MWC and the Age of the Zettabyte

March 9, 2017
This year at Mobile World Congress featured plenty of glitter and global visions, but 5G took center stage.

The annual Mobile World Congress in Barcelona is where players from every corner of the wireless communications ecosystem come to engage, promote, and discuss the seemingly limitless pursuit of opportunities made possible by new wireless technologies, products, and businesses.

The size and scope of this event can be overwhelming, and the information presented covers every imaginable topic in the wireless world.  Nevertheless, the scale of the opportunity and challenges this year could be captured in one word: zettabyte.

Seriously, when did anybody talk about something using the unit of measure “zettabyte” before the exponential growth in data fueled by modern communications technology? Likely only mathematicians and scientists. Similarly, the variety of approaches to the multitude of important topics addressed at MWC makes analysis of the show a serious challenge. Thus, any analysis or commentary on MWC will focus on a relatively small subset of important topics emerging from the show.

5G: Too Fast or Too Slow?

Competition continues to apply pressure on the timelines for deploying the latest technologies. Foremost among hot new technologies is 5G. The previous two MWC events featured extensive discussions about standards and technologies related to 5G. They also had forums where the wide spectrum of benefits were touted. This year, the emphasis shifted to the race for commercial deployment of the 5G standard. The 3GPP Release 15 standard timeline for 5G would enable the earliest start in 2020. However, many companies are anxious to get an earlier jump.

At the same time, there are many technologies being deployed to enhance the current 4G/LTE infrastructure. Operators are deploying solutions such as massive MIMO and beam-forming on top of today’s 4G networks as a way to boost capacity and reduce costs. LTE Advance Pro and other 4.5G implementations are providing significant long-term solutions. Still, operators remain focused on the next major leap forward to the 5G standard.

Some carriers are pursuing implementations of “Pre5G” strategies, which is essentially deploying key technologies like those described above in current LTE/4G networks. The most significant discussions revolved around the 5G New Radio (NR) standard. This entails implementation of many of the “front-end” radio features of 5G while the back-end infrastructure is built out. In this case, operators would commit to forward compatibility with the full 5G standard.

The 5G NR approach would enable large-scale 5G NR trials and deployments by early 2019. The operators backing this proposal are AT&T, BT, Deutsche Telekom, Etisalat, KDDI, KT, LG Uplus, SK Telekom, Sprint, Swisscom, Telia, Telstra, TIM. and Vodafone Group. The tech companies supporting 5G NR are Ericsson, Huawei, Intel, LG, Qualcomm, and ZTE.

The 5G NR approach would give operators momentum, as they anticipate significant increases in data demand from the uptake of mobile video. Average monthly smartphone data usage is expected to jump from 1.6 GB today to about 7 GB by 2021, according to the March 1 edition of Mobile World Daily. A GSMA study predicts that 5G connections will reach 1.1 billion by 2025, accounting for approximately one in eight mobile connections worldwide by this time. This forecast is based on a survey of 750 operator CEOs.

While there is a strong push for deploying pre-5G solutions, there is also concern over the potential consequences of pushing toward 5G too fast. In fact, some companies shared conflicting messages on this topic. During the show, for instance, the CEOs of Orange and Liberty Global both expressed concerned about capex requirements for 5G. They expressed a desire for more consolidation and fewer competitors among service providers. It was not clear if they wanted regulators to impose this or if they are anticipating competitive fallout.

The CTO of Deutsche Telekom stated in a March 1 Mobile World Daily article that “The (5G) economics simply do not add up, not today, and not in 2020.” The same article also points out that only the top fully integrated operators will be able to deliver the full spectrum of 5G services. This points to another remaining challenge with the deployment of 5G: Many, if not most, players are only developing plans for implementing some of the benefits of 5G. Implementation of the broader vision is still lagging. Companies are still building out viable use cases for the larger 5G vision. 

