MWC 2018: Huge Appetite for Technology Development but Very Short on Business-Level Innovation

At this year’s Mobile World Congress, technology suppliers have been very busy pushing various technologies to the market in what ABI Research calls the technology hangover. This trend is consistent across all the technology supply chain, including access networks, core networks, cloud technologies, artificial intelligence, and software tools for digital transformation, mobile chipsets and devices, AR, VR, mixed reality, 360 video technologies, location technologies, and robotics. These technologies are targeting several verticals, including mobile devices, consumer electronics, computing devices, smart homes, smart cities, automotive, utility services, transportation, industrial automation, retail, health, and enterprises.

However, mobile service providers (MSPs) are still largely shy in adopting these technologies. MSPs remain in the early stages in several areas: understanding the end-markets’ technology requirements; understanding what strategies various verticals are utilizing to digitize their businesses; and understanding which business models MSPs should use to monetize these technologies. MSPs seem uncertain about their position in the end markets game, while web-scale companies, systems integrators, and a flurry of other competitors have been digitizing business verticals long before MSPs.

The mobile industry is busy building 5G even as LTE Advanced and LTE Advanced Pro technologies are far from reaching their potentials. Many equipment suppliers have introduced the first generation of their 5G-ready solutions, supporting either NSA or SA 5G NR across different spectrum bands from sub-6GHz to mmWave. These technologies span from base stations supporting the newly released 3GPP 5G NSA access standard, which is anchored on LTE core network, to more sophisticated next generation core (NGC) solutions with slicing and service orchestration capabilities. Major chipset suppliers have also announced their first 5G modems either supporting CPEs (as is the case for Huawei), computing devices (as is the case for Intel), or smartphones (as is the case for Qualcomm). Chipset suppliers are also busy working with infra suppliers to make sure their chipsets are interoperable with key network equipment from various vendors. As such, it is easy to understand that the supply chain is well geared to support 5G services. However, most of MSPs are currently aiming to deploy 5G for network capacity extension, with no immediate plans to create new data plans or use the technology to create new business opportunities beyond the consumer market. Although 5G will help MSPs enhance its network efficiency, extend its capacity, and cope with the growing traffic demand, the lack of MSPs’ innovation at the business model level and their inability to build new business opportunities for 5G will likely deter the financial community from investing in the technology altogether.

AI was also omnipresent at the show across every node of the technology supply chain. AI is still in the embryonic stage of deployment, and proprietary implementations are mushrooming already. Virtually all infrastructure suppliers have embedded different shapes or forms of AI for network automation, traffic monitoring, network capacity optimization, and radio resources management, as well as marketing, customer experience management, and call-center improvements. ABI Research believes that, unless the industry chooses a common approach (by either adopting open frameworks or mandating a universal standard) in implementing AI across different network equipment, MSPs could see themselves locked to a single vendor at best or risk serious problems with equipment fragmentation, which could jeopardize the benefits of AI network implementation altogether. This is particularly the case when proprietary AI frameworks are implemented over standard-based equipment such radio access networks.

The key value proposition of deploying AI lies in helping MSPs cut a significant amount of network and service operational costs. However, as with many other technologies—including 5G—presented in the show, these players have not yet figured out how to monetize the technology or create new business opportunities.

The availability and multitude of competing and conflicting 5G and AI technologies is confusing implementers (including MSPs) and could jeopardize any opportunity the innovative technology could bring. It is also self-evident that technology innovation is not often accompanied by business-model innovation. If investors are not provided every assurance that the deployment of these rather expensive technologies will unlock new and lucrative business opportunities, they will be reluctant to invest as a result.

Having said this, most of the technologies mentioned above (AI and 5G included) are in the early stages of development, and one should not expect the industry to make sense of them overnight. It will take more than two to four years to digest some of these technologies and integrate them to build compelling use cases and applications. In the meantime, technology suppliers have an obligation to increase efforts to educate implementers on the benefits of adopting innovative technologies. Therefore, we see this year’s show as the first episode of an educational process the industry must take in order to build confidence on the value of digital transformation and the role of innovative technologies (such 5G and AI) in enabling this transformation. So, one will have to wait for next year’s MWC show before we see how the end markets grasp the potential of these technologies and sustain new transformative business models.