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Sunday, May 09, 2021

Telcos: Stop Thinking You're Always the Leading Actor

Hubris: "an extreme and unreasonable feeling of pride and confidence in yourself"

I've followed developments in the telecoms industry for over 25 years. I've seen positives (eg broadband, SMS, LTE) and negatives (UMA, RCS) as well as a shifting landscape of regulation, the rise of the Internet, and multiple generations of network technology and services infrastructure.

Undoubtedly, both fixed and mobile networks have added massively to economies, society and our current way of life. It's understandable that network operators - and their vendors and governments - feel proud of their legacy and want to perpetuate it.

Yet it's possible to take this too far. Even beyond obviously-silly pronouncements such as "5G is as important as electricity", there remains a constant thread among the telecoms industry that it is absolutely central to all future developments, and that the network's finely-engineered QoS mechanisms are the wellspring of technology-derived value, as well as pivotal to future GDP and world happiness.

But while self-belief and aspiration is helpful, arrogance and self-delusion is not.


Starring role, or supporting cast?

There is an assumption that the (public, traditional) network is always the leading actor in any movie about Industry 4.0, IoT, smart homes, AI, pandemic recovery & the "new normal", combating climate change, or creating new modes of communications and entertainment like AR/VR.

And yet in reality, the telecom network - especially public 5G - is often going to be a supporting actor. Or perhaps just have a walk-on role, or be relegated to an extra who gets dubbed in a different language.

You can almost imagine a C-list celebrity arriving at a busy party and shouting: "Guys, guys! Listen up! You can get rid of all your old stuff, all your Internet apps, all your legacy Industry 3.0 gear... just use our new [Technology X] instead, and we'll offer it all with a nice monthly per-GB subscription. You can even buy a slice!"

Heads swivel. Eyes roll. People refill their glasses & continue their conversations.

A bit more realism and humility is required. Telecoms isn't always the star of the show, and neither does it write the screenplay for the rest of the infrastructure or solution.

That doesn't mean it lacks value, or has a limited opportunity - but that it has to play nicely alongside others... and accept that the director and producer have other priorities to focus on - and a wide choice of alternatives to cast in the same roles.

Leaving the acting analogy aside, it's also important to understand that the nature of the word "telco" is itself changing. Looking out to 2030, the "telco of the future" isn't like todays - there won't just be 3-4 national MNOs and a handful of converged/fibre/fixed-line operators. There will be a vast diversity of service provider types and private/community networks. I've written before about the "new telcos" and this is a critical aspect for traditional ("legacy"?) operators to understand and even embrace.

This isn't just 5G-related

It's tempting to just see this as a problem with how 5G is being positioned and hyped. But while I discuss that below, it's far from being unique. This attitude has been around for years, and pervades the entire industry. Some examples of this mindset include:

