion of new handset models by myriad suppliers should also stimulate 5G migration.

Enterprise revenue opportunities
Consumer revenue growth from large data bundle sales cannot be sustained in the long term: ARPU levels will eventually decline as data prices fall. GSMA Intelligence forecasts annual consumer revenue in China will decrease by more than $900 million between 2023 and 2025.

On the other hand, enterprise revenue will become increasingly important for Chinese operators. While NSA 5G can enable enhanced mobile broadband (eMBB), enterprises require greater network flexibility. This provides impetus for operators to develop 5G SA networks.

Smart manufacturing is one key focus area for potential revenue uplift. China’s economy is highly reliant on the industrial sector (41 per cent of GDP compared with 19 per cent in the US) and contributes more total economic value of the industrial sector than the US, Japan and Germany combined. Research by GSMA Intelligence and TMG showed 5G will contribute $470 billion to GDP growth in China by 2034, half of which will come from manufacturing. It’s no coincidence that South Korea, another market with a highly industrial economy (39 per cent of GDP), is likewise pushing forwards aggressively with SA 5G. For example, consider SK Telecom’s work with Samsung to launch SA 5G services commercially within the first half of 2020.

China’s first smart manufacturing production line was built by China Mobile and China Information and Communication Technologies Group Corporation (CICT) in Optics Valley, Wuhan. Using mobile robotic arms to produce massive MIMO antennas, the production line exemplifies a mixed application use case for 5G. Each year it produces half a million products, with CICT claiming an increase in efficiency of 30 per cent due to automation. The factory’s robotic arms, with connected processors and sensors, can move automatically between production processes with data transmitted on 5G. As these are “mission-critical” applications, the operation of the arms requires network slicing and low-latency features which become possible with 5G. Meanwhile less time-sensitive applications, such as video calls and security equipment, are served by eMBB.

Of course, Optics Valley is a highly suitable location for operators to deploy 5G enterprise services: enterprise customers in this area are packed closely together, easily reachable with 5G networks. In addition, operators can manage infrastructure and energy consumption collectively here, reducing costs. China has 168 High-Tech Industrial Development Zones (HTDZ) on a similar scale to Optics Valley, along with a further 20,000 smaller industrial parks. While many of these industrial parks are less developed than the HTDZs, 5G solutions can still potentially be deployed at these locations.

Public service
Manufacturing may be one of the most visible industrial 5G use cases, but it’s not the only one. In China, 5G is also expected to provide solutions for public services. As with most developing markets, China suffers from an imbalanced allocation of welfare resources. In healthcare, the best medical specialists and equipment are usually concentrated in provincial capitals, and people in lower-tier cities may have to travel hours to their provincial capitals, or even outside of their provinces, for medical treatment. All three Chinese operators have seen opportunities in this space and begun to act.

China Mobile collaborated with Huawei in March 2019 to allow a chief neurosurgeon in Hainan to supervise brain implant surgery for a Parkinson’s disease patient in Beijing, 2,900km away. The operation took three hours using a network with ultra-high speed and ultra-low latency: the peak transmission rate was 1Gb/s for single users and 10Gb/s for the stations, while latency was under 5milliseconds. The low latency supported by an SA 5G network is crucial for remote healthcare.
China Telecom partnered with the Orthopaedic Surgery Robot Application Centre to enable remote orthopaedic surgery using robots and 5G. Multiple remote surgeries have been completed successfully this year, and another 20 hospitals have since joined the programme.

Beyond healthcare and manufacturing, there are more 5G applications on the way. This year, the China Academy of Information and Communications Technology held its second 5G application competition and received 3,731 project ideas. The orthopaedic surgery programme was one of the top-ten winners. However, ideas at the event included applications for smart cities; consumers; manufacturing; healthcare; media and cloud platforms; connected vehicles; and VR/AR.

The demand for innovation continues to drive Chinese confidence in 5G and, with many vendors both inside and outside of China working on 6G, clearly innovation never ends.

