In our recently published report IoT revenue: state of the market 2020 [1], we highlight how the overall size of the IoT revenue opportunity in 2025 will be $900 billion, a 2.6-times increase on the 2020 figure. However, we factored in a contraction of $200 billion in IoT revenue compared to our 2018 forecast. Covid-19 (coronavirus) is obviously a driver of this revision. The pandemic has disrupted the world as we know it, both on the supply and demand side. While IoT budgets and spending will contract in the short term, the legacy of Covid-19 will be faster digital transformation. To address this opportunity, players across the IoT ecosystem have to work together to simplify deployments and address the needs of end-users, whether that’s consumers, enterprises or governments.

While forecasting anything in the current climate is tough, I’ve highlighted below some of the key assumptions and drivers influencing our new revenue forecast (see chart, click to enlarge).

[2]

Deeper recession
In June, the IMF adjusted its outlook on the depth of the economic crisis. It now projects global growth at –4.9 per cent in 2020, 1.9 percentage points below the April 2020 World Economic Outlook forecast. There are still massive uncertainties, with waves of new infections, lockdowns re-emerging and potential vaccines all affecting market recovery. However, one thing is certain: government measures matter. Regions that cannot put stimulus plans in place will suffer more than others. We see sub-Saharan Africa and Latin America contracting the most. Northern America, Western Europe and pockets of Asia Pacific will benefit from fiscal stimulus plans which aid recovery, particularly in the important SME sector.

Short-term disruption but long-term upside potential
In this [3] blog post I discussed the impact Covid-19 will have on IoT connections [4]. We forecast IoT connections to grow at a slower rate compared to our December 2019 forecast: in 2020, net additions will decline by 45 per cent. Due to a combination of two trends, a short-term slowdown but stronger adoption of IoT across enterprise verticals that have to adjust to the new normal, we expect 24 billion IoT connections by 2025. This is a similar figure to our December 2019 outlook. In the short term, the economic uncertainty could constrain demand and funding for IoT projects. However, every crisis leaves a legacy in terms of faster innovation and a new normal. It is reasonable to assume that Covid-19 will lead to faster adoption among companies of IoT, AI/ML and 5G to drive digital transformation. Business will have to automate their operations. The nature of working is changing all over the world: to stay in the game, businesses and individuals have to adapt. Moving forward, enterprises and governments will want to build resiliency.

Applications, platforms and services are still key
IoT is all about data, and data will power the digital transformation of many sectors of the economy. Enterprises are deploying IoT to achieve cost savings, generate new revenue and comply with regulations. As such, enterprise deployments continue to centre on applications focused primarily on operational efficiencies such as quality control and the management of supply chains, assets and fleets.

The value from IoT data is what fuels application revenue growth. IoT service providers are simplifying deployment by offering complete but also customised solutions. The more these solutions are in the field, the more data will be collected and the more likely it is that new application revenue will be generated. Welcome to the virtuous cycle of data. To enable this, players continue to transition from a product sales strategy to a recurring product-as-a-service (PaaS) revenue model. Vendors, including operators, from across the ecosystem are vying to become the one-stop shop for IoT solutions. Those that have strong credentials and offerings in cloud computing platforms and infrastructure have an advantage. According to our Enterprise in Focus Survey 2019, 21 per cent of enterprises highlight them as first-choice providers for IoT solutions. Cloud players are busy inking partnerships across the ecosystem.

Don’t bet on connectivity
Although connectivity revenue will grow over the forecast period, it will only account for 5 per cent of the total IoT revenue opportunity by 2025. Compared with our previous forecast, connectivity revenue has changed the least. The main difference between then and now is the slower realisation of the 5G opportunity. The potential uplift from 5G IoT adoption depends on how quickly Release 16 can be deployed in commercial networks. We see 5G features such as ultra-reliable, low-latency communications (URLCC) becoming commercially available in 2022.

5G also grants operators an opportunity to address certain verticals such as manufacturing [5], look out for a blog on that soon. Recent announcements suggest operators have progressed in the way they are addressing the manufacturing sector, including SMEs, as they are increasingly offering simple, out-of-the-box solutions. Our research shows [6] IoT connectivity is likely to account for the bulk of IoT revenue. However, operators have been expanding their capabilities beyond connectivity to capture a larger proportion of the overall market to offer end-to-end solutions which involve other IoT capabilities such as platforms, security and analytics.

Professional services suffer the most
This segment (comprising consulting, systems integration and managed services) will suffer a 23 per cent contraction in 2020 compared with our previous forecast, linked to a decrease in new projects but also the fact that vendors are facing pricing pressure and accommodating changes to payment terms.

Systems integration will continue to be the biggest contributor towards professional services revenue as enterprises continue to struggle with integration. Our survey shows [7] that more than half of the companies surveyed reported integration as a key challenge. IT is the most difficult area to integrate, especially across Asia Pacific where companies are struggling the most (nearly 90 per cent of companies surveyed across India and Japan, for example).

So what does it mean for the players across the IoT ecosystem?

Our Enterprise in Focus Survey 2019 shows companies prefer to buy custom products from one provider. However, the simple truth is that no single company can address the needs of an entire IoT ecosystem. M&A continues, as do partnerships to provide IoT-as-a-service offerings to target different verticals. Recent examples include a Qualcomm and Infinite partnership for smart cities, Honeywell and SAP for smart buildings, and Verizon Business and Microsoft Azure in analytics.

Many solutions have been repurposed or created to address the short-terms goals of enterprises: ensuring workers’ safety, adherence to Covid-19 regulations and continuity of business operations. IoT vendors should focus their efforts on helping businesses quickly deploy IoT solutions to address these immediate needs as well as guiding them along the path of digital transformation.

– Sylwia Kechiche – principal analyst, IoT and Enterprise, 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://data.gsmaintelligence.com/research/research/research-2020/iot-revenue-state-of-the-market-2020
[2] https://www.mobileworldlive.com/wp-content/uploads/2020/08/GSMAi_IoT_revenue_forecast_by_segment.jpg
[3] https://www.mobileworldlive.com/blog/intelligence-brief-covid-19-and-what-it-means-for-iot
[4] https://data.gsmaintelligence.com/research/research/research-2020/iot-connections-forecast-the-impact-of-covid-19
[5] https://data.gsmaintelligence.com/research/research/research-2020/5g-grants-operators-an-opportunity-to-address-manufacturing
[6] https://data.gsmaintelligence.com/research/research/research-2020/operator-revenue-in-the-enterprise-market
[7] https://data.gsmaintelligence.com/research/research/research-2020/iot-in-business-2020-the-enterprise-voice-on-iot-adoption

Over the past year or so, I’ve attended an increasing number of briefings and events focused on fixed wireless access (FWA). One thing always amuses me: the context-setting part that highlights how FWA is not actually a new technology or service. It’s a fair point, and only serves to remind me that I started looking at the space about 20 years ago.