  • Telcos consistently assume that "voice" means the same as "telephony", since they only do the latter. Telephony is just one voice application of hundreds - and a 140yr-old clunky and poorly-optimised one at that. This is why telcos don't have a foothold in voice assistants, critical comms, gaming voice, podcasts and so on - and get out-competed by cloud players for UCaaS and cPaaS. (For more: see my upcoming workshop series on the future of Realtime Comms, Voice & Video, starting May 19th)
  • 20 years ago, 3G networks were pitched as platforms for telco-created and telco-delivered videoconferencing, games, "value-added services" (ringtones, basically) and much more inside "walled gardens". The killer app was, in fact, plain vanilla Internet access - despite early dataplans trying to restrict the use of VoIP and IM.
  • Some 1980s & '90s telcos saw themselves as central to enterprises' telephony systems and pitched "Centrex" services - basically a precursor to today's cloud-based UCaaS. Most businesses decided that running their own PBXs was a better option - it fit with their internal organisation and operations much better.
  • Telcos' MEC edge-compute was supposed to take centre-stage against hyperscale cloud providers. Instead, MEC's main use is to host internal NFV or vRAN functions that run the network itself. Or enable some hyperscalers' own edge platforms on a wholesale basis, where they don't have other options. Meanwhile, edge-compute evolves in many other (non-telco) domains much faster, including on-device / gateway, or linked to non-3GPP technologies such as Wi-Fi and fibre.
  • RCS was initially supposed to replace all Internet-based messaging apps. Then its believers pivoted to pitch it as a universal B2C tool for mobile customer interactions. In reality, it's (at best) just another slow-moving messaging app with few users and no loyalty, or special features. It turns out to be channel #17 for consumers dealing with companies that don't merit downloading a proper app or which have a lousy website. RBM's best hope is for things like tickets from that 3rd-tier airline you're forced to use to get to an obscure airport, or ordering a new recycling bin from the local council's chatbot. It's competing with the browser, not apps or Internet messaging.
  • MNOs' public 5G with network-slicing was supposed to replace all the cumbersome enterprise network gear such as ethernet and Wi-Fi. There are still visions within obscure 3GPP work-groups about "5G LANs" and I still read and hear nonsense from the cellular industry about it replacing Wi-Fi at scale....
  • ... or alternatively, the new story is that the 5G core is going to be the centrepiece of all telecoms and networking - it'll control Wi-Fi, fixed broadband, satellite connectivity etc. on operators' terms and policies, of course. (See the Broadband Forum's rather Machiavellian efforts here - led unsurprisingly by behemoths like Verizon & Deutsche Telekom that want the core network as a "control point" all the way to end-devices in the home). Yes, maybe Wi-Fi can easily just slot into 5G's shiny new cloud-native core - but in reality, 99% of Wi-Fi has nothing to do with cellular networks, offload, or non-trusted / non-3GPP access
  • As I mentioned recently, the telecom industry tries to take 100% of the (carbon) credit for new technologies reducing energy consumption or emissions.

The ridiculous and judgmental term "OTT" exemplifies this - creating a them-and-us fallacy of "web" companies using "our" pipes. Never mind the fact those technology companies build their own infrastructure, and invest billions in R&D for everything from AI to chip design. Or that all telcos themselves deploy "OTT" apps, websites and Internet-delivered functions.

To use a more sociological phrasing, many network operators still have a "sense of entitlement". They feel that they should be running everything from voice and video communications to networked entertainment, smart homes, or B2B commerce and industrial automation.

This attitude extends into public policy, and discussions on topics like spectrum, where there is a sense of exerting "license privilege". There is often an attempt to exert control before earning it. This is different to (say) Apple's control of its AppStore.

(*Sidenote [And apologies to my clients if this stings!]:if you work in telecoms & talk casually about "OTTs" for anything other than TV streaming, you should be fired, and so should your boss. It's not only wrong, it's flat-out ignorant and damaging. It indicates gross incompetence. It's not quite a "hate crime" but it is a them-and-us divisive term for a distinction that simply does not exist).

Actions have consequences

There are several reasons why this problem is more than just "attitude" or normal marketing-related hyperbole. It directly translates to business successes and failures.

  • Many telco technologies don't just benefit from n-squared network effects, but depend on them. They degrade "non-gracefully" if they're not ubiquitous - which means they need to be adopted by other telcos at the same time. Messaging is a good example - at 50% uptake, across 50% of operators that implement a new standard, there's a high % chance that two people on different networks won't be able to communicate, especially internationally. There's no focus on saturating small niches, or communities of interest, then expanding over time.
  • Telcos spend so much time envisioning themselves as "platforms" that they fail to realise that pretty much every tech platform evolves from a great (and widely-used/loved) product. Google indexed the web & created a great seach function, before it started selling ads. Apple sold the iPhone for a while before launching the AppStore. It also had a loyal base of iPod users who wanted a music-phone, too. Amazon sold books before it launched AWS. All of them had platforms in mind earlier... but had to create a product before tuning the way the platform needed to behave for customers / developers.
  • The telecom industry always assumes that it will be a "net exporter" (or even pure exporter) of capabilities and APIs. It expects it will sell more "exposed functions" than it buys. It assumes a role at the top of the value chain, rather than the middle. This is starting to change now with the recognition of the role of buying public cloud services for virtualisation, but prior to that it just relied on Google Maps for "find the closest store", or credit-checking agencies for new subscriptions. Almost all successful tech businesses these days are more like trading hubs, importing AND exporting functions, APIs and data. The assumption that telcos will always be the OrchestratORS rather than OrchestratED is leading to an unrealistic world-view and poor decisions.
  • Conversations with regulators and governments try to amplify the supposed "special" status and reinforce the spurious divide with new telcos or Internet/tech firms. "We don't want to be dumb pipes, so please tax & regulate the clever people, because we can't compete". This might seem smart - and perhaps gets better access to new funds for rural coverage or pandemic recovery - but it also hampers and limits future options, for instance around international mergers and expansion. Domestic champions find it hard to live dual lives as global heroes.

