BY MIKA SKARP
It’s been said many times, but bears repeating that telecom is deep pocket business. It’s also game of volume as it relates to electronics, and one of scale when it comes to the networks that support them.
At my age, and as a near lifelong observer and participant in the industry I, like many of my peers, like to look at the history, particularly recent history, to try and glean insights.
Thinking back to the late 80s and early 90s, it’s interesting to witness the ascendency of some technologies over others and the larger industry impacts they triggered.
Future of Telecom in Europe & the Magic of 3
Standards Beget Scale
Take the GSM v. CDMA battle, for example. What made GSM so successful? It wasn’t any better than CDMA or any other technologies of the time, but because European regulators converged upon it as the continental standard that everyone had to use, it not only created instant scale, but also opened up the market for competition. Large and unified, Europe’s mobile industry was in its heyday.
Fast forward to the 20s and we see quite a different picture. No longer is telecom merely delivering voice or text from subscriber A to subscriber B.
Now it is about connecting devices to successive waves of Cloud services, where mobile access technology is suddenly no longer the main cost driver but rather the fiber backbone connecting base stations to the Cloud, with the latter very much at the wheel.
Even Deeper Pockets: The Cloud
When we think about the Cloud, we are of course not talking about a unified Cloud, but rather millions of boxes and their processors humming away in secured locations consuming huge amount electricity to run and stay cool.
There’s no question that building an access network is expensive, but building a Cloud is even more costly and fiber infrastructure takes a considerable chunk of that CAPEX.
By an interesting contrast with the carrier’s competitive landscape, major league Cloud providers are few in number and they are roughly all based on the US. And while even these will be further consolidated in the coming years, Europe boasts none of them.
This is no surprise, as the European model, based on access, has hinged on technological consolidation over business consolidation. But even if you wanted to pose a pan European solution you’d end up facing off against all sorts of funny regulations around data location.
First We Take Manhattan….
On the other side of the pond, It has been relatively easy (though still costly) for American companies to first develop solutions for their large home market and then roll them out in Europe.
Very soon we’ll see the same coming from China. Unfortunately no European country was big enough to serve as a development launch pad for Cloud infrastructure. It simple requires more volume than good old GSM. So Europe has, in effect, lost this game. But can anything be done to catch up?
Certainly not in the Cloud, but perhaps on the access side. But even there we can say that the battlefield is not particularly inviting. As it stands, there are two pan China access providers, three in India and three in the US.
To begin any kind of real global ascent we need to consolidate our 90+ access providers. It makes no sense to deliver 90+ NFV networks when we could get much more traction with three. And three seems to be the magic number to when it comes to balancing girth with the need for competition.
Once there, Europe would be in a perfect position to allow them to grow and particularly were they to bring Network Slicing into play.
The High Cost of Not Investing
Unfortunately, we are seeing a continued reluctance to make the kinds of access network moves and investments that would see more powerful, unified and versatile networks grow. It has been heartbreaking to see the pace of Public Safety network development in the UK.
Recently they have announced that the UK’s TETRA network will be operational for many years to come, with only a handful of broadband solutions added on top of it. And this approach provides no benefit to carrier but rather, and almost exclusively Motorola Solutions.
While it may make a lot of sense for Motorola, it is a really bad deal for UK telecom infrastructure.
To avoid such deals into the future, Europe should follow FirstNet’s approach where all investments go toward a unified, general purpose network. Though we talk up the Public Safety vertical and use cases for Network Slicing a good deal in these pages, it is certainly not the concept’s only customers.
There are several proprietary networks in every country. These networks are low in capacity and high in OPEX. So when providing a reliable network for IoT for example, we can not only save on operating costs but create thousands of new use cases at will and on demand due to the steeply decreased price point. Remember, again, it is all about volume.
Taking a Bite of Big Data
A good entry point for European in the IoT space would be to focus big data and how to analyze it. There is enormous value in that, and while we won’t become big Cloud contenders, we could certainly have top notch IoT analysis solutions running in the Cloud.
Though this may seem a long shot, our strong industrial legacy would suggest a perfect pivot into developing solutions for running complex machinery autonomously. Stay tuned.
Incidentally, and as we focus on the big moves and advancements in our own back yard here in Europe we are pleased to be joining Catalyst champions Orange and NTT along with partners Nokia, Sigma and Cerillion to Prove the Business Model for Sponsored Network Slices with a focus on the huge mobile gaming market at the TM Forum in Nice May 14th-16th. We hope to see you there.