The pandemic has given Mobile Network Operators (MNOs) the opportunity to rethink their supply chains in an increasingly tech-enabled world. Many organisations have found new ways to engage with suppliers since the first lockdowns in early 2020, which has meant a steep learning curve for many. At the same time, the mobile value chain is diversifying rapidly, which requires new and flexible approaches to supplier-partner relationships, says Jon Freeman, strategic growth director at Cellnex UK. He looks at ways that MNOs can use 2022 to change their mobile value chain and remain competitive into the future.
And in 2022, 5G network rollout is providing European MNOs with a golden opportunity to discover new ways to work with their supply chain.
Fifteen years ago, the mobile world was quite simple. You had specific vendors making equipment for mobile phone networks, the value chain was linear and predictable. However, in 2022, the value chain is far more varied, presenting both challenges and opportunities to both suppliers and MNOs alike.
It’s fair to say the historic end-to-end single source supplier approach to mobile network deployment is no longer fit for purpose, especially in a 5G world. The sheer scale and pace of innovation, and resulting technology which is now available, means that MNOs require more flexibility and choice around their expert suppliers.
The industry is growing at scale
This can be demonstrated by the increasing scale of exhibitors at the annual Mobile World Congress in Barcelona. Over the last 15 years, the number of organisations participating has more than doubled in size, from 1,100 exhibitors in 2007, to 2,400 in 2019. One of the key drivers for this diversification of the mobile value chain is the pace of innovation required. Technical solutions are becoming much more diverse and increasingly cloud based, which has encouraged more businesses to enter the industry. Another factor has been the change in physical network infrastructure and its location for example, in the radio layer we have seen expansion from just towers and rooftop locations down to street level and inside buildings which has also accelerated the number of industry participants.
As more and more organisations continue to enter the tech ecosystem, end-to-end delivery from a small handful of big vendors is firmly in decline. The recent explosion in innovative companies involved in the roll-out of networks means that MNOs will continue to step out of their comfort zone of working with a set list of traditional vendors and establish a partnership-based model of diverse expert suppliers.
Steps to resetting mobile value chain culture
The next evolution of networks is going to involve a wide variety of solutions and will require cross-collaboration from organisations acting as partners to deliver. For traditional MNOs, this will require three steps:
- A cultural shift to accommodate different suppliers’ working practices
- Structural change to allow for flexibility in a competitive market
- Investment in new skills required to manage multiple and diverse suppliers
Creating future-proof networks in a post-pandemic and increasingly tech-enabled world now revolves around being able to orchestrate a range of partners. Increased collaboration borne from the pandemic means that organisations that have never worked together before will have to learn how to collaborate on projects, which will require a learning curve. As we strive to embrace a more varied chain of partners in 2022, it’s clear that a broader set of skills and expertise is required to leverage this more diverse supplier ecosystem and achieve success.
And, as more innovators enter the market, this ability to adapt and be flexible is only going to become more vital. We’ve observed increasing diversification in the mobile value chain in the last few years. As the mobile network ecosystem evolved beyond the traditional ‘tower and data centre’ into streets, buildings and the cloud, a whole other range of partners must now be added to the equation; and this demands a structural change within MNOs as ‘purchasers’ and in the market itself, to allow for competition to flourish.
Europe’s untapped potential
We first started to see increased mobile value chain diversification in the US around five years ago, as MNOs, in a bid to bring new features, functionality and enhanced network performance to market more quickly, began working with suppliers, such as software companies, and asset providers, like local authorities, which sat outside of their traditional list.
This idea spread throughout Latin America and Africa, where stakeholders are coming together to tackle a range of challenges – from technical issues to policy. Kuwait has seen investment focused on 5G capabilities, intended to support a growth in data traffic which has, in turn, led to revenue growth in recent quarters. The country’s telecom regulator also actively encourages shared infrastructure to boost connectivity. In Europe, we are just at the tip of the iceberg when it comes to tapping into the potential that a more collaborative approach between MNOs and the supply chain can bring and it’s clear there is plenty to be learnt from our peers internationally.
Last year, the UK’s Telecoms Diversification Taskforce highlighted that a coordinated approach amongst like-minded nations, with investment focused on areas that can succeed on an international scale, rather than nationally, was key to broadening the supplier net there is no single country solution to diversification. With around 100 MNOs throughout Europe, we are beginning to see interesting collaborations coming to fruition throughout the market for example highly diverse partners coming together to develop and trial new 5G use case projects. And it’s fair to say this trend towards mobile value chain diversification is only going to increase, as countries begin to phase out 2G and 3G in the coming years noting this will be achieved in the US by the end of 2022 paving the way for new telecoms suppliers to enter the market.
The organisations that succeed will be those who manage their diverse value chain most effectively, and this is where pressing the ‘reset’ button comes into play. It all starts with an evolution in operating ethos and letting go of restraints put in place by traditional methods or ways of working. Organisations that can create the mindset and conditions for a flexible, collaborative and diverse approach will realise the full potential of a broader, more advanced set of solutions that deliver their strategic ambitions.
The author is Jon Freeman, strategic growth director at Cellnex UK.
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