What needs to change?

There needs to be a frank, honest discussion about "Telcos' place in the world", which works out how to transition from a world of a few licensed network operators per country, to one in which the landscape is much more complex and nuanced.

  • Position the term "telco" as a broader church & consider the needs/roles of the wider group. MNOs and fixed telcos are important, but not alone here. TowerCo's are telcos. Neutral Hosts are telcos. WISPs are telcos. MVNOs are telcos. Governments can act as telcos. Community networks are telcos. Consider them peers. Insist that GSMA, CTIA, ETNO and others treat all telcos equally and offer membership (and governance) on reasonable terms.
  • Don't push back against governments trying to enable new forms of competition and new entrants. Instead, exploit them. Offer reference designs for Open RAN internationally (see Rakuten). Launch Private 5G services in new countries with local spectrum (Verizon is doing this). Run MVNOs in other countries (Turkcell, China Mobile etc).
  • Internet, IT and industrial automation (OT) companies need to be seen as equal and equivalent peers too. Amazon, Microsoft, Google, Siemens, Honeywell, IBM, HPE, Tech Mahindra, NTT Data & many others will often own the customer relationship. Sometimes telecoms fits into their frameworks, and sometimes theirs' fits into telcos. Maybe there are roles for gatekeepers, but only where there is enough competition.
  • Telecom standards need to become much more "loosely coupled". The traditional insistence that a 5G radio needs a 5G core and IMS/VONR telephony needs to stop. 3GPP standards and interfaces should be mix-and-match. Rather than trying to push complex core networks into fixed broadband architectures, the industry should instead make core-optional lightweight variants of 5G RANs, or expose interfaces that make them controllable by enterprise IT, or a Wi-Fi platform.
  • Offer both complete solutions and sub-component services. Don't assume primacy - sell what customers want. Maybe enterprises want their own Private 5G, but would happily use telcos to do the installation and maintenance, or to enable roaming or as a provider of eSIM-aaS
  • Use 3rd-party infrastructure and connectivity where it makes sense - for instance on neutral host networks. Attempt to automate onboarding, and remove friction wherever possible. Accept national roaming if it means your customers get better access in remote places, or indoors.
  • Work out better metrics to measure the business & communicate these to investors and regulators. See this article on what metrics are especially poor.
  • Understand software and app developers' mindsets. They don't want to pay for "premium QoS" on a thousand networks. They want warning of congestion, and how to adjust their apps' demands - when/how to use on-device compute vs. cloud, which codecs and compression, and so on.
  • Stop thinking that phone calls (and worse, video calls) are perfect manifestations of communications, with just an upgrade every 10 years from circuit to VoLTE to VoNR. Why doesn't the dialler app get updated once a month with new features, or give the user more controls?
  • Look at alternatives to subscription business models. Why not an insurance-style annual premium? Or "dark spectrum" just like "dark fibre"? Or 100 others?
  • Invent more stuff. Spend money on R&D rather than sports TV rights. Much of the current angst comes from competing against tech firms that actually create products and services that people want to buy/use.
  • Have a much clearer policy and stance on buying/selling technology and services. Make using platforms effectively seem as important as creating platforms. This is starting to happen with cloud and Open RAN, but it's very slow.

It has been interesting to see that the most interesting - and lauded - new telcos have come from different backgrounds, and have different attitudes. Rakuten is a cloud/eCommerce company first and foremost. Dish started as a satellite TV provider. Jio's parent Reliance Industries is a broad conglomerate. Although not a new company, South Korea's SKT is part of the SK Group, which also has a broad set of non-telco assets.

To be fair, one area where telcos are taking a more hybrid position is around physical assets. Some are operators/co-owners of shared networks, some spin-out tower businesses, some sell dark fibre and some buy - or both in different places. Some use public colocation and data-centres, while others are looking at local offices as possible edge compute sites.