I was there for LMDS in the US, for the plethora of proprietary solutions for leveraging MMDS (2.5 GHz) spectrum, and for the rise and fall of WiMAX. I believed in my overly optimistic market forecasts. Mostly, however, I believed (and still do) in the promise of using wireless technologies for fixed broadband use cases.

It was great, then, to tune into last month’s FWA Technology Forum launch [1]. The Forum brings together FWA-focused operators, manufacturers and analyst shops, with a goal of driving the industry and driving collaboration across industry players. And, if nothing else, it was an important reminder of some key market realities: FWA services play a critical role in connecting the unconnected; with 100 million users across 4G and 5G technologies, it’s no longer a niche technology; and the industry is now supported by an array of suppliers, giving operators plenty of equipment choice but potentially making those choices more difficult.

By bringing together insights from a broad set of FWA players, the Forum launch was an opportunity to gain further insight into the direction of the FWA market, helping to answer questions on the future of FWA and what we need to be thinking about if we want it to continue on a path to success.

What’s more important: 4G or 5G?
With 5G being rolled out around the world, it’s natural to think that any new interest in fixed wireless would be linked to it. The reality of FWA is more complicated.

Ultimately, to address rising capacity demand, operators will need to leverage all suitable spectrum. And, where spectrum is tied to a specific technology generation, this means leveraging 4G as well as 5G. Both come with specific advantages, ensuring that each has its place. 4G, for example, will be the logical option where 5G spectrum hasn’t been allocated, but also benefits from the infrastructure and CPE cost efficiencies that reflect its global scale and maturity – scale represented by the deployment of 401 FWA networks based on 4G (according to the Global mobile Suppliers Association, GSA). Clearly, there’s no shortage of successful 4G examples for operators to look to.

5G, meanwhile, will be an important technology for scaling FWA capacity and addressing new, high-bandwidth services thanks to the use of new spectrum bands but also technology innovations such as enhanced uplink and massive MIMO. Beyond bandwidth, however, 5G should help operators deliver differentiated services in the home. It’s a similar story to the way 5G is being positioned in the enterprise. And, while there aren’t as many 5G-based FWA networks, the fact remains that 50 per cent of 5G networks support FWA use cases (again, per the GSA). Since, like LTE, 5G represents a common technology that can support fixed and mobile services, this isn’t surprising.

What’s more important: networks or CPE?
It might seem silly to suggest that either network or CPE assets are more important in delivering FWA services. Services, after all, cannot be delivered without both. That doesn’t mean it’s not a question worth asking, or one without an answer.

Think about mobile broadband services. New generations of networks bring impressive features and capabilities – new speeds, new services, lower costs and added user scale. But device availability, features and costs always remain a gating factor on success. Fixed wireless is no different. Network infrastructure innovations help to make the business case, but CPE is critical to the business case in terms of costs (EG, device and deployment costs) and services (EG, home networking features and differentiated services). Now more than ever, as FWA looks to address multiple use cases, these service capabilities are critical.

And this is one place where the FWA Technology Forum could lend real value to the market. Experience sharing is a nice goal, and discussing technology trends is appropriate. Meanwhile, bringing CPE players into a solution catalogue, backed by integration testing and a CPE Open Lab, should help develop the FWA CPE ecosystem and get the right CPE into the hands of operators.

What’s more important: services or experiences?
I’ve heard the FWA sales pitch many times over the past few years. For their part, vendors often start by calling out an opportunity to connect the unconnected, while highlighting the value of specific solution assets: RAN re-use, CPE management tools, QoS and performance evaluation capabilities, service provision management (including coverage planning and prediction). All of these received attention in the Forum launch too.

Vendor marketing aside, however, this all points to the notion that FWA needs to be about more than connectivity or broadband services. It needs to be about in-home experiences. This is reflected in the way operators talk about themselves and the services they want to deliver. Just as importantly, we saw this reflected in the Forum’s discussion of using FWA to deliver multiple services (gaming, SME services, cloud services) and the provision of tools to manage the in-home experience (including a focus on in-home networking capabilities) versus simply delivering broadband to the home.

I don’t really recall how many FWA connections I forecasted back when I started looking at the market a couple decades ago. If I’m being honest, I don’t really want to remember – I’m sure I was way off. But with 400+ FWA networks built on 4G, and 50% of 5G networks supporting the use case, it’s clear that we are now talking about big numbers of users and connections and traffic. That’s a testament to how far the industry has come in the past few years – but a reminder that the market’s potential is far from being achieved, and that it won’t be achieved without the technology innovation and ecosystem development that makes it easier to deploy FWA and deliver compelling services with it. While it may not deliver all of this, the FWA Technology Forum launch seems like a step in the right direction.

– 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.huawei.com/en/news/2020/7/4g-5g-fwa-technology-forum

Since the Covid-19 (coronavirus) pandemic started spreading around the globe, most of the attention has been on two areas: health and the economy. One of the main questions over the past few months was what the global economic outlook is looking like in 2020 and beyond, and which sectors of the economy will suffer the least and the most. Some analysts were forecasting moderate growth for telecoms, while others were more conservative in their outlook, predicting a decline, in line with the global GDP.

The first results for Q2 will be published in the coming weeks and give us a great indication on how well the industry is holding up in the crisis. For a bit of clue to what we should expect to see, this is a great chance to take a look at the most recently published results, Q1 2020.

So how much of those fears or hopes have actualised in Q1 2020?
GSMA Intelligence conducted an analysis of the financial performance for 27 biggest telecom groups by revenues based on Q1 2020 reported results, which can be accessed via the latest Global Financial Benchmarking report [1]. The good news is that 17 groups out of 27 reported a year-on-year revenue growth. While the aggregated revenue for all 27 groups declined by 0.5 per cent, the decline was slower than the drop in global GDP, which Fitch Ratings states shrank by 1.7 per cent.

There are several factors regarding why that happened. First of all, group performances were largely influenced by their geographical footprints, as the spread of the virus and severity of the lockdown has varied by region. Secondly, telecom operators are non-cyclical companies, meaning their performance is less volatile in times of recession, due to an ongoing demand in the essential service they provide; connectivity. It is important to mention as well that while Covid-19 was among the factors affecting the financial performance Q1, it was not the only factor, and mainly had an indirect link to financial performance via the economic impact.