Gu Zhang – senior analyst, Forecasting, Strategy, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/featured-content/home-banner/chinas-big-three-operators-launch-5g/

Verizon launched its pre-standard 5G fixed wireless access (FWA) service in four US cities in October 2018. Even though FWA is not a new concept (globally more than 5 per cent of the fixed connections are already FWA or some sort of wireless-based technology), this was an important “first”. 5G technology brings lower latencies and higher capacities, making it much more suitable for FWA as a way to provide real high-speed broadband.

Nevertheless, this launch was more than a year ago and that is a considerable amount of time in telecoms, especially in the middle of 5G fever. So, what’s happened with 5G FWA since?

Geography of FWA
The US came into the forefront 5G FWA and has just kept its leading position for two main reasons:

First, the FCC boosted the US market by making available a significant amount of 5G-suitable spectrum (in mmWave bands) in the space of 15 months, a remarkably short period of time compared with other markets.
Second, US incumbents typically have less fibre in the ground than other mature markets. OECD figures place the number of fibre broadband subscriptions per 100 inhabitants in the US much lower than the global average, or most of Europe, South Korea and Japan. This makes FWA a potentially more efficient, cheaper and faster solution than FTTx for incumbents to compete against cable in the US. In South Korea, Japan or Europe, where FTTx is the dominant solution, 5G FWA is less compelling other than as a complement to coverage in selective scenarios.

Providing home broadband services with 5G FWA is an opportunity for several European challenger operators to compete in new markets without capex-intensive fibre deployments. These are mobile-only players with a more limited fixed broadband presence that can extend their coverage and potentially disrupt the market with their pricing. Hutchinson UK (Three) and Telefonica Germany are both well-positioned for 5G FWA, while Digi and Iliad could also become disruptors with competitive pricing and newly acquired 5G spectrum licences.

CPE, the new gateway to the homes
FWA requires different form factors and capabilities to traditional routers and customer premise equipment (CPE). Some FWA solutions will include an external antenna to improve speeds and connectivity, while others may be a single indoor, self-contained router. This area has seen a significant amount of development in the past year, as 5G trials and deployments have created demand and highlighted challenges, especially when operating with mmWave frequencies. Initially, operators had a limited number of CPE options to reach homes with 5G FWA, but there is a now a growing variety of products in the market and the number of OEMs offering FWA kit will soon reach 40, covering both indoor and outdoor CPE.

Infrastructure vendors and device manufacturers are all working on their own solutions. A  wide-range of players including Inseego, Oppo, Nokia, Samsung, Sharp and Sierra Wireless have either already launched or started to develop their own devices, and most of them will start supporting FWA deployments from 2020 at the latest.

These new CPEs will offer a number of advances over early models. Some are enabling download rates of up to 5Gb/s, while stronger router signals should also boost coverage in the customer’s home. Many of these are also lightweight and, in some cases, even portable, allowing more flexible deployments and so access the 5G network more freely. Furthermore, the newest CPE’s which Verizon plans to launch in 2020 are equipped with many more features including Wi-Fi 6 capabilities, Amazon Alexa, Bluetooth playback and parental controls. With these advanced functions, 5G CPEs evolve into a new home gateway and help network operators to deliver triple-play home internet to customers, including fibre-like high-speed data, television and phone services in a high-performance single-box solution.

Crucially for both operator economics and consumer adoption, the new Verizon gateway (and numerous others) will be self-install. Some operators are also providing a smartphone app with the CPE to help customers find the optimal location for the equipment in their homes. The Plug and Play installation saves time for the customer and should help to drive further adoption of 5G FWA.

Future of 5G FWA
In the first year of 5G FWA, the technology was still generally in a trial mode, reaching just a small number of customers. The new CPE models are Wi-Fi 6 capable, a feature that is especially important for enterprise customers. Wi-Fi 6 advanced features such as higher data rates; lower latency; increased capacity and improved power efficiency will provide a background for many new use cases. As a result of these new capabilities, enterprise adoption is an additional factor to drive FWA adoption.