This undoubtedly comes across as a bit of a rant (and not for the first time...) but it's coming from a position of frustration. I've seen the same issues play out for years - and at the core is this attitude of entitlement that I mention above.

It's totally counterproductive, even if the inertia - and sense of history - is understandable.

Everyone wants to be the star, especially if they've been the lead actor for decades. But sometimes, the role just involves a couple of scenes. And often, it's just the cameo roles - if played well - that get the headlines after all.

[A quick plug again: my upcoming Future of Video & RTC workshop series is here]

Cross-Posted from my LinkedIn Newsletter Article (here). Please see comments there & Subscriber.

#telecom #5G #telco #cloud #technology #regulation #voice #edgecomputing

Thursday, May 06, 2021

Why does the Edge Computing sector ignore Wi-Fi?

We should be talking more about Wi-Fi-Edge as well as 5G-edge. Arguably, it is more important (along with fibre-connected edge)

Yes, the 3GPP term MEC has been upgraded from "mobile edge compute" to "multi-access", but there's still little focus on local edge-cloud use-cases that rely on fixed (usually fixed + Wi-Fi) broadband.

Given today's Wi-Fi often has lower latency than current 5G versions (2-5 milliseconds is common), and many devices such as AR/VR headsets don't have 5G radios, this seems odd.

Many of the use-cases for advanced connectivity, especially IoT in smart buildings and smart homes, as well as gaming and content/video display, uses Wi-Fi predominantly. 5G won't replace it.

On enterprise sites, Edge Computing applications will terminate to end-devices connected with a mix of 5G (public and private), 4G, Wi-Fi, fibre, Ethernet, LPWAN & other tech. This isn't just about low-latency, but connections for IoT devices, cameras, screens etc. that require local processing - and local storage ("data sovereignty"). 

They might use cloud-type software stacks, and use hyperscale cloud for deep analytics, but there will be various reasons for on/near-prem edge.

Offices connect all laptops, collaboration/meeting systems and screens with Wi-Fi. Wi-Fi dominates in education. Even in retail settings and #smartcities, there's a lot of Wi-Fi or proprietary industrial WLAN variants.

In homes, the opportunity is almost entirely about #WiFiEdge. TVs, laptops, voice assistants, smartphones, tablets, AR/VR headsests and most other residential devices connect with Wi-Fi (plus some short-range Bluetooth, ZigBee etc). Very few end-devices inside the home connect with 4G/5G, and even in future the low-band 5G connections that penetrate the walls likely won't support the ultra-low latencies that many talk about.

All of these have significant links to #cloud platforms and applications. Indeed, many higher-end Wi-Fi systems are themselves cloud-controlled. 

Outdoors, especially for mobile and vehicular use-cases, #5GEdge (& 4G for years) will be important plus maybe SatelliteEdge & LoRaEdge

In general, I'd expect "fixed edge" of one sort or another to be far more important than "mobile edge" or MEC. In many ways, it already is, given #CDNs largely service fixed broadband use-cases.

Possibly this is just reflecting a lack of marketing - or perhaps the cloud/edge/datacentre sector has been blinded by #5Gwash hype and has forgotten to focus on often more-important technologies for some critical applications - whether that's security-camera analytics or multiplayer games. They may well need low-latency or secure on-premise compute, but won't (often) be using 5G.

This also perhaps reflects the fact that 5G needs some edge-compute for its own operation (especially Open RAN), so the industry is trying to offset the costs by hyping the potential revenues of using that infrastructure for customer applicatins as well. That's less true for other connectivity types, although fixed/cable broadband has a lot of localised compute infrastructure too.

I'm curious to see if this blending of #WiFiEdge has resonance.
At the very least I think the Wi-Fi and fixed-broadband providers should be making much more noise about it. Seems bizarre that 5G-edge gets all the attention when it is, well, a bit of an edge-case.

Wednesday, April 28, 2021

New: Future of Video & RTC Workshop Series, starting May 19th

 "Why do people make phone calls?"

... the opening question at my old Future of Voice workshops. 

 It stumped many attendees and also many of my telco consulting clients during private engagements.

Most just looked blank, or perhaps suggested "to speak to people?". To be fair, the answer isn't obvious. Which is rather odd, given the need or desire for phone calls is the basis for the entire industry.