The financial results of the first quarter in 2020 demonstrate that (see chart, below, click to enlarge).

While most telecom operators suffered from reduced non-recurring revenue, as the lockdown restrictions meant they had to close down most of their retail outlets, service revenue was up due to an increase in data usage, both on the fixed and mobile side, due to a switch to homeworking an increase in usage of online services for entertainment.

[2]

In our latest Global Financial Benchmarking report we selected three groups with presence in South America, MENA and Africa to deep dive into their financial performance and key strategic changes and assess the regional impact of Covid-19. Looking at the regional differences, Telefonica, which has a vast footprint in South America, reported a negative effect of Covid 19 on its operations in Q1, with revenues declining 5 per cent, impacting profitability. Enterprise clients affected by the pandemic, and declines in prepaid, roaming and handset revenues were the main contributing factors.

Etisalat, which is mainly present in MENA, saw 1 per cent growth in revenue, boosted by the businesses in Egypt and Chad. However, growth slowed compared to the 2.4 per cent rise recorded in Q4 2019, due to the impact of Covid-19 on domestic operations.

And MTN, operating in Africa, reported limited impact from Covid-19 on its performance for Q1, as the lockdown measures across most of its footprint were not introduced until the last week of the quarter. In April 2020, however, the pandemic proved a catalyst for an increase in data traffic across MTN’s footprint, up 115 per cent compared with April 2019, with the highest increases in Nigeria and Ghana.

Regarding profitability, the aggregated EBITDA margin of the 27 analysed groups declined only slightly, from 34 per cent in Q1 2019 to 33.7 per cent in Q1 2020, with 20 groups reporting EBITDA margin of more than 30 per cent. On the capital expenditure side, as the 2020 budgets set in 2019 did not foresee the global pandemic, groups continued with 5G rollouts and 4G upgrades in Q1 and spent $4 billion more in the quarter than Q1 2019.

Outlook
Despite these reassuring results, it is worth understanding that Q2 may look less positive. This is due to majority of lockdowns being introduced at the end of March, therefore mainly affecting second quarter results. At the same time the worsening economic situation across the world means an increase in unemployment, which will have a negative impact on telecom revenues, particularly in developing markets with limited fixed broadband coverage and where the majority of subscribers are on prepaid tariff plans.

The main challenge in upcoming months therefore will be managing the bad debt and balancing the liquidity. On the capex side, devaluation of local currency against the US dollar in developing markets may result in an investment slow down. Other factors that may decrease capex are supply chain disruptions and new site installation limitations due to lockdown restrictions, especially in case of a second wave of Covid-19.

In terms of capex drivers, capacity improvements may lead to an increase in the infrastructure spend. However, most of the 27 groups report their networks are coping with the increased data traffic and since most countries have already seen the transition to homeworking, it is unlikely the Q1  rate of growth in data traffic will continue to increase across the remainder of 2020.

– Alla Shabelnikova – senior financial analyst/forecaster, 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://data.gsmaintelligence.com/research/research/research-2020/global-financial-benchmarking-q1-2020
[2] https://www.mobileworldlive.com/wp-content/uploads/2020/07/GSMAi_majoroperator_q1_comparison.jpg

As countries around the world ease pandemic-related restrictions on consumers and businesses, it is abundantly clear operators and smartphone vendors now inhabit a fundamentally changed economic landscape. Covid-19 (coronavirus) sent shockwaves through every sector of the economy, and while it has been better insulated than some, the telecom industry will inevitably feel the effects of the 3 per cent global GDP contraction the IMF predicts for this year.

Operators and smartphone vendors are now facing the ominous dual prospects of a severe global recession and a prolonged slump for traditional in-store retail, where most phones were sold before the pandemic.

Through the economic gloom, there is nevertheless some good news for smartphone manufacturers. At a basic level, lockdowns have, if anything, further demonstrated the critical importance of mobile devices for enabling everything from remote business transactions to staying connected to friends and family to prevent social isolation.

Beyond this, there are at least two more positive notes which should help the industry this year:

Despite some delays, many countries have forged ahead with planned 5G rollouts this year. The rollout of the new networks should be a boon for smartphone vendors, as it is during this time that operators are the most likely to engage new manufacturers and make changes to their roster of suppliers.
Although brick-and-mortar smartphone retailers face enormous challenges as a result of the pandemic, operators and vendors have spent years developing robust online sales channels which can fill the gaps left by traditional retail.

So we expect that, like most consumer categories, smartphones will be in for a bumpy ride, but ongoing 5G rollouts and a new emphasis on digital retail channels offers hope and should form a lifeline for the industry which will help it ride out the economic turbulence ahead.

New launches, new opportunities
Even as the pandemic raged, operators were still making moves to prepare for the 5G era: in May, with lockdowns still implemented across much of Europe, Oppo and Vodafone, for example, announced a deal to bring Oppo 5G handsets to customers across the continent. These kind of moves are by no means limited to Europe: in a recent survey [1], 81 per cent of operators globally indicated they planned to make changes to their smartphone vendor roster in 2020.

[2]And the most important factor they consider when adding a new vendor? 5G compatibility (see chart, right, click to enlarge). The Oppo/Vodafone deal is a perfect example of what many operators will look to do as 5G becomes more prevalent: add a vendor which can bring a full complement of 5G handsets available at a variety of budget-friendly price points.

And the price point of the handsets should start to matter now more than before the pandemic, when our survey was in field. With millions unemployed and countries facing a dire economic outlook, it is safe to assume an annual or bi-annual device upgrade, often with only minor improvements over the last model, will for some consumers be put on hold for the foreseeable future. Instead of incremental upgrades, the operators we surveyed are betting support for 5G network technology is what will drive consumers to invest in a new smartphone. Obviously, operators will therefore prefer manufacturers which have an array of affordable 5G handsets available, which poses a significant problem for those who do not.

Of the top three smartphone vendors in the world, only Samsung is currently well positioned to succeed in this emerging landscape where operators emphasise 5G compatibility above all else. The others have significant challenges to overcome:

Apple has not yet released a 5G iPhone, and there is a great deal of uncertainty as to whether it will do so this year.
Because of the US-led sanctions, Huawei phones lack a full complement of Google applications, putting them at a significant competitive disadvantage.

As we discuss in a new report [3], this creates room for smaller players to manoeuvre, potentially enticing operators into new distribution deals if these manufacturers can differentiate on 5G capability or on the (increasingly important) price factor.

A seismic shift in retail strategy
While operators and vendors are betting big on 5G phones to withstand the forecasted economic downturn, they must simultaneously adapt to a threat to their largest channel of smartphone sales: the high street retailer. The worsening economy and the emergence of post-lockdown social distancing measures pose an existential threat to brick-and-mortar shops.

