Trade shows, where many buyers and sellers congregate, are a place to see signals like this. For example, the recent MWC noted many small signs that networking is facing big challenges.
- In 2007, Australia created a national infrastructure project called the National Broadband Network (NBN). At the time, access infrastructure was too expensive to sustain competition and reasonable consumer prices. At MWC, Telecom Italia said retail price pressures and exploding data consumption mean the network is “facing the perfect storm”. Ericsson said it needed a major consolidation of its 200 operators in Europe for an efficient and stable financial structure.
- Last year, as demand for bandwidth soared without consumers being willing to pay for broadband, operators in the European Union asked the Commission to approve subsidies from tech giants. There was talk throughout the MWC that the EU was in favor of this subsidy, called fair distribution. An EU regulator says fair distribution policies are key to delivering gigabit-class connectivity by 2030.
- Mobile communication operators, which have long been the main source of revenue in the communication services market, are looking to increase their revenues or reduce their costs. At Mobile World Congress, Telefonica announced an agreement with Microsoft to support a GSMA-announced API program called Open Gateway that appears to be aimed at generating new revenue and avoiding subsidies.
- OEM revenues from service providers continue to decline. Nokia’s announcement of a brand refresh at MWC grabbed headlines as it focused on enterprise networks rather than service provider networks. However, over the past 20 years, the share of enterprise network budgets devoted to new spending to gain new benefits has almost halved, to around 10%.
These signs are not signs of a healthy industry. There is the story of a Dutch boy who saved a country from flooding by plugging a hole in an embankment with his finger. Right now, all the data points are pointing to real networking issues and lots of water leaking on the levees of the business model, so where are the fingers?
Cost control is not the solution. All the easy methods have already been used. Sooner or later, when all cost overruns are eliminated, cost control will become impossible. EU operators seeking subsidies know that additional cost control is not the solution. Companies have reduced their network expenses for 20 years. However, for new revenues and benefits to be realized, customers must be willing to pay more for network services, and businesses must be able to find new productivity benefits to justify network expenditures.
What is needed here is that there is no connection. Experience with users and new information relationships are the only answers. Why is no one willing to build these informational relationships to create new benefits and generate new revenue? Ask any Wall Street analyst and you’ll hear “SOX.”
It looks like socks, but it’s not, it’s SOX, short for Sarbanes-Oxley. The law was passed after the dotcom bubble to prevent Wall Street from increasing the value of tech companies by promising huge future returns. SOX focuses stock performance on the current quarter or the current year, not the future. Corporations have obligations to their shareholders. In other words, under SOX, this means that R&D and marketing will focus on areas that will make the results that will be announced in the next quarter look good. Building new informational relationships with consumers and workers to justify more network spending takes too long from this perspective.
Network service providers need new revenue streams
The good news is that MWC revealed that at least network service providers recognize the need for a new business strategy based on something on the network. All discussions about APIs focus on the desire of network service providers to engage software developers in creating a long-term informational relationship.
The bad news is that the main purpose of the MWC API was to expose a vendor’s OSS/BSS functionality to developers, or to make things like device location and a smartphone’s GPS easily accessible. to cloud service providers or smartphone vendors. was It’s like bringing an old-fashioned bicycle to a market with expectations and demand for flying cars. The good news in the bad news is that the MWC API story proves to service providers and enterprises that the future of networking lies in creating partnerships between connectivity and hosted functions and applications. However, two barriers still need to be overcome for the network to benefit from this good news.
The first hurdle is circular dependency. No application creates new information relationships. There is also no architectural element to fabricate it and provide hosting and connectivity capabilities etc. Without apps, there’s no motivation to build platform architectures, and without architectures, there’s no way to build apps.
The second barrier is the value of network roles. If the whole role of the network is to carry traffic for new information relationships, the application will only place a greater burden on the network service provider. Consider social media. For network service providers and network solution providers to benefit from the new information relationship, they must be part of the information creators, not just the carriers.
What MWC lacked was an idea of how to overcome these obstacles. The only new service concept was the Metaverse, and the Metaverse focused on virtual reality. It is unclear how this will help network service providers, network service providers or equipment providers. Again, all the network does is carry something.
What and who can break down this barrier? Think of tall buildings. If you start from the basement, you have no idea what’s on the side of the observatory at the top of the building, and if you start from the observatory, you can’t see what’s supporting it below . However, if you start in the middle, you can see the top and bottom bit by bit. Cloud service providers are a logical source of middleware that should be the basis for new information-user relationships. When this happens, they not only block operators’ path to higher revenue, but they also absorb more and more functionality from the corporate network.
If I were a cloud service provider, I would assign a dozen talented software architects to define the next key information relationship for consumers and businesses, and a large team of developers to create a cloud platform in as a service to support it. I will build a room in the basement of a high-rise building, connect it to the operator’s GSMA API, please them, and turn my eyes to it to steal the key to the kingdom. Then, instead of plugging the hole in the market fill with your fingers, you’ll rip out a wallet that probably has a trillion dollars in the market pocket. Cloud service providers may already be doing this. This is the lesson learned from MWC.
editor@itworld.co.kr