Few people think broadly about "purpose" of communications. What is the participant trying to achieve? How does the service or application help them do that? How can it be improved? What are the real sources of value?

In reality, there are 100s of uses for phone calls: To get information. Catch up with a friend. Buy something. Complain. Get help. All deserve a different, optimised experience. Yet a phone call is basically a one-size-fits-all, common denominator product. 

Telco's don't do "voice". They just do "telephony" - a single 140-year old, clunky, unnatural, heavily-regulated voice applications

Instead, they should have considered the 1000s of types of voice communication that are NOT phone calls. Audio chat, push-to-talk, karaoke, voice assistants and so on. All designed for particular purposes, with user-interaction models and technology stacks. Some dependent on the network, some on apps, some on devices, some in learned human behaviour.

The same is happening now for video. It's more than just video conferencing.

It's training, collaboration, security, education, medicine, machine vision, infra-red, social broadcast or 1000s of other uses, applications & business models.

There are platforms, enablers & APIs. Developer tools & design & test capabilities. WebRTC is important but not alone.

If telcos, service-providers, cloud/platform players, developers, enterprises and investors really want to understand the value and timelines for future communications - they need to ask the real questions. Not get blinded by ancient standards, or regulatory mandates to measure things in "minutes".

RTC (realtime communications) is getting more complicated, diverse - and has huge opportunities, as well as risks to incumbent providers of old/poor products. We all know which are the good/bad WFH conferencing products, or messaging services these days. 

What does the future bring? New models for UCaaS & cPaaS? Innovative video services for the smart home? New audio drop-in chat apps? AR/VR conferencing? What are the impacts of 5G, edge-computing and AI?

So I'm announcing: 

A new 3-part / 2-timezone "Future of Video & RTC" workshop series with WebRTC maven Tsahi Levent-Levi from May 19th. Early-bird rates end soon.


Sign up here.


Thursday, April 08, 2021

Free-to-download report on Creating Enterprise-Friendly 5G Policies (for goverments & regulators)

Copied from my LinkedIn. Please click here for the download page & comments

I'm publishing a full report & recommendations on Enterprise & Private 5G, especially aimed at policymakers and regulators.

It explains the complex dynamics linking Enterprises, MNOs and Governments – explaining the motivations of each around connectivity, 5G deployment choices, IoT and the broader impacts and trade-offs around the economy and productivity.

This is not a simple calculus – MNOs want to exploit 5G opportunities for verticals, but businesses have their own priorities and preferences. Governments want to satisfy both groups – and also act as both major network users themselves and “suppliers” of spectrum.

A supporting cast of cloud players, network vendors, other classes of service providers and other stakeholders have important roles as well.

This report is a “Director’s Cut” extended version of a paper originally commissioned for internal use by Microsoft, now made available for general distribution.

(To download on LinkedIn, display in full screen & select download PDF)

#5G #policy #telecoms #private5G #cloud #IoT #spectrum #WiFi

Wednesday, March 03, 2021

The Worst Metrics in Telecoms

 (This post was initially published as an article on my LinkedIn Newsletter - here - please see that version for comments and discussion)

GDP isn't a particularly good measure of the true health of a country's economy. Most economists and politicians know this.

This isn't a plea for non-financial measures such as "national happiness". It's a numerical issue. GDP is hard to measure, with definitions that vary widely by country. Important aspects of the modern world such as "free" online services and family-provided eldercare aren't really counted properly.

However, people won't abandon GDP, because they like comparable data with a long history. They can plot trends, curves, averages... and don't need to revise spreadsheets and models from the ground up with something new. Other metrics are linked to GDP - R&D intensity, NATO military spending commitments and so on - which would needed to be re-based if a different measure was used. The accounting and political headaches would be huge.

A poor metric often has huge inertia and high switching costs.

Telecoms is no different, like many sub-sectors of the economy. There are many old-fashioned metrics that are really not fit for purpose any more - and even some new ones that are badly-conceived. They often lead to poor regulatory decisions, poor optimisation and investment approaches by service providers, flawed incentives and large tranches of self-congratulatory overhype.