Before lockdowns, operators reported a majority (52 per cent) of their smartphones were sold in-store, but also said they expected stronger growth in online sales over the next two years. As we have seen elsewhere [4], the pandemic condensed multiple years’ worth of predicted industry trends into a few short months, and with high street retailers facing massive obstacles, we expect online sales to overtake in-store in short order. In fact, AT&T in the US and Virgin Media in the UK have already announced they will be closing some or all of their retail outlets as a result of the pandemic.

For a device segment often thought to be reliant on “hand feel” to guide purchases, the rapid shift to online as the dominant sales channel could further complicate an already challenging situation for smartphone manufacturers. Vendors with strong and established direct-to-consumer online sales channels are obviously best positioned to succeed in this new landscape, and we may see the arrival of new marketing strategies as vendors look to reorganise around online channels in the medium- and long-term. But for the short term at least, because operators seem prepared to rely on their speedy new 5G networks to drive interest in new handsets, it is here that smartphone manufacturers must also focus their attention to stay aligned with operators and maximise their opportunities to forge new alliances.

The way forward for vendors
Vendors must adapt to operators’ laser-focus on their 5G networks and the reduced importance of brick-and-mortar retail in order to thrive in the post-lockdown world. But how can smartphone manufacturers best navigate these challenges?

An important step for vendors is to understand operator plans for driving 5G uptake and tailoring their messaging to build on this theme. One way to do this is to emphasise the importance of new phones in influencing 5G upgrade intent among consumers: our research [5] shows that across seven markets which have or will launch 5G in 2020, a brand new 5G handset can boost upgrade intent by about 10 per cent. Knowing where their customers stand on 5G is one of the keys for vendors to unlock new strategic partnerships with operators that will help both thrive in the new economic landscape.

Vendors can also ensure they are supporting the move to online sales by shifting the co-marketing resources given to operators to market their devices to online and social channels. This can help to smooth the transition and avoid a precipitous decline in device sales.

These strategies will allow manufacturers to adapt to the challenges that the pandemic has ushered in. They will also have long-term benefits for both operators and vendors, as the current state of affairs is likely to be more than temporary. Preparing for the new normal is important and necessary for the industry to withstand the turbulent times ahead, and move with confidence into the next phase of the 5G era.

– Jason Reed – lead analyst, Digital Consumer, 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://data.gsmaintelligence.com/research/research/research-2020/device-portfolios-and-strategies-in-the-5g-era
[2] https://www.mobileworldlive.com/wp-content/uploads/2020/06/GSMAi_smartphone_vendor_qualities.jpg
[3] https://data.gsmaintelligence.com/research/research/research-2020/the-rising-tide-of-5g-will-all-smartphone-vendors-be-lifted-
[4] https://data.gsmaintelligence.com/research/research/research-2020/the-zoom-boom-surge-in-video-conferencing-sharpens-operator-minds
[5] https://data.gsmaintelligence.com/research/research/research-2020/the-rising-tide-of-5g-will-all-smartphone-vendors-be-lifted-

In May, I wrote a blog off the back of a research series [1] we kicked off earlier in the year.

The question we set out to answer with the research was a fairly simple one: what service and technical capabilities do operators need to successfully sell into the enterprise sector? Okay, the question was a little more complex than that. While operators have consistently highlighted enterprise verticals as the biggest new 5G revenue opportunity, the reality is most mobile operators have been selling B2B services for years. So, what actually changes with 5G? And what will need to change in terms of how services are delivered for operators to execute on their enterprise aspirations?

To answer these questions, we contacted a set of operators which are deeply engaged in delivering connectivity and other services to the enterprise segment. In particular, we spent a lot of time trying to understand how service level agreements (SLAs) would need to evolve if 5G is tied to delivering specific service capabilities. Ultimately, we received a mixed view from operators on whether or not SLAs would actually need to be more granular or different from what’s offered today.

But, if 5G investments are being broadly justified by enterprise digital transformation opportunities, then we need to look beyond operators with a long track record of B2B sales and well-developed B2B strategies. We need to look the broader universe of mobile operators. And that’s just what we did when we surveyed 100 operators for their views on enterprise services earlier in the quarter. It’s almost like we had it all planned at the outset.

5G in enterprise, is it that important?
The narrative around 5G in the enterprise segment has been well-elaborated on many occasions. It brings new network and service capabilities, massive IoT support, low latencies, ultra-reliable connectivity, which will enable operators to drive enterprise digital transformation, fund their 5G builds, and grow their revenues. We see this reflected in technology pilots and service trials from 5G pioneers. But what about everyone else?

Short answer: 5G is a core part of enterprise service strategies for nearly all mobile operators.

Long answer: 47 per cent plan to sell 5G-based connectivity to businesses in 2020, with 90 per cent planning to do so by 2022. That’s impressive, sure. But it doesn’t say much about the importance of advanced 5G capabilities and how they will support enterprise digital transformation. To understand that, you’d need to ask operators about the importance of standalone (SA) 5G. And when we did just that? SA 5G came out on top in terms of technology capabilities required for enterprise success, besting things like in-building coverage and edge networking.

How about SLAs?
A major implication of our initial analysis was that operators were roughly split in terms of how they saw enterprise SLAs evolving in a 5G world: half thinking SLAs will need to be more granular if services are tied to new 5G capabilities, while the other half figured they would be fine just as they are. If you’d hoped that the leading lights of 5G and enterprise services would lend insights, you’d have been wrong.

Against that backdrop, it’s nice to see the rest of the operator universe sees SLAs as critical to enterprise success.

While SA 5G may be deemed the most important technology capability for operator success with enterprise sales, SLAs weren’t far behind. On a scale of one to five (where five was tops), SA came in at an average of 3.88. Security and performance SLAs averaged 3.82 each, tying in second place for the most important capability. And right behind them in the number three spot: network and service performance visibility (presumably to ensure that SLAs can be delivered).

So, what’s the answer?
Let’s to our original question, the one in the title: what do operators need for enterprise success, particularly as we move further into the 5G era?

Recognising the importance of SLAs and SA 5G is a good start. If the argument is that 5G plays to digital transformation based on new technical capabilities, SA will be needed to deliver those capabilities and SLAs will be needed to prove that they are actually being delivered. Actually rolling out SA and more granular SLA support, however, is more important. To that end, it’s encouraging to see new SA launches every month. Will operators move with equal ambitiousness on new SLA strategies and offers? It’s unlikely, but those who do will be in a much better position to execute on the enterprise 5G opportunity.

