Quantum technologies: Strategic paths for telcos

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With quantum technologies touching on many areas of telco business, it can be unclear where telcos should make early investments. However, there are some common priorities for telcos – and by considering a small number of strategic perspectives, decisions on next steps can be made.

Quantum technologies are advancing and telcos have a role to play

Recognising the century since the initial development of quantum mechanics, the United Nations has proclaimed 2025 as the International Year of Quantum Science and Technology. Quantum physics underpins much of modern technology, from the transistor to lasers to solar cells. However, quantum advances are poised to disrupt a range of technologies of relevance to the telco sector covering computing, sensing, communication and the related topic of post-quantum cryptography (PQC). A previous STL Partners report provided an introduction to these topics, and these are briefly summarised below.

PQC is driving near-term infrastructure upgrades

The importance of PQC is due to the likelihood that future quantum computers will be able to break the protection of current cryptography used in many internet and networking protocols. The likely timeframe of a cryptographically-relevant quantum computer (CRQC) is believed by experts to be within 10-15 years, a point in time sometimes referred to as ‘Q Day’. However, Q Day may be even sooner if technology progress accelerates. This creates a present-day threat from malicious actors storing encrypted data for decryption by a future CRQC, i.e. a ‘store now, decrypt later’ (SNDL) attack. An SNDL attack is a significant threat for long-lived sensitive data in sectors such as finance, legal, health and government.

In some markets, governments are taking a lead by making strong recommendations to begin moving to quantum-safe infrastructure. Such infrastructure doesn’t rely on protection from cryptography that is itself vulnerable to attack by a CRQC. As an example of strong government recommendations, in 2022 the US issued a memorandum to its departments and agencies to begin the work of migrating away from – or otherwise mitigating risks from – current cryptography, with a target to be quantum-safe by 2035.

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Quantum computers offer early opportunities in a few areas

Aside from PQC, the quantum domain includes three new types of technology, as shown in the figure below. The first of these is quantum computing. Quantum computers represent an opportunity to solve complex problems that are challenging today. They use quantum bits, or qubits, to perform calculations that leverage the uncertainty inherent in quantum physics. Qubits produce probabilistic results rather than deterministic ones, but this suits certain problems in optimisation, physical simulation and machine learning. A digital computer can be coupled with a quantum computer to allow those problems to be solved faster or more accurately than the digital computer could do on its own.

Small quantum computers are available now on platforms such as AWS, Azure and IBM Cloud, and larger and higher-quality quantum computers are beginning to appear that allow useful optimisation problems to be solved for telcos. These will support better workforce scheduling, logistics optimisation, network design and planning, or financial portfolio optimisation. Telco internal operations will benefit from these applications.

Quantum technologies

Source: STL Partners

Quantum communication is a strategic area for telcos

Quantum communication involves sending quantum states (such as qubits) over a distance – and is the least mature of the quantum technology categories covered in this report. A key property of a quantum communication channel is that it provides protection against eavesdropping, and a well-known early application is quantum key distribution (QKD). QKD provides a way for two parties to exchange a secret key, based on trusting the laws of physics instead of the proofs of mathematics. However, QKD links are currently limited to a distance of less than 1,000 km through fibre or special satellite infrastructure. True quantum repeaters are still being developed, although trusted nodes can chain together QKD links to securely receive then retransmit new quantum states at the risk of creating a potential interception point.

In the longer term, quantum communication is expected to enable a quantum internet where qubits of information are transmitted by quantum sensors to quantum computers or exchanged between quantum computers themselves. Given that large quantum computers will likely be located in special facilities (rather than in portable devices), this will further drive the cloud computing trend. Additionally, new applications such as blind quantum computing will allow cloud workloads to be performed with guaranteed privacy.

The miniaturisation of quantum sensors is bringing utility

Quantum sensors make use of quantum mechanical effects to achieve highly sensitive and precise measurements. While such sensors have been around longer than quantum computers, a new generation of sensors are smaller and higher performing. Quantum sensors applications include timing (atomic clocks), navigation (gyroscopes and accelerometers), random numbers, antennas and industrial sensors. Quantum random number generators (QRNGs) may be the most broadly applicable, but the use of quantum sensors in timing and navigation to allow accurate travel at high speed in GPS-denied environments is of significant interest in early markets such as defence.

Telcos have a role to play in the quantum tech sector

IT and telco infrastructure vendors are starting to have conversations with their customers about this new technology, triggered by developments of new standards. For example, with PQC, the 6G/IMT-2030 standardisation process has identified quantum safety as part of the objectives, and the US National Institute of Standards and Technology (NIST) has published final versions of initial PQC standards in August 2024.

However, assembling teams to run quantum-related projects is challenging. Quantum-related skills are currently scarce and expensive. Meanwhile, training existing staff in quantum will take many months. Additionally, there is no one type of quantum specialist, as the skills relating to near-term quantum activities such as PQC are very different to those required for emerging quantum technology opportunities.

Telcos need a strategic framework to help make decisions about the various quantum technology opportunities and threats, so as to prioritise investment and resourcing. This report will provide strategic perspectives that telcos can use for decision-making in their own organisations. It will examine use cases and activities required for different quantum technology exercises, including a range of examples from the telco sector.

Table of contents

  • Executive Summary
    • Key use cases
    • Market activities
    • Strategic patterns
    • Prioritisation
    • Recommendations
  • Introduction
    • PQC is driving near-term infrastructure upgrades
    • Quantum computers offer early opportunities in a few areas
    • Quantum communication is a strategic area for telcos
    • The miniaturisation of quantum sensors is bringing utility
    • Telcos have a role to play in the quantum tech sector
  • Market overview
    • What is driving quantum advances in key regions?
    • What has been the role of global industry and standards bodies?
  • Telco use cases
    • New products/services
    • Investments in startups
    • Skill development
    • Improvements to internal operations
    • Research collaborations
  • Framework for planning
    • Tactical moves
    • Strategic considerations
    • Next steps
  • Conclusions
    • Recommendations
  • Glossary
  • Index

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Andrew Scott

Andrew Scott

Andrew Scott

Senior Associate Analyst

Andrew has over 25 years experience in the telecoms industry. His background includes roles in strategy, product, technology, architecture, and startups. He was previously the head of Telstra Labs, and in that role drove innovation in services across multiple sectors. Over a long career Andrew has developed considerable expertise in topics such as about AI/ML, private 4G/5G networks, drones, AR/VR/mixed reality, IoT, edge computing, and quantum technologies.