Consumer adoption is also expected to increase further during the next year, driven by new features, self-install capabilities and lower prices. The number of available devices and 5G spectrum are both expected to grow significantly. The expected appearance of the budget CPEs during 2020 will also boost penetration in less mature markets, such as Romania or South Africa.

Overall, 5G FWA has evolved significantly since it launched, and there will be numerous new developments around devices and network capabilities by time we reach the second anniversary of the launch of 5G’s wireless broadband. 5G FWA has both the opportunity to provide home hubs, integrate many new functions into one box and also to provide advanced connectivity for enterprises, enabling brand new applications.

– Emanuel Kolta – senior analyst, Consultancy, Strategy, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

“I wouldn’t say I’ve been missing it, Bob.”

If you don’t recognise the quote above, stop reading this blog and go rent Office Space (immediately). It celebrated its 20th anniversary this year. It’s still relevant. And, afterwards, you’ll have a better chance of understanding many office-related jokes. If the quote is familiar, you know it’s about the difference between being absent from something (for example, missing an important meeting) and the sense of regret that comes from going without something (missing your friends).

The reason for this lesson on pop culture and semantics? The Facebook-led Telecom Infrastructure Project (TIP) is holding its TIP Summit 2019 this week. And, for the first time in a few years, I’ll be missing it in both senses of the word.

Just over three years old, TIP is a Facebook-led consortium focused on the development of open source telecom networking technologies. Think a 500-plus member organisation, with groups focused on things like OpenRAN, vRAN, open optical networking and edge application development. Think more than 75 operator members, with a board of directors which includes BT, Deutsche Telekom, Telefonica, and Vodafone Group (along with Intel, Nokia and Facebook). Think a set of so-called Ecosystem Acceleration Centres hosted by operators aimed at producing, “breakthrough technologies that reimagine telecom infrastructure.” You get the idea, right?

Against this backdrop, it should be clear why missing out on TIP’s annual summit is regrettable for anyone who cares about the future of telecom networks. In case it’s not, let’s spend a little time digging into why I’ll be missing it.

Operators get the value of “open”. If TIP is all about enabling telecom infrastructure solutions based on open technologies, the number of operator members provides a clear indication of how important they think these technologies are. Our own survey data makes the same point: less than 20 per cent of all operators think it’s not important to integrate open networking technologies into their networks. But if the interest in open technologies is a given, operator announcements and commitments coming out of the Summit will provide an indication of how serious they are in executing on those interests.
Operators want supplier diversity. [1]Remember that survey I just mentioned? It also highlights that, alongside the introduction of “open” network technologies, operators care about introducing new suppliers into their networks. The introduction of 5G only accelerates this: more than half of operators think they’ll leverage 5G builds to engage new network suppliers (see chart, above, click to enlarge). TIP clearly reflects this dynamic, with plenty of smaller infrastructure vendors taking part in the hopes of building their own credibility and momentum with operators. The Summit, in turn, provides another signal of how successful they’ve been (or, alternatively, where they’ve found success).
Open + vendor diversity equals supply chain. Concerns about supply chains have dominated network discussions for the past year or so. But there are a lot of different things captured in that two word term. The security of any given product in the supply chain is one of those things, for sure. But so is the reliance on a small set of suppliers along with the ability to introduce new suppliers in a relatively seamless manner. That means the topics at the heart of the TIP Summit align with one of today’s most important telecom networks dynamics. Enough said?
Open + vendor diversity does not equal easy. That last question was rhetorical. Simply acknowledging that we could address supply chain concerns by embracing new suppliers and open networking technologies doesn’t actually do anything to secure the supply chain. Talk is not action and executing on these priorities isn’t easy. The number one obstacle on both fronts based on our global operator survey? Security concerns. A close second? Integration issues. If this year’s TIP Summit wants to move these spaces forward, it will need to have something to say on both fronts.
Making money versus doing good. From the outset, Facebook positioned TIP as an effort to help make networks more affordable to drive access to the internet and connect the unconnected. It’s a noble goal. Vendors, however, have an interest in seeing the efforts extend more broadly, tapping into the capex budgets of larger operators. It’s a clear tension and the news out of TIP this week will be a key signal of where vendors are focusing.