– 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/blog/intelligence-brief-will-enterprises-pay-for-5g-without-service-level-agreements/

Earlier this year, we kicked off a series of blog posts to discuss how suited various markets were to launching 5G. As part of the series, we want to look at South Africa this month with its recent 5G launch.

South Africa is among the most diverse nations in the world, with people of many cultures and religions. The telecom landscape, on the other hand, is characterised by a duopoly where Vodacom and MTN command about 70 per cent of the market share by connections, with Cell C and Telkom maintaining approximately 14 per cent each. At the end of Q2, market penetration of mobile connections stood at more than 165 per cent, smartphone penetration at 60 per cent of total connections and 4G population coverage at 95 per cent. And yet, eight years after initial launches, 4G only accounts for 30 per cent of total mobile connections.

Got you thinking into what is holding the 4G uptake in a country which boasts of 165 per cent of population having access to mobile services? It got us thinking too. So, let’s try to understand the reasons.

Factors impacting 4G penetration
In general, low 4G penetration in any country can be driven by various factors: consumer affordability, high taxes, non-availability of devices, higher tariffs, low digital literacy et cetera. What’s at play in South Africa?

High data connectivity costs: As of Q2, data connections in South Africa accounted for only 50 per cent of the total. At a cost per gigabyte of $6.81 as of Q4 2019, Research ICT Africa’s Retail African Mobile Pricing (RAMP) Index ranked South Africa 33 out of 46 (one being the lowest in data tariff) African countries. Relatively high data tariffs, in turn result in consumers purchasing either short term or limited data bundles, resulting in low 4G uptake.
Lower digital literacy rates: A big chunk of the South African population is digitally illiterate, having limited or no understanding of basic aspects of digital such as connectivity, devices and skills. Some industry sources estimate the number at 80 per cent. Lower digital literacy rates further discourages the uptake of LTE services.
Inadequate spectrum: Lack of adequate spectrum in the market is argued to be the contributor to high data tariffs. In the absence of adequate spectrum, operators have to invest more in existing bands to densify and increase the coverage. The additional investment is then translated into higher data tariffs. Example: operators in South Africa are still eyeing 700MHz as the key band for 4G.

Now, as the market is still ramping up 4G uptake, we see 5G getting rolled out in the country with some operators even ahead of schedule. So, what’s behind the 5G launches?

The COVID-19 (coronavirus) pandemic (accompanied by lockdowns and remote working) resulted in surging in data traffic globally. For its part, South African operators like Vodacom experienced 40 per cent growth in data traffic, while MTN experienced 56 per cent growth from February to April.

To ease congestion and create capacity for new data traffic requirements, the South African telecoms regulator ICASA announced a temporary allocation of spectrum in various bands (700MHz, 800MHz, 2300MHz, 2.6GHz, and 3.5GHz) until November. Vodacom leveraged the opportunity to launch its 5G services on the 3.5GHz spectrum in several cities. MTN followed the move and launched on the last day of the quarter adopting a dynamic spectrum sharing model in various frequencies (700MHz, 2100MHz, 3.5GHz and 28GHz).

Launching a new generation of technology in temporary spectrum allocations might seem risky or, at the very least a bold move. But the operators have it covered. A roaming and managed services agreement between Vodacom and Liquid Telecom gives Vodacom the access to a wholesale 5G network Liquid Telecom is building using its stock of 3.5GHz spectrum. Liquid Telecom offers wholesale network services in the country on the various spectrum bands assigned to it. This explains why Vodacom jumped on the opportunity to launch 5G services on temporary 3.5GHz spectrum.

For MTN, the dynamic spectrum sharing model used to launch 5G allows it to continue with services even after the expiry of temporary spectrum rights in some of the bands. Not to forget, the deal between Vodacom and Liquid Telecom is nonexclusive, opening doors for other players (MTN) to strike similar agreements and access the 3.5GHz spectrum held by Liquid Telecom.

Operators in the country are also optimistic of the 5G auction being held by the end of this year, which will also allow them a smooth transition to auctioned spectrum in these bands with minimum disruption for customers.

Is now the right time for 5G launches?
From the 4G experience in market and the underlying challenges on data costs and digital literacy which still needs to be addressed, we expect consumer 5G uptake to be slow and estimate the technology to account for only 8 per cent of the total mobile connections by 2025 (see chart, below, click to enlarge).

[1]

Based on this, one might argue operators have jumped the gun by launching 5G services in a market not yet prepared to fully reap the benefits. But, it’s the angle of looking at things that matters. There are benefits we can already see from the launches:

Alternate and last mile connectivity: In recent years, South Africa has invested in its fibre footprint and now has fibre available in more areas than ever before. Fibre paired with 5G, however can be used to offer affordable internet access to users through FWA solutions. This brings us to another important argument: connections might not always be the best evaluation criteria to define the success of a technology, particularly in the 5G era where larger economic benefits are expected with digital transformation in enterprises.
Enterprise 5G: Speaking of digital transformation, the full potential of 5G is expected to be realised with the help of use cases in the enterprise sector. In South Africa, tourism can act as a catalyst in 5G uptake. The use of technologies like AR/VR can bring new opportunities in tourism. Mining is another sector which stands to gain from 5G in the country.
Early mover advantage: Barring a few exceptional markets, 5G will co-exist with other generations of technologies until 2025. The full stream of benefits will start to come with the deployment of standalone networks. Timely launches, though give operators the opportunity to explore and experiment with use cases, allows early partnerships to form and provides learning experiences to help in fully tapping the potential of 5G.

South Africa stands to benefit from the timely launch of 5G services.
Considering the 4G experience and challenges with data costs, 5G might not appear to be the right choice at this time for South Africa. Yet, the success and potential of 5G should not be measured by connections alone, particularly given the wider economic gains 5G will bring by enabling digital transformation. Moreover, with South Africa’s Competition Commission imposing a mandatory reduction of data tariffs, steps are already taken in the right direction to promote uptake of 4G or 5G.

The launch of 5G services is timely in South Africa and, with the right ecosystem partnerships, operators stand to gain by unlocking the numerous opportunities in the enterprise sector. All they need to do is act quick and learn on the way.

Radhika Gupta – head of Data Acquisition; Gaurav Thareja – research analyst, 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/2020/07/GSMAi_SouthAfrica_Tech_Connections.png

As more of our everyday life takes place on the internet we inevitably share more of our personal data with online businesses, something which could be resulting in growing apprehension over the privacy of our data.

