Like all tech, 5G and 6G have followed the “all-to-positive-to-absolutely-negative” PR path. I’ve arguably been on the negative side of the middle ground for both, from the first, and that’s likely the closest thing to a default right assessment we could give anything new in tech. AI? Quantum computing? They could both expect the “G’s” to recite to them the quote from a gravestone in New England; “Behold and see as you pass by, as you are now so once was I. As I am now so you must be, prepare for death and follow me.” Maybe not death, but disillusionment for sure. So given all this, is there no hope for operator salvation in 6G?
There is room for hope, I think, but “hope” here has to be interpreted as “hope that some favorable outcome could emerge.” It’s not human nature, and especially not operator-human-nature, to accept that definition. A “favorable” outcome usually means “the outcome I want”, and there is very little chance of that happening with 6G. If you’re looking for it, as an operator planner, I recommend you grab a rose and lie down. You don’t need to read this. If you’re willing to accept a broader definition of “favorable outcome”, meaning “an outcome I can live with”, toss the rose and read on.
Operators’ high-level problem in terms of revenue growth is their supply-side bias, their belief that demand will develop for the stuff they dream up in the way of services and service features. They don’t look at “opportunity” the way an Apple or Amazon would, but look for things they believe naturally evolve from what they currently do, and that could be useful to buyers. This thinking leads to the mistaken presumption that utility, the fact that something specific could be done with a service/feature, is the same thing as justification, which is the ability to identify a value sufficient to offset cost and risk.
Operators also fear competition more than they value opportunity, as I’ve said before. This leads them to avoid doing things in a space already occupied by a successful player, and to view every service/feature first in the way it might erode the justification for what they already sell successfully. In today’s world, this means that while they all complain that OTTs have “disintermediated” them, they don’t see competing with the OTTs as the answer. Instead, they want to find something that’s essential to buyers but that proven marketing giants haven’t thought of, or get regulators to require OTTs share the wealth through subsidies in some form.
OK, we’ve identified the problems. Can we suggest solutions? Let’s try.
What advantages do operators have over OTT giants? Both are well-known, both make money. Operators really have only two advantages. First, they generally have a lower, often much lower, internal rate of return on invested capital. Low IRRs usually mean the company can do projects at a low ROI and still produce a financial benefit. Second, they usually have a tolerance for “first cost”, and so do investors in them. First cost is the cost that’s incurred in the lifecycle before accumulated revenue offsets costs so that you pass break-even. We’re seeing today the signals from Wall Street that the huge AI infrastructure investment by players like Alphabet/Google, Microsoft, and Meta is raising concerns. Operators routinely have high first costs. Who buys the first phone? Nobody, because there’s nobody for them to call. You need to deploy a mass-market infrastructure to have any market at all.
Mass market. That’s the key, or one key. Significant deployment-to-revenue lag is another. Things that have both these are markets telcos would be financially superior in than the OTTs. But can we find this sort of market?
We have it, with IoT. On a large scale, IoT could be transformational, building a whole new set of benefits for business and dependencies for consumers, both of which can create revenue. When the concept emerged a couple decades ago, operators sort-of-realized this, but their strategy was to expect someone else to do the heavy lifting, to deploy the sensors and build the applications. The someone-elses’ out there, sadly, didn’t have the financial attributes that the operators had, and so they didn’t move, which rendered the support services telcos pushed out for the IoT market valueless.
What could 6G do to fix this? They’d have only two choices. First, to undertake more of the cost of the broad IoT deployment, in the form of a public IoT deployment, and so to reduce the risk for other players. Second, to somehow reduce the risk without taking it on themselves.
Operators could accomplish the first approach by buying and deploying sensors, either in direct sensor form of by perhaps deploying a zillion microcells that could include some sensor capability. They could also offer a kind of partnership program with companies or governments to lend for or partially fund deployments. The problem with this is that they’d need some notion of what exactly was needed for either approach to succeed. It would be possible for them to get that notion, I believe, if they could avoid looking at the problem with their usual biases. What would a “smart world” look like? How could you get there in levels, starting perhaps with smart buildings, blocks, cities?
The other possibility would be to think like a phone company again. Years ago, I wanted phone service in a campground where I had a travel trailer. The phone company ran poles and wires for well over a mile to get me a phone, but once they did that they sold phone service to almost three-quarters of the seasonal site renters, and the campground owner even subsidized some boxes to install phones in some of their transient sites, which proved popular. What it took to do this was to identify the notion of a “service” and standardize what was needed to connect to it, so much so that you could go to a retail store and buy the necessary device—a phone, in my case.
Could operators recognize what was needed in the way of “public sensors”, a class of devices that could bring about massive changes in how we work and live? Sure. Could they then create “standard sockets” to connect them, APIs to access them, services to transport their data securely? Sure. Will they? What do you think?