While I won’t be in Amsterdam for this year’s TIP Summit, a number of my analysts will be, braving the rain and cold (I wouldn’t say I’ll be missing that). As we look to understand operator priorities and progress on the network infrastructure front, research like our upcoming Network Transformation survey is critically important. But, so too are the efforts out of groups like TIP.

– Peter Jarich – head of GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/wp-content/uploads/2019/11/GSMAi_5G_vendoropportunity.png

Airtel and Vodafone Idea’s Q3 financial results, released last week, provided a stark reminder of the bleak operating environment in India at the moment, with structural consolidation providing only partial mitigation. The Indian mobile market is currently in the throes of a multi-year period of turbulence that can be traced to the entrance of Reliance Jio in 2016.

For a country with the world’s second largest population, a high growth economy and professed destination for foreign tech investment, the gulf between government rhetoric of a digital economy and the challenging regulatory environment it has presided over is in need of urgent redress.

From a consumer perspective though, things are rosy.

Jio’s entry in September 2016 triggered a rapid acceleration of 4G adoption, driven by free/zero-premium 4G tariff plans, cheap 4G feature phones (under $30) and increased handset availability from regional vendors. Today, 4G penetration has reached around 55 per cent of total connections from less than 10 per cent in 2016 – in the same timeframe, 4G adoption in Pakistan and Bangladesh has grown to 23 per cent (from 3 per cent) and 9 per cent (from 0.1 per cent), respectively. Meanwhile smartphones currently account for nearly two-thirds of total connections in India (up from a third in 2016), compared to 49 per cent in Pakistan and 40 per cent in Bangladesh.

[1]The price war that followed Jio’s entry means that India now has some of the cheapest mobile data pricing in the world, with the average price per GB (based on tariff plans) standing at around $0.26 (compared to the global average of $8.53). This in turn is driving high levels of data consumption: Indian smartphone owners, on average, listen to music online and stream video more than the global average (see image, left, click to enlarge), while the government’s flagship biometric passport (Aadhaar) has helped drive public service access from smartphones. In general, an average user in India now spends more than 17 hours per week on social media, more than in the US and China.
All of this is undeniably accelerating India’s digital transition: India will soon be the world’s second largest smartphone market (with an installed base of over 1 billion devices by 2025), 4G will continue to grow (80 per cent of total connections expected by 2025) and, amidst this massive digital transformation, the government is targeting 5G launches next year.
On the other side of the fence however, the operators are struggling.
[2]The aforementioned price war has had a significant impact on operator financials (see image, left, click to enlarge): annual revenues have declined by 30 per cent since September 2016, while annual EBIT has dropped from $2.7 billion to -$1 billion in the same time frame (a swing of almost $4 billion).
At the same time, the operators are facing a tough regulatory environment. In October, it was ruled that the operators will be required to pay the regulator a total of INR920 billion ($12.9 billion) in overdue levies and interest, made up of 3-5 per cent of their adjusted gross revenue (AGR) as spectrum usage charges, plus 8 per cent of AGR as licence fees. Airtel and Vodafone Idea are appealing the decision (specifically around how the AGR is calculated), but the outlook is bleak. Airtel and Vodafone Idea reported net losses of INR509.2 billion ($7.08 billion) and INR230.4 billion ($3.2 billion) respectively in their quarterly results last week, and rumours abound of Vodafone exiting the market (although it has denied this). Jio meanwhile, in a change to its wildly successful free calls proposition, has started to charge its customers for off-net calls in order to recoup the Interconnect Usage Charge (IUC) imposed by the Indian regulator.
These regulatory rulings come at a time when the Indian mobile sector is in a precarious financial position, and could potentially weaken the viability of the sector as a whole. Future network expansion and 5G plans could be put at risk, and there could be a domino effect on the entire digital value chain. Further, despite the obvious demand for data and digital services as outlined above, India’s visions of a world leading digital economy and ambitions to be seen as a poster child for a developing market becoming a fully-fledged digital economy in a short space of time (as outlined in its Digital India campaign) could hit some major road blocks.
This is particularly important as India looks to enter the 5G era, as a thriving mobile sector needs to be in place to help drive the creation and delivery of 5G products and services. The government should therefore seek to create an enabling environment for this to happen, encouraging operators to invest in the market and develop innovative services for the 5G future, rather than stifling them with punitive regulation that puts India’s entire digital future in jeopardy.
If all stakeholders work together in a supportive and forward-looking manner, the mobile market can get back in the fast lane and help drive the Indian, Asian and even global mobile economy forward.
Jan Stryjak, Senior Manager – Core Mobility Research, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/wp-content/uploads/2019/11/ss2.jpg
[2] https://www.mobileworldlive.com/wp-content/uploads/2019/11/ss4.jpg

