Between 27 February and 2 March 2023, the Mobile World Congress (MWC) took place in Barcelona. Over 88,000 visitors and 2,400 exhibitors from over 200 countries attended the event. Over half of the exhibitors, 56%, came from mobile-adjacent industries. MWC has long ago stopped being all about connectivity. These days, it is more about mobile technologies, digital devices, and, above all, connected experiences.
As one of the world’s leading technology events, Mobile World Congress gives attendees a good sense of what the main themes are that relate to network infrastructure, cloud infrastructure, and the emerging world of connected solutions.
My main observations were that:
More carriers are migrating network infrastructure elements into the cloud. Public cloud providers play an ever more important role in network service provisioning. Carriers and hyperscalers emphasized in discussions the trend to make network and IT infrastructure more service-oriented and its cost base more flexible by embracing cloud computing.
Forrester survey data shows that network as a service is the top network infrastructure priority. Infosys told me in a discussion, “If you want to empower the enterprise customer, you have to open the network.” Google shared that many carriers are moving part of the operations support system and business support system into the cloud. Network equipment vendors such as Ericsson, Nokia, Huawei, or Juniper are developing their own cloud offerings.
But carriers also work with large hyperscalers like Microsoft Azure, AWS, and Google Cloud to use cloud platforms for radio access network (RAN) and core network elements. Multivendor environments invariably raise interoperability issues, affecting quality of service and service-level agreements. Hence, virtualization providers such as VMware or HPE are helping to minimize the integration complexities.
Not surprisingly, a new generation of carriers is emerging. For instance, Rakuten Symphony is a cloud-native, open RAN mobile network provider. Several carriers hinted that, as prices for public cloud computing are increasing, they are evaluating their decision-making on when and what to move into the cloud more carefully.
The prospect of tougher carrier-hyperscaler competition is growing. The relationship between carriers and hyperscalers will be redefined against the network cloudification trend. To be clear: There is nothing inevitable about hyperscalers eating the carriers’ lunch.
But it would be naive not to contemplate the potential for more competition between these two camps. During the event, I heard several comments about the potential risks for the carriers’ value propositions as a result of deploying public cloud solutions inside their core and radio access networks as well as their business and operating systems.
Hyperscalers need to be careful not to abuse their increasingly powerful position vis-à-vis the carriers if they want to build long-term, trusted relationships with them. Also, regulators might at one point focus more on hyperscalers in the debate from a national security perspective.
Carriers are forming deeper alliances with each other.
Carriers sense that the competitive landscape is changing. To succeed, they need to work together. Of course, carrier alliances are nothing new. They have been around for years and focus on tactical objectives, with, for instance, the FreeMove Alliance on sourcing.
At Mobile World Congress, 21 carriers with a combined customer base of 2.5 billion users and the GSMA formed Open Gateway. GSMA Open Gateway is a framework of common network APIs designed to provide universal access to operator networks for developers.
The goal is to help developers and cloud providers enhance and deploy services more quickly across carrier networks. GSMA Open Gateway addresses the challenge for carriers to deliver reliable end-to-end customer experience and service levels.
Open Gateway’s goal is to deliver services consistently across carrier networks in an API world. The initial APIs focus on issues such as SIM swaps, quality on demand, number and location verification, and edge site routing — and will be defined by the open-source project CAMARA.
Carrier customers will benefit from Open Gateway as communication networks transform into platforms for software-as-a-service providers like Salesforce or Microsoft. Open Gateway underlines the macro trend of IT and network infrastructure moving ever closer.
Carriers are still searching for financially attractive 5G use cases.
The GSMA estimates that carriers will spend $1.1 trillion on 5G between 2020 and 2025. Given the challenge to charge a 5G premium in the consumer segment, the focus for 5G monetization remains on the business segment.
In my discussions with carriers, network equipment vendors, and professional services firms, however, I did not hear about any new 5G use cases that offer carriers realistic and attractive returns on their 5G investments.
Most enterprise decision-makers tell me that they don’t care about 5G as a technology. They are keen to drive better customer experiences or boost their internal efficiency and employee experiences, but it is these non-tech-minded stakeholders who are increasingly involved in deciding which solutions to buy from which vendors.
Hence, carriers must become better at translating the benefits of 5G network functions for supporting business outcomes. In most instances, existing technologies such as Wi-Fi or LTE suffice. The private 5G network pitch is also at times countered by alternatives like Siemens’ Wi-Fi-based connectivity solutions.
Hence, there are still very few 5G stand-alone solutions. The lack of IT and operational technology convergence is further delaying the 5G uptake. An additional challenge relates to the budget-holder complexity: Professional services providers told us that they are often dealing with different budget holders for IT and networking projects.
Carrier consolidation in Europe looks likely.
A study by PwC highlights that 46% of carrier CEOs believe that their carrier will no longer be economically viable a decade from now. Predicting the carrier doomsday is of course nothing new and has prompted consolidation in many markets. The North American carrier market is dominated by three large carriers.
A similar picture exists in other large markets like India and China. In Europe, meanwhile, there are dozens of carriers, with three to four carriers even in small markets. Consolidation might be one way to build greater resiliency for carriers.
At Mobile World Congress, the EU’s industry chief pointed to the ongoing discussions regarding the cross-border consolidation of carriers in the EU and the benefits of an integrated radio spectrum market.
In light of the high inflation levels and the pressure of the cost-of-living crisis on households, this debate is exposed to two underlying dynamics: Carriers could benefit from economies of scale, and price rises would only follow if carriers abuse their oligopolistic positions — something that regulators need to be watching out for.
What was refreshing at Mobile World Congress 2023 was the absence of the doom and gloom that has infiltrated many technology discussions, with their stories of headcount reductions and revenue slowdown.
Clearly, these market adjustments will continue and reflect cyclical patterns of the technology sector. But Mobile World Congress shows that there is still a lot of dynamism in the tech sector.
One startup from Barcelona told us that every tech professional in the city has at least five job offers, despite the headcount reductions by the large tech vendors. A dose of normalcy can help focus minds to get many of the projects and initiatives that were the focus of Mobile World Congress 2023 done
First published on Forrester Blog