MWC2019 Arvani Report:
The Mobile World Congress (MWC) took place in Barcelona from Feb 25-28, 2019. More than 109,000 delegates came together to showcase the latest in mobile industry. As expected, the big themes were 5G, AI and IoT, which combined together enable Intelligent Connectivity.
By 2025, 15% of all global mobile connections, 30% of Europe’s and China’s mobile connections and almost half of US mobile connections will be on 5G, according to latest GSMA study.
The number of global IoT connections will almost triple from 9 billion in 2018 to over 25 billion in 2025.
Signs of True Digital Transformation – from Traditional Telco and Digital Native
While many in the industry talk about digital transformation, most people are really talking about digitization or digitalization and not true transformation. The emphasis in Digital Transformation must be on transformation. Too many people limit their conception of digital transformation as application of digital technologies like 5G, AI, cloud, IoT, blockchain and others to improve the way people, products and processes work to better address specific business problems. While that is not necessarily a bad frame of reference, it is too confining and provides suboptimal improvements. Such a mindset prevents the complete evolution of digital transformation’s full promise. Transformation should examine the entire business placing customers at the center and creating digital platforms and digital pathways with all having a direct path toward serving customers. An incumbent telco player, and for that matter any industry’s incumbent player, must focus on transformation for three key reasons: 1) Only with true transformation, can an incumbent create a fundamentally new business model that enables significant leaps in revenue growth and profit growth; 2) and perhaps more imminently concerning, to be able to compete with a digital native that will eventually attack that industry. We have a lot more to say on Digital Transformation but will leave further discussion to another time; and 3) Telcos are looking to provide Digital transformation services to enterprises and verticals, so it would be more compelling if they have gone through a true transformation themselves.
Meanwhile, at the MWC show, we were encouraged to see signs of real digital transformation. One excellent example is Vodafone, where the new CEO Nick Read, openly discussed issues with traditional telco industry where the customer satisfaction levels are just slightly above those of the tobacco industry and much lower than those of the financial sector. Vodafone has recently refreshed its strategy with a major focus on customers and creating transparency and simplification around products, services, and customer engagements.
Another example comes from an e-commerce player in Japan, Rakuten. The company’s CEO, Mickey Mikitani, talked about its Rakuten Mobile Network, emerging as Japan’s 4th telco operator. As an outside challenger with no telco legacy, Rakuten is building a fully virtualized cloud-native mobile network. Mikitani called the traditional telco networks a “mystery” that looks like “spaghetti”, a term of art generally used for bad software where additions and fixes have been piled up on top of each other haphazardly resulting in a mess. Rakuten is implementing its mobile network the way an Internet company would do it, in the cloud, and in partnership with key third-party players.
Both of these efforts will undoubtedly encounter bumps along the way. The traditional telco’s transformation journey will not be a walk in the park, as the old what Read called “protectionist” mindset and less-collaborative ways of working will surely be hard to shed. The emerging challenger’s fully cloudified mobile network using a collection of third-party technologies – that all have to deliver in unison to provide all the functions and features that mobile users are accustomed to – will require a herculean effort. Yet, both of these developments can become very significant and potentially mark inflection points for telecom industry’s true digital transformation.
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