This month saw the launches of the much-anticipated online video subscription platforms Apple TV+ and Disney+, set just two weeks apart from each other. AT&T lined up the launch of its contender, HBO Max, to be taking place within six months. The timing of these launches is not coincidental. The respective companies see the present period as decisive in taking a strong footing in the media landscape of tomorrow.

What does that landscape look like? In this view of the future, consumers will enjoy a comprehensive content library split among several services as major media companies move towards exclusive distribution through their own OTT platforms. This is no longer just a prediction, the current launches represent significant efforts (bets?) to realise this vision.

Disney, for instance, is taking the strategic risk of foregoing revenue from licensing its content to Netflix and from retail sales by making almost the entire catalogue of animation and superhero films available through the platform. Thus, the launch of Disney+ inevitably cannibalises its own revenue streams in the short-run, with the view of making the platform a household name and dictating the industry of tomorrow (while collecting user insights to help with content generation and marketing in the future).
Apple, meanwhile, sees such a great opportunity from the present media landscape transformation it justified diving into a completely new industry with significant reputational and sunk costs at stake. Having committed a staggering $6 billion on content prior to launch, it currently offers a strikingly narrow catalogue. In a prudent move, however, it is being positioned to complement other services with its content offer, rather than compete to replace them, fitting in well in the set-out prediction of direct-to-consumer future.

Netflix, of course, remains at the forefront of the OTT battle. With this position, however, comes the expectation from its viewership of having a go-to library, available in one subscription. Netflix has historically won popularity by being able to offer broad range of licensed content, but the company is now finding this promise progressively more difficult to deliver.

In the bid for direct distribution, media holders continue to take their content off Netflix. This includes some of the most-streamed titles on the service. Disney’s content, for example, includes the highly desired titles of Marvel, Pixar, Lucasfillm, and 20th Century Fox. In preparation for its launch, the media giant pulled the vast majority of licensing agreements with Netflix in favour of distributing it directly through Disney+ and its majority-controlled Hulu.

AT&T’s upcoming HBO Max platform, meanwhile, will have productions from WarnerMedia as well as HBO itself. The latter has never been available on Netflix. WarnerMedia most prominently owns the rights for the TV show Friends, for which Netflix has been paying an astronomical fee, signifying the importance it played for the service.

In house
Netflix long ago recognised the present challenge and responded by investing more of its spending on original productions. The company owns perpetual rights for self-produced content and accumulated a significant library. The future for the company is thus beginning to look less like a technology business and more like any other media entertainment one, as the industry enters a level playing field.

But if the growing popularity of OTT entrants creates pressures for Netflix, the future will still be limited to a handful of well-established platforms which have been able to pull together compelling content while also solving the technical challenges in setting out infrastructure for distribution on a mass scale (see chart, below, click to enlarge).