A recent survey by GSMA Intelligence found 70 per cent of consumers are concerned about the privacy of their data and 48 per cent say their concerns are growing. Worries relate specifically to identity theft (59 per cent cited it as their biggest anxiety) with 45 per cent most troubled about financial impacts.

And yet, even after suffering a security breach, the same survey shows nearly half of consumers are failing to take the most basic precaution of changing a password, 72 per cent are failing to add a second layer of security, and 69 per cent are failing to change their privacy settings.

People appear to be doing very little about their privacy concerns, so what is the reason for this inertia? Do we really care about what happens to our data?

The answer depends on a number of dynamics. Whether consumers are aware of the risks. Whether they consider themselves responsible for their data. And whether they have access to tools and settings for easily managing it:

Privacy risks: It seems a large majority (70 per cent) are aware of the risks of sharing data, at least when asked in a survey, but those risks may not be top of mind when people are desperate to get their hands on compelling digital content or services. In that moment they may not think about the risks, especially when only 22 per cent have experienced a security incident in the past two years.
Responsibility: It is also perfectly valid to care about data privacy but do nothing about it because it’s considered someone else’s responsibility. Here, opinion is divided: 20 per cent consider the online business which handles the data to be responsible, while only 18 per cent consider themselves responsible for securing their data.
Tools and settings: Of course, if consumers do care about their data privacy they need easy access to privacy settings and tools enabling them to manage it. However, in the UK alone, there are more than 600,000 businesses registered to process personal data and, on average it is estimated consumers have as many as 200 online login accounts each. Effectively managing privacy settings and permissions for many hundreds of websites and apps becomes an overwhelming task, unfeasible without tools to automate and centralise the process.

The answer, then, isn’t that people don’t care about privacy but rather that consumers don’t seem to care enough at key touch points when they consciously share their data.

For instance, most Europeans are already blithely clicking through websites’ ubiquitous cookie consent notices, 57 per cent of which, a recent study by the University of Michigan and Ruhr University showed, use design to bias the agree button to accept privacy-unfriendly defaults.

Consumers, doubtless, should care more, especially as the threat to data privacy will get worse with growing deployments of AI and machine learning. A common approach with AI and big data deployments, after all, is to vacuum up more data than is required for a particular purpose, often within opaque black-box algorithms. This goes against several clauses in the EU’s General Data Protection Regulation (GDPR), not least the seven principles of Article 5 which include purpose limitation, data minimisation and storage limitation. So regulations exist for AI, but policing it is a big problem for central authorities and without integrating consumers’ permissions into algorithms by design, privacy controls become out of reach for authorities and the consumer, whether they care or not.

If we also consider poor digital literacy in certain demographics and regions, and the power of compelling content to override privacy concerns, a consumer’s mind-set of careless resignation is only set to continue.

Consumers’ inability to match active care with their vociferous privacy concerns is a problem which will only get worse as we connect 1.2 billion more consumers in the next five years to the mobile internet, many of them in developing countries where privacy awareness, responsibility and access to management tools can be even lower. Alternatively, we could see a new generation embrace digital wellbeing (described by Google as a better balance with technology) and demonstrate an appetite to actively care about privacy, protecting their identity from theft, protecting their net wealth from exploitation, and guarding their knowledge against fakery.

Driving this awareness, however, will be the responsibility of the entire industry: all signs suggest consumers won’t simply get more interested in their privacy on their own.

– Mark Little – senior manager, Consultancy, 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.

Covid-19 (coronavirus) is already having an impact on all of our lives.

Mobile technology will help to get us through this whether that be from supporting health services, allowing more people to work remotely or simply providing a link to the outside world for people self-isolating. That said, for the average consumer priorities have clearly changed. With the epicentre of the crisis now in Europe, many potential early adopters of the latest technologies will now need to concern themselves with their financial and personal wellbeing rather than the latest handset.

This year is already shaping up to be a bad one for everyone, but what does it mean for 5G vendors, operators and users? How will the crisis affect national rollouts and what should we expect to see in the future?

There is little doubt that this is the most significant challenge mobile network and handset vendors have faced.

Globally, governments have announced extreme measures to support economies including low-interest government loans, income subsidies and tax breaks. The UK government announced £330 billion ($392.5 billion) in loans will be offered to businesses and the US administration is planning a trillion dollar stimulus programme which could include direct payments to citizens.

Despite these actions, it is inevitable disposable income for both consumers and enterprises will fall. Trillions have already been lost from stock markets, and the travel and tourism industry has been decimated.

For the mobile industry, 5G will be the hardest hit. Consumers are not going to stop using mobile phones, but most will not be in a position to spend more on a service which is still very much seen as a nice to have. With ARPU already stagnating, MNOs will struggle to generate the revenue streams required for a major technology build out.

Consumer interest in 5G will decline
GSMA Intelligence’s consumer survey found the majority of respondents in most markets had limited interest in upgrading to 5G…yet. This was most apparent in Europe, where nearly 80 per cent of consumers in the UK did not plan to upgrade, while many in France and Germany were not even aware of the technology.

In the current environment, where consumers and enterprises are worrying about their financial future, sentiment is unlikely to improve. Ipsos data showed 37 per cent of US consumers now believe the coronavirus will have an impact on their personal finances. The factor is even more pronounced in other key 5G markets: in Japan the figure was 56 per cent; with Australia at 40 per cent; and Italy 41 per cent.

Beyond these first order effects, there are secondary effects on mobile uptake too. Major potential sports and entertainment use cases which could have generated interest in 5G are now on hold: European football leagues and the US NBA are postponed indefinitely, while the Eurovision Song Contest was cancelled for the first time in its history.

With consumer confidence at such a low and the development of most new business cases likely to slow, GSMA Intelligence is reducing the forecast for 2020 by more than 25 per cent: we now expect around 150 million 5G connections globally by the end of the year, with the majority of devices in East Asia and the US.

Coverage and device availability will continue to be a barrier as rollouts are delayed
5G has been launched in nearly 30 markets across the world. Yet, in most cases, coverage has been limited to small, densely populated areas. Operators in early adopting markets had planned to spend the next two years expanding and densifying networks. Meanwhile, 2020 should have been the year of the 5G smartphone.

As well as the challenging economic landscape, MNOs will have to contend with significant limitations in the supply chain. Many of the parts used for both devices and networks originate from Chinese companies. While the nation now seems to be over the worst of the epidemic, with month-on-month smartphone shipments dropping 40 per cent in January and a further 56 per cent in February, the impacts to productivity resulting from enforced factory closures will be felt for some time.

At the same time, if social distancing drives more usage on communications networks, operators may need to spend all of their resources on simply keeping existing networks operating versus deploying new ones.