Some of the worst telecoms metrics I see regularly include:

  • Voice traffic measured in minutes of use (or messages counted individually)
  • Cost per bit (or increasingly energy use per bit) for broadband
  • $ per MHz per POP (population) for radio spectrum auctions
  • ARPU
  • CO2 savings "enabled" by telecom services, especially 5G

That's not an exhaustive list by any means. But the point of this article is to make people think twice about commonplace numbers - and ideally think of meaningful metrics rather than easy or convenient ones.

The sections below gives some quick thoughts on why these metrics either won't work in the future - or are simply terrible even now and in the past.

(As an aside, if you ever see numbers - especially forecasts - with too many digits and "spurious accuracy", that an immediate red flag: "The Market for Widgets will be $27.123bn in 2027". It tells you that the source really doesn't understand numbers - and you really shouldn't trust, or base decisions, on someone that mathematically inept)

Minutes and messages

The reason we count phone calls in minutes (rather than, say, conversations or just a monthly access fee) is based on an historical accident. Original human switchboard operators were paid by the hour, so a time-based quantum made the most sense for billing users. And while many phone plans are now either flat-rate, or use per-second rates, many regulations are still framed in the language of "the minute". (Note: some long-distance calls were also based on length of cable used, so "per mile" as well as minute)

This is a ridiculous anachronism. We don't measure or price other audiovisual services this way. You don't pay per-minute for movies or TV, or value podcasts, music or audiobooks on a per-minute basis. Other non-telephony voice communications modes such as push-to-talk, social audio like ClubHouse, or requests to Alexa or Siri aren't time-based.

Ironically, shorter calls are often more valuable to people. There's a fundamental disconnect between price and value.

A one-size-fits-all metric for calls stops telcos and other providers from innovating around context, purpose and new models for voice services. It's hard to charge extra for "enhanced voice" in a dozen different dimensions. They should call on governments to scrap minute-based laws and reporting requirements, and rejig their own internal systems to a model that makes more sense.





.... applies to counting individual messages/SMS as well. It's a meaningless quantum that doesn't align with how people use IMs / DMs / group chats and other similar modalities. It's like counting or charging for documents by the pixel. Threads, sessions or conversations are often more natural units, albeit harder to measure.

Cost per bit

"5G costs less per bit than 4G". "Traffic levels increase faster than revenues!".

Cost-per-bit is an often-used but largely meaningless metric, which drives poor decision-making and incentives, especially in the 5G era of multiple use-cases - and essentially infinite ways to calculate the numbers.

Different bits have very different associated costs. A broad average is very unhelpful for investment decisions. The cost of a “mobile” bit (for an outdoor user in motion, handing off from cell to cell) is very different to an FWA bit delivered to a house’s external fixed antenna, or a wholesale bit used by an MVNO.

Costs can vary massively by spectrum band, to a far greater degree than technology generation - with the cost of the spectrum itself a major component. Convergence and virtualisation means that the same costs (eg core and transport networks) can apply to both fixed and mobile broadband, and 4G/5G/other wireless technologies. Uplink and downlink bits also have different costs - which perhaps should include the cost of the phone and power it uses, not just the network.

The arrival of network slicing (and URLLC) will mean “cost per bit” is an ever-worse metric, as different slices will inherently be more or less "expensive" to create and operate. Same thing with local break-out, delivery of content from a nearby edge-server or numerous other wrinkles.

But in many ways, the "cost" part of cost/bit is perhaps the most easy to analyse, despite the accounting variabilities. Given enough bean-counters and some smarts in the network core/OSS, it would be possible to create some decent numbers at least theoretically.

But the bigger problem is the volume of bits. This is not an independent variable, which flexes up and down just based on user demand and consumption. Faster networks with more instantaneous "headroom" actually create many more bits, as adaptive codecs and other application intelligence means that traffic expands to fill the space available. And pricing strategy can basically dial up or down the number of bits customers used, with minimal impact on costs.

A video application might automatically increase the frame rate, or upgrade from SD to HD, with no user intervention - and very little extra "value". There might be 10x more bits transferred for the same costs (especially if delivered from a local CDN). Application developers might use tools to predict available bandwidth, and change the behaviour of their apps dynamically.

So - if averaged costs are incalculable, and bit-volume is hugely elastic, then cost/bit is meaningless. Ironically, "cost per minute of use" might actually be more relevant here than it is for voice calls. At the very least, cost per bit needs separate calculations for MBB / FWA / URLLC, and by local/national network scale.