[1]

Again, take Netflix as an example. It has had years to develop its platform, offering some of the most lucrative developer salaries in Silicon Valley. It is thus currently able to offer unparalleled quality, reliability, and bandwidth requirements compared with competitors. Amazon Prime Video, meanwhile, enjoys a particularly great synergy with AWS, Amazon’s cloud computing business. The company continually sought to capitalise on this unique strength, achieving the feat of streaming a live sport event to 18 million viewers simultaneously. Disney, too, made a staggering investment of a $2.6 billion for a controlling stake in BAMTech, a video streaming technology company, two years prior to the launch of its platform.

Home delivery
The keen pursuit by media companies to capitalise on their content, now forms the view of a highly fragmented industry. The services will have little overlap between their content offers, and consumers will be limited to particular studio productions when signing up for a platform. The launch of new services is a costly investment for the parent companies, but not only in aggregating the content offer itself. The potentially greatest challenge for an established media company, now lies in realising the back-end infrastructure which ensures reliable and high quality distribution.

This forms a high barrier to entry, which rare challengers will be able to overcome in competition for the global market. Put another way, failing to make sufficient investment in the platform component today will leave media business with significant restraints in the future.

Andrey Popov – analyst – Fixed, TV & Convergence, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/wp-content/uploads/2019/11/GSMAi_OTT_Subscriptions-1.png

Myanmar recently celebrated its five-year anniversary of liberalisation in the telecom market, changing from monopoly structure to competitive landscape of five operators; from 13 per cent penetration to more than 124 per cent; from a market dominated by 2G to one where 5G trials are taking place; and from a Greenfield market to one approaching maturity.

This phenomenal transformation is certainly worth discussing and exploring.

At the end of 2013, more than 120 countries around the world registered penetration of more than 100 per cent. That same year, Myanmar, a country more populous than many of these markets, had a penetration level of merely 13 per cent (see chart, below, click to enlarge), served only by the monopoly operator (MPT). SIM cards were sold through a lottery for more than $240 each, for a mobile network which was frequently jammed.

Ripe for revolution, the inflection point finally came when the Burmese government, to increase the country’s tele density to between 75 per cent and 80 per cent by 2016, invited non-domestic players into the market.

Telenor and Ooredoo won licences and they launched their services in the third quarter of 2014.

[1]

Let us first look at what market looks like today:

Two new players, Mytel and Ananda Infinity, entered the market in 2018, taking the total count of operators from three to five.
As of Q3 2019, market penetration by connections stood at 124 per cent with total mobile connections of more than 67 million, exhibiting a compound growth rate of 48 per cent.
With the entry of new players and fair competition, Myanmar’s total connections grew steadily over the past half-decade with the growth rate so far in 2019 around 17 per cent compared with an average rate of 3 per cent for the Asian region.
For a cumulative investment of about $3 billion between 2014 and 2019, the industry has consistently generated revenue of more than $2 billion per year since 2016, compared to around $450 million in 2013.

What brought about rapid transformation?
Let us look at what the operators in the market did (or rather did different) to bring the market up to scale in such a short period.

Ooredoo:

Ooredoo initially rapidly rolled out its 3G-only network in Q3 2014, attracting more than 1 million connections within the first quarter of its launch.
Interestingly, its 2G network launched much later, in Q3 2017.
Rolled out the first LTE service for the market in Q2 2016, consequently commanding the biggest market share of the 4G connections pie at 30.5 per cent.

Telenor:

Unlike Ooredoo, the Norway-based group read the nerve of the market dynamics and entered in Q3 2014 with 2G and 3G services.
This put Telenor in an advantageous position to build a bigger customer base from the onset of its journey resulting in an overall market share of 32 per cent compared with Ooredoo’s 15 per cent as of Q3 2019.
Hitherto lagging in 4G connections, the operator is providing tough competition for Ooredoo and is expected to become the biggest 4G player in next couple of quarters.

MPT:

Responding to new-found competition, low-cost SIMs priced $1.52 were launched in 2014.
To further combat the competition and deal with falling market share, MPT collaborated with KDDI and Sumitomo to modernise its offerings and infrastructure.

