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While AI was the future buzz at Mobile World Congress, operators are exercised with today’s problem of recouping money from the millions of dollars poured into 5G networks.
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There were repeated calls for better regulation, wider cooperation, and promises not to repeat the mistakes of 5G, such as letting streamers like Netflix extract all the value from data carried over their networks, when it comes to monetizing AI.
“5G is the fastest-growing mobile standard in history but there are big challenges ahead,” said Mats Granryd, Director General, GSMA. “Mobile revenue growth has gone down but capex gone up. We have to keep investing in new infrastructure to keep the world connected.”
As ever, the GSMA and the leaders of the world’s leading mobile operators make grand claims for the importance of their industry in serving both the world’s business community and solving societal problems, for instance, by bridging the digital divide.
Operators will spend $1.5 trillion between now and 2033 on their networks and 90 percent of that will be on 5G, he said. “We need innovative business models to make it happen.”
One slice of potential revenue lies in getting more people to use mobile devices and mobile networks. Today over 4.6 billion people use the mobile internet—almost 60% of the world’s population. During 2022, 200 million more people started using mobile internet. There are 3.4 billion people still not using the mobile internet, which could add $230 billion to the mobile industry. But the GSMA say the pace of progress is slowing down.
“We know the barriers such as affordability and concerns around security but this is frustrating in an increasingly digital world,” said Granryd. “It is a moral and a business imperative [to close the gap].”
The GSMA is heavily promoting Open Gateway, an initiative to build a unified 5G ecosystem with a framework of open APIs so that businesses can build new services and businesses across national boundaries. A year from launch and it has 240 operators signed up representing over 65% of mobile connections, and over 90 APIs.
Microsoft is a partner and came to MWC in force touting updates to its Azure platform for network operators. It describes this as “a carrier-grade, hybrid cloud platform, and the foundation of network modernization with AI.”
Microsoft EVP Jason Zander said, “We don’t want developers to have to write their app 50 times. They want to deploy it with 50 major operators across all continents at once.”
Microsoft Vice Chair and President Brad Smith gave a keynote and said, “We are creating a new AI economy. Fundamentally for us it is about partnerships. We are not vertically integrated. We do not have an app store for consumers. We don’t make chips. If there was a time for new partnerships it is here and now.”
Dell Chairman and CEO Michael Dell made a similar pitch for telcos to tie networks with AI running on its data centers. “Telcos need to be a winner in this next wave,” he said. “For network operators it is not just about productivity it is about growth. Growing those relationships is the opportunity we see for you.”
Telcos have an enormous competitive advantage, he added. “The vast majority of data is created at the edge. Clouds and apps are moving to the edge. AI will also be at the edge. You want to bring AI to your data not the other way around. Let’s move to a network that is software upgradable and a true platform for innovation. We understand transformation is hard, but the bigger risk is if you don’t do it.”
Europe Falls Behind
5G rollout has been particularly sluggish in Europe where the European Union even warned in January that low 5G deployment risks delaying other technologies dependent on fast internet such as AI. Although 5G has reached 80% of EU population, it is far below the 94% in Japan and the 98% in South Korea and the U.S. Around 40 million people in EU countries will still have no access to a fixed gigabit connection by 2030 according to the EU’s own figures, and will therefore fail to meet the block’s target of providing 5G to all households.
Accenture CEO and Chair Julia Sweet into bat for telco clients. “Today regulation is not allowing us to do what we want across borders,” she said. “It is an industry issue too. Individual operating units in different countries have deep cultures which make change challenging.”
Paolo Murri, VP Business Development at Italian telco TIM, said, “The hype before 5G was a mistake and as an operator we take our share of the blame. We were too [intent on] following our hopes and wishes, we didn’t do the math and we didn’t share the experiences beforehand with the vertical markets. We overestimated demand. We thought everything would have happened much more quickly.”
He indicated that the hype in the runup to 5G spectrum auctions had inflated the price. “In Italy, we have to pay €2.4 billion for frequencies probably driven by hype.”
He quoted a report by Barclays banks stating that the return on 5G capital spend for telcos is running at 5.2% with the cost of capex at 8%. “This is an issue for future innovation,” Murri said.
With the industry only just starting to tap into 5G Standalone—networks that do not rely on 4G—there is hope that higher performance and lower latency will boost applications such as remote production of news and sports events.
Operators are looking to the sports world as 5G promises new opportunities to personalize fan engagement.
“When you make an investment, you don’t make it emotionally but without the emotion of the fans any investment will be questionable,” said Bryan Bachner, GM for Barcelona FC’s Barca Vision and MD in the USA and APAC. Speaking at a two-day long Sports Forum running as part of MWC, he said, “The fan is the author of their own viewing experience. The player has new connected performance technology that allows them to create and share their own media.”
Justin Castillo, Founder of Javelin Advisory in L.A., works with athletes and sports franchises. “The traditional athlete endorsement has changed. It’s no longer a photo shoot and a smile. The overall lifespan of fan engagement should be 7 years plus not just time in the stadia. Mobile technology strengthens the bond between talent and fan.
He cited work his agency had done with New Zealand-based Soul Machines to create avatars of leading sports personalities to engage in real time with fans wherever they are in the world.
“These hyper real digital avatars can democratise fandom by connecting with top tier athletes.
[Golfer] Jack Nicklaus may be 84 and lives in Florida but he can now communicate with fans across multiple languages on a one-to-one basis and have a legacy in perpetuity in the metaverse with fans.”
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