All That Glitters is Not Gold

The unveiling of the latest smartphone models is always a source of excitement at MWC.  Analysts are anxious to see the implementation of the newest technologies and how they can advance wireless capability, and they can be criticized for cheerleading the advances in technology. But analysts are paid to be objective regarding the practical and business side of the latest hardware introductions, so it’s healthy to remember the old saying, “All that glitters is not gold.”

Indeed, experience has shown that new smartphones that generate excitement around their technological prowess often underperform in the marketplace. This was acknowledged by some as revised product introductions were made this year. It is important that the smartphone industry avoid making the same mistake the PC industry made in an earlier era, when the focus on “feeds and speeds” eventually led to misalignment with market directions and contributed to the long-term downturn in the industry.

With most players depending on the same operating systems, chipsets, displays, etc., it is very challenging for smartphone manufacturers to differentiate their offerings. As a result, success is determined more by content, partnerships, and unique services than hardware specs. A more comprehensive analysis of each smartphone supplier’s complete product strategy and execution is required when attempting to determine those most likely to succeed.

Speaking of differentiation, it is interesting to observe the evolution of brands in the marketplace. Just how much brand equity can companies leverage in their marketing efforts? Highly successful brands from prior years—such as Nokia, Motorola, and Blackberry—are now owned and produced by new companies. There are many questions that arise: How faithful are these brands to the elements that made them successful and popular originally? Are these brands too tethered to their past (and eventual demise) to be viewed in a positive light? Can their new owners build on name recognition and implement new benefits that can revive these offerings?

In this light, it was interesting to watch as HMD Global introduced “the return of a modern classic,” the iconic Nokia 3310 feature phone. Retro products are popular in the market, especially among a younger generation fascinated by products from an earlier era such as vinyl records. The Nokia 3310 announcement generated great media interest and is a direct attempt to leverage the positive vibe of the Nokia brand.

That’s all well and good, but what really matters are the upcoming announcements from Apple and Samsung!

Global Visions Face an Uphill Climb

Because of its international scope, MWC is a forum for championing new visions of global access and portability. The theme this year was the promotion of open, collaborative systems that enable the connected vision of the future. However, these ambitions always run headlong into a few harsh realities.

How realistic is universal connectivity in an environment plagued by hacking that permeates every corner of the communications world? Will roaming ever become truly affordable, or is there too much interest in local government control and the protection local markets? And is there too much temptation to use markets and technology as a political football? Witness the push in the U.S. for protection of its local industries and potential fallout with other trading partners. Or the EU’s desire to punish new U.S. immigration policies by now requiring tourist visas.

I’d argue that no industry has reaped greater benefits from the open, global trading environment than the technology industry. However, every month sees new developments in countries and regions that threaten the foundations that support a healthy global technology world, including mobile communications.

China and others are promoting a vision of the internet that would lead to the end of the “World Wide Web” and create a balkanized marketplace.  Other laws that mandate local storage of data and content could lead to a slippery slope where national boundaries inhibit free flow of services. These threats and others present some of the most significant challenges to the future growth of technology-dependent markets that we have seen in many years.

On the other hand, there are developments that show promise for enabling future opportunities. More IT departments are capturing the vision of the opportunities presented by mobile communications and are centering their strategies on a mobile future. Services and content providers are adapting to the preferences and behaviors of a rising consumer and workforce generation. We are seeing the incarnation of exciting concepts such as virtual reality, augmented reality, and cognitive intelligence in services and products that are closer to being ready for prime time.

This year has seen the introduction of a new acronym that was promoted at the Global Digital Transition Forum: ROADS. It stands for real-time, on-demand, all-online, DIY, and Social. This is a helpful way to describe features and capabilities that are more meaningful for a broad audience. It helps us break out from the geek-speak that we engage in and translate the future into terms that demonstrate the value a broader market can appreciate.

With the end of another MWC, the industry now returns to its pursuit of ambitious goals and to grapple with some daunting challenges. If past successes are a prologue to the future, we can anticipate an exciting, if bumpy, path forward!

Dale Ford is an analyst and, for more than 20 years, a keen observer of trends in the electronics industry.

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