5G is a powerful soldier in the war on the coronavirus
A crisis can be a driver of technological advancement and despite the challenges facing the industry, 5G is in some cases already proving its worth.

In Wuhan, for example, Huawei installed a 5G network in a specialist hospital in three days: 5G-enabled robots can now help to take care of patients in the hospital and take measurements, reducing the amount of time medical staff need to spend with infectious patients. Additionally, specialists are using 5G to control medical equipment in distant centres across the country, allowing them to remotely diagnose new cases and support local physicians.

More broadly, for the millions of people now in isolation, internet connectivity is allowing work to continue without the need to go into the workplace. While working from home has been an option for office workers for some time, 5G can provide a far better experience for virtual meetings and, of course higher network capacities, making it an important tool in simply keeping up with new traffic demands.

Work and productivity aside, 5G will also be a key tool in entertaining and connecting people. With face-to-face social interactions limited, and with friends and families in some cases trapped in different countries, mobile internet connectivity allows us to keep in touch with loved ones who would otherwise be isolated. It is also worth considering that with sports and TV shows cancelled or restricted, people will look for new ways to entertain themselves and some of those could be enabled by 5G.

The outlook for the future
The Covid-19 epidemic is a great, but not insurmountable challenge for the industry. We are seeing this already as operators move forward on their 5G plans. In Japan, for example, NTT Docomo will this week become the first operator to introduce mobile 5G [1] to the market, with KDDI [2] and SoftBank [3] not far behind.

Elsewhere, China Unicom and China Telecom plan to reach their 250,000 5G base station target in Q3, earlier than their original plan. In the US, the National Association of Tower Erectors (NATE) say tower construction is continuing [4] without major disruption.

Governments have already shown their willingness to invest as they strive to avoid a major recession, and covering underserved areas is seen a priority for many countries. The UK government for example, agreed in October 2019 to invest £500 million into a project ensuring at least 4G coverage for 95 per cent of the country. With the GSMA predicting 5G will contribute $2.2 trillion to the global economy between 2024 and 2034, this could be a great time for governments to invest in the technology.

With working from home now widespread, an increasing number of businesses and their employees will see the benefits of remote working and not everyone will want to return to Monday-to-Friday in the office. Additionally, with travel severely limited, large organisations will see the necessity for an alternative to face-to-face business consultations. 5G will enable more people to work together on projects and in meetings, and so even when things get back to normal, we will be able to spend more time with our families and reduce our carbon footprint.

Over the next two years we should expect to see lower-than-hoped global 5G adoption and in most markets we are going to have to wait a bit longer to see extensive 5G networks. The impact will not be forever however, with Qualcomm already predicting a hard snap-back in demand [5].

As the world recovers from this crisis, we will see that wider connectivity and better networks will become a priority for consumers, enterprises and governments.

– Matthew Iji – senior manager, Core Data, 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/docomo-targets-first-to-5g-claim-in-japan/
[2] https://www.mobileworldlive.com/devices/news-devices/qualcomm-prepares-for-global-smartphone-upswing/
[3] https://www.mobileworldlive.com/asia/asia-news/softbank-lays-down-mobile-5g-marker/
[4] https://www.mobileworldlive.com/featured-content/top-three/us-network-construction-unaffected-by-pandemic/
[5] https://www.mobileworldlive.com/devices/news-devices/qualcomm-prepares-for-global-smartphone-upswing/

The Covid-19 (coronavirus) pandemic and resulting widespread shift in working patterns and increased demand for home entertainment has thrust communications and the resiliency of telecoms networks to the fore. The outbreak has, and will continue to have, sweeping effects on all aspects of the global economy. As social distancing and travel disruption continue to impact supply and demand, a reduction of global GDP growth by 4.5 percentage points is expected in 2020, with a direct knock-on effect to the telecoms sector [1] among others.

However, the impact of Covid-19 could well be magnified in emerging markets, which are disproportionately impacted by falling commodity prices, reduced international investment, decreased incoming remittances, rising foreign debt burden and large itinerant worker populations. So, while much of the media coverage has focussed on the shifting epicentres, first China, then Europe and the US, here we want to examine how the outbreak will affect the development of the mobile ecosystem in countries perhaps less well equipped to deal with it, despite admirable efforts to cushion the impact.

Digital divide is accentuated in a pandemic
Mobile is the primary access technology in emerging markets: fixed broadband subscriber penetration is around 11 per cent, while mobile internet penetration exceeds 40 per cent. This does, however, still leave a significant proportion of the population unconnected (see chart, below, click to enlarge), and the pandemic has brought to the fore how detrimental that digital divide is.

[2]

As a result of lockdowns, many have turned to the internet to maintain a sense of community, access education or crisis information, and safeguard a limited level of economic activity. But billions of people across emerging markets who are still unfamiliar with the internet are excluded from opportunities to overcome the social and economic limitations of self-isolation, while governments without established digital platforms are less able to effectively manage the pandemic and the associated economic fallout.

There are some specific areas where the limited use of mobile internet services exacerbates the impact of lockdowns:

Education: following the closure of schools and other educational institutions, millions of students now depend on remote learning. Although 1.4 billion mobile subscribers around the world already use a phone to improve their education or that of their children, the shift to online solutions for remote learning is leaving many behind. Some governments have had to turn to non-interactive technology, such as radio and television, to provide a minimum level of educational continuity for those unable to use the internet. For example, the Rwanda Education Board (REB) began broadcasting educational radio programs on weekdays on 4 April, starting with literacy lessons for primary school students, while in Malaysia, a new TV channel called TV Okey from the public broadcaster Radio Televisyen Malaysia (RTM) was launched on 6 April to deliver educational television programs to all students, especially those without internet access.
E-commerce: the limited uptake of digital services in emerging markets is preventing businesses from moving to e-commerce or other online platforms to maintain a level of continued consumption. For example, the GSMA Intelligence Consumer Survey 2019 showed fewer than 20 per cent of smartphone owners across sub-Saharan Africa and Developing Asia (excluding China) use their devices to purchase goods regularly (at least once a month), compared with around 50 per cent in Europe and North America.
Information: the effective distribution of crisis communications largely depends on digital channels, and the capability of individuals to discern trustworthy sources and advice apart from manipulated information. This poses a challenge for those who have not been online before.

Operators also face different challenges versus counterparts in higher income regions
Operators in emerging markets face several unique challenges. With retail outlets closed, many have lost their direct handset sales channel, which GSMA Intelligence Operator Device Survey 2020 showed accounts for nearly 40 per cent of all smartphone sales in emerging markets (excluding China). Some operators, for example in South Asia, have already increased third-party sales channels including bank ATMs, pharmacies and grocery stores, but as these efforts are reactive, operators are failing to capture the full revenue potential and not maximising consumer engagement. Emerging markets are also mostly prepaid (84 per cent versus 36 per cent in developed markets), meaning operators are more exposed to customer spend reductions.

