Operators attending MWC aren’t all that happy about the state of the show, the mobile market, or their own mobile opportunities. I’ve gotten comments from 54 of them as of end-of-show on Wednesday, and 48 found little to be pleased with. The six that were at least a bit positive were reacting in some way to the Broadcom VeloSky announcement I blogged about yesterday.
Operators are in general agreement that the overall problem they face is revenue growth stagnation. Of the 54 who commented, 53 cited this problem, and 38 said it was serious. Light Reading reported the issue as one of slowing growth in mobile traffic, and operators agree that’s happening, but say that it’s a problem because increased mobile traffic has, in the past, been largely created by either new users or a form of greater usage that could be monetized in some way. Thus, the problem is money.
Operators also agree that something like AI is a simplistic response to their revenue stagnation. Of the 54, 27 (exactly half) say that they believe AI might impact traffic, but only 15 think that the impact of AI will be meaningful in 2025-2026. This is in sharp contrast to what operators hear from their vendors, and of course what the show announcements focus on, since those announcements typically come from vendors.
What does generate revenue growth? Operators admit that the only solid source is new wireless subscriptions. You can argue that new applications would spur growth, but that’s true only if the new applications either produced new subscriptions or generated a new service model that could justify higher pricing. The six who were reacting to the VeloSky story from Broadcom pointed out that the appliance offered a new set of pathways to revenue gains. You can add wireless or satellite backup (or both) to wireline broadband, add security features, and potentially even add in some form of QoS.
More revenue almost surely includes opportunities for more IoT, in the minds of 44 of the 54 operators. They could see AI as perhaps driving more IoT opportunity by creating applications that would rely on telemetry from sources not connected with wires or WiFi. The problem for them is that vendors who seem to rely on this theme focus on the AI piece without developing the applications that AI facilitates. The result isn’t something operators can then monetize.
Another AI focus, one that the six who are finding value in the show contents identify with, is the notion of AI chatbots that expand on the role of the Amazon, Google, or Microsoft assistant technologies. DT’s AI Phone is a play on the notion that there are dimensions to the personal assistant that the previously referenced three giants haven’t plumbed. The problem, they agree, is that there is probably no way to prevent these three, and others, from entering the space if it starts to show promise. One example three operators cited is the opportunity to have an assistant share information with family members, co-workers, etc. in what one called a “sort of user group.” Operators could hope to exploit the fact that most families and many businesses use a common mobile provider, so in theory a lot of information is available to them to work across personal boundaries to offer new assistant services. Still, the same capabilities could be offered by others.
The operators who aren’t enthralled by MWC are almost totally focused on one or both of two things. First, managing capex and opex to manage profits in an age that may well promise persistent revenue stagnation. Second, a transformation to a more software-and-platform model of infrastructure to facilitate the introduction and management of new and potentially complex features, presuming that such features will be identified at some point. This goal is linked to the idea that if you can’t invent new cellular customers with IoT/M2M, then you can gain cellular subscriptions only by stealing market share.
AI RAN, one of the show themes, seems linked to this, according to 26 of the operators. If you could manage cellular radio and service capacity allocation and present the greatest elasticity possible without committing to persistent over-provisioning, then you could tout a superior QoE. The reason why everyone doesn’t jump on this is that many operators see this as just another arm in an arms race that will drive up costs for everyone. “We improve QoE by investing, then they do the same, so neither of us gets the ROI we expected,” one operator commented. If there is a significant capex/opex cost associated with a step, then the differentiator it creates has to be persistent, which in the regulated and complex telco ecosystem is hard to create.
This situation is hardly optimistic, and that matches the general pessimistic undertone of the show that most attendees have noticed. I’ve mentioned the point of slowing mobile traffic growth. Add to it the fact that PwC’s forecast of telco revenue growth say it won’t even match inflation through 2028, and of course any forecasts beyond that would be highly suspect.
How about FWA? The truth is that this is the hottest sector in the whole wireless space, and yet only 18 of the 54 operators saw a lot of hope in its contribution to revenue growth. Part of the problem is that FWA is another differentiator you probably can’t protect; competitors will offer it too and it will quickly commoditize in price. Part is also the fact that for some operators (cable MSOs, for example), FWA may undercut its current competitive position. Finally, even the majority of the 18 who see hope in FWA believe that realizing value from it will depend on finding add-on features to sell to broadband customers overall, so having more of those customers will raise revenues more than basic broadband will bring in.
What’s obviously missing here, missing from all the themes, is some convincing set of features that can be offered by operators to customers willing to pay incrementally for them. Absent these features, operators really face a static TAM, and vendors face continued pressure on their revenue from the operator market segment. The reason they’re missing is simple; there’s no vendor really assigned to offering them. That’s likely for a combination of reasons. First, it’s hard to push a service feature unless you can fulfill it completely, and most vendors at a show like MWC are in the connection business. Second, it’s hard to identify a feature that could generate the kind of capital spending boom that a new cellular generation would, and money talks.
Why not cost reduction? Well, there are two kinds of costs, capex and opex. Cutting capex isn’t something that equipment vendor show sponsors would likely favor. Cutting opex has been going on a while, and the low apples have been picked. For the rest? Just link to AI.
Back in the 1980s, I went to a lot of trade shows. Most no longer exist. When I largely stopped going, my vendor friends kept telling me how much they envied my ability to make that choice. They were going because their competitors were going. Eventually, everyone stopped going to many of them. Will MWC suffer that fate? It will unless a clear strategy to boost capex on mobile network infrastructure emerges. Is 6G it? Not according to most operators, but I don’t have a view to offer on the vendor side. The next couple years will tell.
People often turn to unconventional, even off-the-wall, solutions to problems that don’t seem to lend themselves to traditional solutions. Think crystals. Company decisions are made by people, but just as many of those personal-unconventional strategies are ineffective or downright harmful, so are many of the strategies presented to operators to solve their revenue problems. Trade shows can be useful only if they don’t turn into the crystal stands of technology.