While MPT still commands the biggest market share of 40 per cent in terms of connections in the market, it raises the question of why MPT quickly lost ground to the new operators after holding a monopoly?

The services offered by the new competitors in 2014 were much more customer centric.
Compared to the roughly 70 per cent population coverage by the biggest 4G player in the market, MPT’s coverage of around 26 per cent is considerably lower, meaning it is not the preferred choice for users seeking uninterrupted 4G experience.
MPT initially planned to bid for 2.6GHz spectrum auction in 2016, but later chose to wait for 1.8GHz allocation, which was delayed to mid-2017. This resulted in it launching LTE services a year later than its competitors.

Beyond the provision of basic telecom services, however, new entrants tried to carve unique propositions. Where Ooredoo focused on faster mobile internet, Telenor focused on the digital payments sector with its launch of Wave money (a mobile money service) in 2016. In the nine months to end-September, the service had more than 11 million customers, who remitted around $2.8 billion (equivalent to approximately 2 per cent of the country’s annual GDP for 2018).

The result? Both operators have been succesful at maintaining positive double-digit EBITDA margins with Oordeoo at 33.7 per cent and Telenor at 52 per cent in Q3 (see chart, below, click to enlarge).

[2]

What operators now need to consider for long term growth?
Myanmar has come a long way in the transformation of its telecom landscape. The market is entering the phase where contribution from core telecom services is stagnating and operators need to explore different perspectives for a long term growth.

Focus on data offerings and network expansion:
While the overall penetration of MBB-capable connections in Myanmar is high (98 per cent), the actual penetration of unique mobile internet subscribers is still low at 40 per cent, clearly highlighting the untapped potential. Moreover, there is demand from the end-customer indicated through the increase in Telenor’s average monthly data usage from 2.7GB at the end of June 2019 to 3.5GB by September 2019.
New operators entering the market from 2018 (MyTel and Ananda Infinity) are clearly trying to tap this opportunity with regualtory support: MyTel was allowed to offer its services at 70 per cent below the minimum tariff specified by the regulator in the Tariff Regulatory Framework, for a fixed period of three months, helping it to attract 1 million subscribers within ten days and 2 million within a month of its nationwide network rollout. Ananda, on the other hand, also kicked off operations by offering data-heavy plans, further intensifying competition in the market.
Shifting market sentiments also provide a boost to operators’ 5G plans. While Telenor is working with Ericsson to prepare its network for the technology, Ooredoo and MyTel have already conducted tests for 5G network with a range of use cases. MyTel’s CEO even announced they aim to launch commercial services in 2020, based on the timing of an auction of 5G spectrum.

Diversify revenue base:
With the launch of MyTel and Ananda Infinity, Myanmar is now a highly competitive mobile market. And yet, GSMA Intelligence forecasts revenues to remain stable for next few years at around $2 billion. As a result of such stagnation, operators need to start seeking new revenue streams.
And we are seeing operators do just that. For instance, seeing the potential of mobile money services being offered by Telenor (Wave Money) and Ooredoo (M-Pitesan), MPT announced (in March 2018) plans to launch its own mobile financial services, for which it has received the licence in October 2019.
This mirror operators in other regions which are exploring revenue opportunities in adjacent services including convergence, IoT, pay-TV, media and the broader universe of digital services.

The bigger dynamic here, however, is one of evolution, from greenfield to fairly competitive to highly competitive, and the questions that come with it. How will operators remain competitive in long term? Is consolidation round the corner? Will adjacent services be competitive. What lessons are there for other markets in transition?

Beyond any history lesson about mobile services in Myanmar, the future is what’s most interesting as the market moves into maturity.

– Ankit Sawhney – research manager – and Charu Paliwal – team lead, GSMA Intelligence

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

[1] https://www.mobileworldlive.com/wp-content/uploads/2019/12/GSMAi_market_performance.jpg
[2] https://www.mobileworldlive.com/wp-content/uploads/2019/12/GSMAi_competitive_landscape.jpg