(By a similar argument, "energy consumed per bit" is pretty useless too).

Spectrum prices for mobile use

The mobile industry has evolved around several generations of technology, typically provided by MNOs to consumers. Spectrum has typically been auctioned for exclusive use on a national / regional basis, in fixed-sized slices in chunks perhaps 5/10/20MHz wide, with licenses often specifying rules on coverage of population.

For this reason, it's not surprising that a very common metric is "$ per MHz / Pop" - the cost per megahertz, per addressable population in a given area.

Up to a point, this has been pretty reasonable, given that the main use of 2G, 3G and even 4G has been for broad, wide-area coverage for consumers' phones and sometimes homes. It has been useful for investors, telcos, regulators and others to compare the outcomes of auctions.

But for 5G and beyond (actually the 5G era, rather than 5G specifically), this metric is becoming ever less-useful. There are three problems here:

  • Growing focus on smaller areas of licenses: county-sized in CBRS in the US, and site-specific in Germany, UK and Japan for instance, especially for enterprise sites and property developments. This makes comparisons much harder, especially if areas are unclear.
  • Focus of 5G and private 4G on non-consumer applications and uses. Unless the idea of "population" is expanded to include robots, cars, cows and IoT gadgets, the "pop" part of the metric clearly doesn't work. As the resident population of a port or offshore windfarm zone is zero, then a local spectrum license would effectively have an infinite $ / MHz / Pop.
  • Spectrum licenses are increasingly being awarded with extra conditions such as coverage of roads, land-area - or mandates to offer leases or MVNO access. Again, these are not population-driven considerations.

Over the next decade we will see much greater use of mobile spectrum-sharing, new models of pooled ("club") spectrum access, dynamic and database-driven access, indoor-only licenses, secondary-use licenses and leases, and much more.

Taken together, these issues are increasingly rendering $/MHz/Pop a legacy irrelevance in many cases.


"Average Revenue Per User" is a longstanding metric used in various parts of telecoms, but especially by MNOs for measuring their success in selling consumers higher-end packages and subcriptions. It has long come under scrutiny for its failings, and various alternatives such as AMPU (M for margin) have emerged, as well as ways to carve out dilutive "user" groups such as low-cost M2M connections. There have also been attempts to distinguish "user" from "SIM" as some people have multiple SIMs, while other SIMs are shared.

At various points in the past it used to "hide" effective loan repayments for subsidised handsets provided "free" in the contract, although that has become less of an issue with newer accounting rules. It also faces complexity in dealing with allocating revenues in converged fixed/mobile plans, family plans, MVNO wholesale contracts and so on.

A similar issue to "cost per bit" is likely to happen to ARPU in the 5G era. Unless revenues and user numbers are broken out more finely, the overall figure is going to be a meaningless amalgam of ordinary post/prepaid smartphone contracts, fixed wireless access, premium "slice" customers and a wide variety of new wholesale deals.

The other issue is that ARPU further locks telcos into the mentality of the "monthly subscription" model. While fixed monthly subs, or "pay as you go top-up" models still dominate in wireless, others are important too, especially in the IoT world. Some devices are sold with connectivity included upfront.

Enterprises buying private cellular networks specifically want to avoid per-month or per-GB "plans" - it's one of the reasons they are looking to create their own dedicated infrastructure. MNOs may need to think in terms of annual fees, systems integration and outsourcing deals, "devices under management" and all sorts of other business models. The same is true if they want to sell "slices" or other blended capabilities - perhaps geared to SLAs or business outcomes.

Lastly - what is a "user" in future? An individual human with a subscription? A family? A home? A group? A device?

ARPU is another metric overdue for obsolescence.

CO2 "enablement" savings

I posted last week about the growing trend of companies and organisations to cite claims that a technology (often 5G or perhaps IoT in general) allows users to "save X tons of CO2 emissions".

You know the sort of thing - "Using augmented reality conferencing on your 5G phone for a meeting avoids the need for a flight & saves 2.3 tons of CO2" or whatever. Even leaving aside the thorny issues of Jevon's Paradox, which means that efficiency tends to expand usage rather than replace it - there's a big problem here:


There's no attempt at allocating this notional CO2 "saving" between the device(s), the network(s), the app, the cloud platform, the OS & 100 other elements. There's no attempt such as "we estimate that 15% of this is attributable to 5G for x, y, z reasons".

