There’s a meteor coming – duck or grouse
Operators face a series of challenges as they grapple to determine their role in the digital value chain and struggle with the continued need to invest in infrastructure in order to bring new services to market. At a recent Openet media event, George Malim caught up with chief executive Niall Norton to gauge his views on what the operators of the future will look like.
George Malim: As operators focus on how to compete in the digital services market is their insistence on providing carrier-grade services starting to shift? Could we see services come to market more rapidly in a beta testing mode?
Niall Norton: A service delivery environment will always have an obsession about carrier-grade reliability, it’s an easy metric so it’s easy to apportion blame when it goes wrong. If you’re partnering you can blame someone else so proof of fault will be required.
The tools are our there now but they are a lot less specialist and a lot less complex than carrier-grade tools. These will just keep getting better and better and we’ll see things like videoconferencing that doesn’t hit the internet so the quality can be assured.
Things will still go wrong but the internet is understood to be not carrier-grade so I think operators will learn to dry their tears of regret at not being carrier-grade.
GM: Will operators continue to be consumer brands? Can you envisage communications becoming just another bundled service offered by a bank or a utility service for example?
NN: There’s a segmentation of operators going, particularly among this big ones which can afford to buy media content and have real ambitions of getting into other services. You could see them selling electricity or security in partnership with others and it’s possible that communications services could be sold by other organisations.
New service areas for operators are all real and will all come to pass pretty quickly. Operators, particularly the big ones, have an unassailable advantage in the 5G space with the assets they have at the edge of the network. This means they can make decisions at the signalling layer and this capability can be exploited at the network edge.
GM: Which new services do you see being successful for operators?
NN: Security, tracking and virtual reality will be important – especially in factories –and they don’t need massive amounts of fibre. We see AT&T, Verizon, Orange and BT taking serious steps away from the traditional telco model but all sorts of new models, some of which are not known today, will emerge.
GM: Operators seem stuck with the old model, though, especially when you look at the 5G investment burden. How will they survive and thrive in the digital era when they’re encumbered with traditional infrastructure investment?
NN: If people look at 5G as being like 4G, they’re stuffed because they won’t be able to raise the money. Operators’ share prices are unbelievably sensitive to price wars and anything to do with margin constriction has a massive affect. In the US, for example, when T-Mobile dropped its price the others had to compete with it but to do so they had to shut down almost everything in order to maintain margins for the Street. If margin drops by 1%, an operator’s share price can drop by 10%.
This means announcing massive investment in 5G isn’t going to happen. However, the 5G business case is around services people want that require spectrum. That means high bandwidth interactive TV or super-high definition cameras on new devices.
We’ll therefore see 5G deployed in support of these types of services. We’re now getting purchase orders for the development of software tools to support 5G so it’s now a reality but these are targeted investments in the delivery of specific services and value propositions.
Operators aren’t changing because they want to. They have the choice of being a mammal and adapting to the market conditions or being a dinosaur just after the meteor hits.