Meanwhile, the risk of potential delays to network builds is growing. Auctions of 5G spectrum are already starting to slip as operators seek additional spectrum for 4G to handle the jump in network traffic. In Brazil, for example, operators have requested a delay to the 5G spectrum auction while they assess long-term financial impacts. India’s 5G spectrum auction has similarly been postponed from 2020 to 2021 at the earliest: Reliance Jio and Bharti Airtel have also asked the regulator for additional 4G spectrum. Yes, 5G isn’t the biggest priority for many emerging markets right now, but it is still vital for timelines not to slip too far so the gap between emerging and advanced countries doesn’t widen further. At the same time, though, some emerging markets, for example India, see 5G as a key stepping stone in their transition to a fully-fledged digital economy, so delays are unfortunate.

When a challenge becomes an opportunity
It’s not all negative though, as the digital ecosystem has proved vital in the response to Covid-19.

Operators have increased mobile data packages and even made data free in many cases to help users access information, and health and education services, while participants from the entire digital value chain including operators, vendors, internet players and governments are pulling together to support people during lockdown and prepare for a return to normality once the pandemic ends. As a side effect of more people working remotely or having to stay at home, mobile operators have been granted a unique opportunity: they can/should leverage the boost in the adoption of mobile services (for example video calling for business, online collaboration tools, video streaming, e-commerce and mobile payments) to grow their role in people’s lives.

Likewise, despite the challenges facing the industry, times of crisis can serve as a driver of technological advancement and, in some cases, 5G is already proving its worth. For example, in various countries (including China and Cambodia), operators have launched 5G-enabled telemedicine services which allow doctors to assess patients via video. And while working from home has already been an option for office workers for some time, 5G can provide an enhanced experience for virtual meetings and, of course, higher network capacities, making it an important tool to help meet new traffic demands.

The outlook for emerging markets ensconced by the pandemic is fluid and will continue to be monitored closely. The human cost has been terrible, and the repercussions will likely reverberate for decades, but emerging countries could well have been given the stimulus needed to start catching up to their developed counterparts. Governments with weak digital economies have been given a warning to ensure they are never placed in such a vulnerable position again, while populations with, up until now, limited awareness of the benefits of the mobile internet have all of a sudden had their eyes opened to how essential mobile services can be.

– Jan Stryjak – senior manager, Mobile Operators and Networks 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://data.gsmaintelligence.com/api-web/v2/research-file-download?id=51249608&file=030420-Covid-mobile-networks_2.pdf
[2] https://www.mobileworldlive.com/wp-content/uploads/2020/06/GSMAi_Emerging_Market_Digital_divide.png

While MWC20 Barcelona was cancelled, the planned product launches and innovation showcases were never going to simply disappear, which is why my GSMA Intelligence team has been releasing a set of market updates.

We’re calling the series Unwrapped because there’s nothing to actually wrap-up. Clever, eh?

The process behind these analyses is straightforward. Announcements from operators, suppliers and everyone across the ecosystem are closely tracked (starting from the beginning of February to the beginning of March). Themes and messages are then identified within the context of broad market segments like smartphones, enterprise and IoT, and network transformation. With that last one, we settled on three key messages: the continuing move towards OpenRAN (if not virtual RAN); edge networking business versus technology innovation; and network operations model innovation. One market segment, and the evolution within it, just failed to make the cut: small cells.

Based on operator priorities and views, leaving small cells off the list would seem to make sense: they trail all other key technologies in terms of expected RoI. Regardless, it wasn’t an easy decision to leave small cells out of the analysis, if only because the last month saw no shortage of announcements and innovations on the small cell front, including: Radio Dot additions from Ericsson; Verizon’s commitment to roll out five-times more of them in 2020 than it did in 2019; the Small Cell Forum’s automation roadmap; and Qualcomm’s commercial FSM100xx momentum.

And what do they all tell us?

Constantly evolving definitions
Back when femtocells were first introduced, the definition of a small cell was fairly clear: a self-contained, low-power, low-capacity base station. Then we added enterprise editions with higher power and capacity. Then, new architectures splitting baseband and radio for indoor deployments were introduced, some leveraging macro cell baseband assets. The result was a very fluid definition of what a small cell is circa 2020. This was evident from Qualcomm’s FSM100xx references. Originally positioned as a small cell platform, it’s now being pitched as something which supports “small cell and remote radio head infrastructure.” Of course, the fact that the Small Cell Forum now refers to “small cell networks” versus “small cells” reflects the same reality.

Scaling the business
On the topic of that Small Cell Forum automation roadmap, there’s an important message which could easily be obscured by the paper’s technical focus on optimisation and orchestration: namely that scaling small cell networks isn’t something which can be done manually. Instead, it’s a process requiring a substantial amount of automation. And because the small cell space has evolved to include consumer femtocells, enterprise small cells, distributed and virtualised architectures, the notion of automation cannot live in a vacuum, but needs to take an end-to-end view.

mmWave raises the stakes
Discussing the requirements for scaling small cell networks might seem like a waste of time without clear indications operators were actually looking to do so. This is only partly accurate. Like so many technologies, operators need to see a mature ecosystem before getting serious about planning and investment. In this case, however, it’s also clear that operators are moving forward on deployments, with Verizon tying an aggressive small cell deployment plan to its mmWave 5G expansion. The link between mmWave and small cells is fairly obvious: physics dictates coverage is generally limited. And, while US operators may be more active with mmWave deployment than those in other regions, high-band spectrum allocations (above 6GHz) are taking place around the globe. Not surprisingly, mmWave deployment is the second-highest 5G RAN investment priority per a GSMA Intelligence survey of operators around the world.

5G raises the stakes
If mmWave deployment is the number two 5G RAN investment priority for operators, you’re probably asking yourself an obvious question. What’s the top priority?

Smart question. The answer: in-building 5G coverage.

While it might seem surprising, it aligns with everything the market has been talking about in terms of 5G support for society-wide digital transformation and enterprise use cases. And it’s reflected in small cell portfolio additions (from Ericsson or its competitors), new in-building architectures and commercial momentum, and roadmaps for scaling small cells. To say that executing on 5G promises will require network densification is not controversial: it has become a well-accepted argument and is thoroughly baked into our own 5G capex forecasts. Fundamentally, however, densification involves small cells in some form.

– 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.