Everyone takes 100% credit. And then tries to imply it offsets their own internal CO2 use.

"Yes, 5G needs more energy to run the network. But it's lower CO2 per bit, and for every ton we generate, we enable 2 tons in savings in the wider economy".

Using that logic, the greenest industry on the planet is industrial sand production, as it's the underlying basis of every silicon chip in every technological solution for climate change.

There's some benefit from CO2 enablement calculations, for sure - and there's more work going into reasonable ways to allocate savings (look in the comments for the post I link to above), but readers should be super-aware of the limitations of "tons of CO2" as a metric in this context.

So what's the answer?

It's fairly easy to poke holes in things. It's harder to find a better solution. Having maintained spreadsheets of company and market performance and trends myself, I know that analysis is often held hostage by what data is readily available. Telcos report minutes-of-use and ARPU, so that's what everyone else uses as a basis. Governments may demand that reporting, or frame rules in those terms (for instance, wholesale voice termination rates have "per minute" caps in some countries).

It's very hard to escape from the inertia of a long and familiar dataset. Nobody want to recreate their tables and try to work out historic comparables. There is huge path dependence at play - small decisions years ago, which have been entrenched in practices in perpetuity, even though the original rationale has long since gone. (You may have noticed me mention path dependence a few times recently. It's a bit of a focus of mine at the moment....)

But there's a circularity here. Certain metrics get entrenched and nobody ever questions them. They then get rehashed by governments and policymakers as the basis for new regulations or measures of market success. Investors and competition authorities use them. People ignore the footnotes and asterisks warning of limitations

The first thing people should do is question the definitions of familiar public or private metrics. What do they really mean? For a ratio, are the assumptions (and definitions) for both denominator and numerator still meaningful? Is there some form of allocation process involved? Are there averages which amalgamate lots of dissimilar categories?

I'd certainly recommend Tim Harford's book "How to Make the World Add Up" (link) as a good backgrounder to questioning how stats are generated and sometimes misused.

But the main thing I'd suggest is asking whether metrics can either hide important nuance - or can set up flawed incentives for management.

There's a long history of poor metrics having unintended consequences. For example, it would be awful (but not inconceivable) to raise ARPUs by cancelling the accounts of low-end users. Or perhaps an IoT-focused vertical service provider gets punished by the markets for "overpaying" for spectrum in an area populated by solar panels rather than people.

Stop and question the numbers. See who uses them / expects them and persuade them to change as well. Point out the fallacies and flawed incentives to policymakers.

If you have any more examples of bad numbers, feel free to add them in the comments. I forecast there will be 27.523 of them, by the end of the year.

The author is an industry analyst and strategy advisor for telecoms companies, governments, investors and enterprises. He often "stress-tests" qualitative and quantitative predictions and views of technology markets. Please get in touch if this type of viewpoint and analysis interests you - and also please follow @disruptivedean on Twitter.

Friday, February 05, 2021

New Report & Recommendations on Telecoms Supplier Diversification

Copied from my LinkedIn. Please click here for the download page & comments

I'm publishing my full report & recommendations on telecoms supplier diversification, especially for 5G, but more broadly for "advanced connectivity" overall. This follows my "10 Principles" article from 2 months ago.

It covers both near-term RAN diversification and a long-term roadmap for a better telecoms/networking landscape towards 2030, with 6G and other connectivity enabling "biodiversity" rather than monoculture.

Although it has been triggered by UK Department for Digital, Culture, Media and Sport (DCMS) work via its Diversification Task Force - and will be submitted directly to it - it is applicable more broadly to global policymakers considering 5G, private networks, Open RAN, Wi-Fi, spectrum and vendor policy issues.

My view is that Open RAN is important, but overhyped (like 5G itself). Much of the value from 5G is in settings where there is already good vendor choice (eg indoors, or for private cellular).

Governments should focus more on context for deployment, ownership models and substitutive options like WiFi6. All bring extra supply options.

In short - *Demand* diversification catalyses *Supply* diversification.

(To download from LinkedIn, display in full screen & select download PDF)