Telecom Trends 2019 - Time for operator 5G and IoT Decisions

4 min



Technologies that telecom operators hoped would frame their transformation in the year 2019, namely network functions, virtualization, 5G and IoT are moving at an extremely slow pace, while buyers' requirements are changing rapidly. Very few industries are confronted with the sheer number of transformations that network operators are facing and it is these changes that will dominate telecom trends in 2019.


Operators have been informed for more than a decade that internet and over-the-top (OTT) services could thwart telecom service providers from new revenue opportunities. However what is worse is that while new services increase network traffic, stiff competition prevents operators from charging for services on a usage-based model. Consequently, while consumers want a lot of what the new technology promises, operators seem to have problems getting a piece of it.

The most important change in telecom trends for operators to face is a significant technology shift to accommodate enormous market changes, which is not expected to happen this year. A large number of CTOs had been hoping for the widespread impact of NFV, rapid adoption of new 5G mobile services and increased revenue from IoT connections. However, none of these seems to be just around the corner. Instead, operators have to plan for a buyer-side revolution and focus on technologies that best support the buyer influences likely to develop this year:

5G focus shifts to fixed broadband: 5G hybrids with fiber to the node(FTTN) is the strongest technology arrow for operators in 2019. It is already demonstrating that it can literally revolutionize fixed broadband services by radically lowering costs and speeding new deployments. Mobile 5G may enable new applications, but it does not promise an increase in buyers' willingness to pay higher prices for mobile services. Also, operators can expect to reach about 80% of their customers with at least 75 Mbps broadband, while fiber to the home can reach only a quarter of that profitably.

With 5G FTTN, telcos that have previously relied on DSL to provide home and small-business broadband can now expect to have a profitable, competitive and higher-speed alternative. 5G FTTN makes fixed broadband internet potentially profitable in itself, particularly for operators whose service areas have a large home and business density. Customers have also demonstrated a willingness to pay for broadband beyond DSL rates, so a 5G-FTTN hybrid service promises higher revenue when mobile services are competitively capped at unlimited usage. This shifts the 5G focus from mobile to fixed broadband.

5G FTTN drives streaming video services: Mobile users' appetite for video-on-the-run quickly created a video market to supplement linear home video delivery, but the same consumers are now increasingly moving towards streaming at home. 5G FTTN can deliver streaming video but not linear video and, therefore, commits operators to stream.

Large-scale streaming video to both mobile and fixed locations implies video and ad caching become crucial. The most convincing early opportunity for edge computing and carrier cloud is in caching video and ads and applying user demographics to make ad selections. This application gives operators a chance to create profitable edge-hosted OTT services of their own because operators have available space in central offices worldwide that could be quickly exploited in these video-related applications. Others would face massive real estate and connectivity issues to match operator capabilities.

However, the operators face a big challenge wherein the complexity of the operations is concerned. Services created from dynamic hosted features are inherently more complex than services created by purpose-built devices. Operators' initial NFV foray into hosted features failed to address this concern. We can thus conclude that this year operators face a pivotal choice to continue to open source projects using the network-device-based approach of the past. If so, the carrier cloud will have to adopt the cloud computing industry's model of application development, deployment and lifecycle management, because device-centric practices cannot be adapted to the cloud without losing all of the cloud's dynamic benefits.

The separation of network and cloud would mean operators could provide OTT features and services only through separate subsidiaries, and their core business would become a low-margin connectivity game.

Operators need IoT smart facility service model: Till date, operators have looked at IoT opportunity purely in terms of the revenue they might gain from connecting new devices to 5G mobile services. But recent studies indicate that operators will have to focus on services to process IoT events and create consumer value to generate new revenue.

Smart homes, buildings, and cities are the realistic frameworks for IoT adoption, and all these depend more on an IoT service model than on 5G or cellular connectivity. Players like Amazon, Apple, Google, and Ring are all looking at facility security and control, including personal assistants that integrate these traditional IoT applications with entertainment, communications, and lifestyle overall. Every step taken by these players creates a new OTT threat by fulfilling the most essential pieces of smart-facility opportunity before operators even get started.

The bottom line for telecom operators is that to succeed in IoT, they need to radically advance their thought process to look beyond connection revenue to see the value points and ensure network operators have offerings that directly address those value points.

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