MWC 2023: You are now in a new industry

The birth of a new sector: “Connected Technologies”

Mobile World Congress (MWC) is the world’s biggest showcase for the mobile telecoms industry. MWC 2023 marked the second year back to full scale after COVID disruptions. With 88k visitors, 2,400 exhibitors and 1,000 speakers it did not quite reach pre-COVID heights, but remained an enormous scale event. Notably, 56% of visitors came from industries adjacent to the core mobile ecosystem, reflecting STL’s view that we are now in a new industry with a diverse range of players delivering connected technologies.

With such scale It can be difficult to find the significant messages through the noise. STL’s research team attended the event in full force, and we each focused on a specific topic. In this report we distil what we saw at MWC 2023 and what we think it means for telecoms operators, technology companies and new players entering the industry.

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STL Partners research team at MWC 2023

STL-Partners-MWC23-research-team

The diversity of companies attending and of applications demonstrated at MWC23 illustrated that the business being conducted is no longer the delivery of mobile communications. It is addressing a broader goal that we’ve described as the Coordination Age. This is the use of connected technologies to help a wide range of customers make better use of their resources.

The centrality of the GSMA Open Gateway announcement in discussions was one harbinger of the new model. The point of the APIs is to enable other players to access and use telecoms resources more automatically and rapidly, rather than through lengthy and complex bespoke processes. It starts to open many new business model opportunities across the economy. To steal the words of John Antanaitis, VP Global Portfolio Marketing at Vonage, APIs are “a small key to a big door”.

Other examples from MWC 2023 underlining the transition of “telecommunications” to a sector with new boundaries and new functions include:

  • The centrality of ecosystems and partnerships, which fundamentally serve to connect different parts of the technology value chain.
  • The importance of sustainability to the industry’s agenda. This is about careful and efficient use of resources within the industry and enabling customers to connect their own technologies to optimise energy consumption and their uses of other scarce resources such as land, water and carbon.
  • An increasing interest and experimentation with the metaverse, which uses connected technologies (AR/VR, high speed data, sometimes edge resources) to deliver a newly visceral experience to its users, in turn delivering other benefits, such as more engaging entertainment (better use of leisure time and attention), and more compelling training experiences (e.g. delivering more realistic and lifelike emergency training scenarios).
  • A primary purpose of telco cloud is to break out the functions and technologies within the operators and network domains. It makes individual processes, assets and functions programmable – again, linking them with signals from other parts of the ecosystem – whether an external customer or partner or internal users.
  • The growing dialogues around edge computing and private networks –evolving ways for enterprise customers to take control of all or part of their connected technologies.
  • The importance of AI and automation, both within operators and across the market. The nature of automation is to connect one technology or data source to another. An action in one place is triggered by a signal from another.

Many of these connecting technologies are still relatively nascent and incomplete at this stage. They do not yet deliver the experiences or economics that will ultimately make them successful. However, what they collectively reveal is that the underlying drive to connect technologies to make better use of resources is like a form of economic gravity. In the same way that water will always run downhill, so will the market evolve towards optimising the use of resources through connecting technologies.

Table of contents

  • Executive Summary
    • The birth of a new sector: ‘Connected technologies’
    • Old gripes remain
    • So what if you are in a new industry?
    • You might like it
    • How to go from telco to connected techco
    • Next steps
  • Introduction
  • Strategy: Does the industry know where it’s going?
    • Where will the money come from?
    • Telcos still demanding their “fair share”, but what’s fair, or constructive?
    • Hope for the future
  • Transformation leadership: Ecosystem practices
    • Current drivers for ecosystem thinking
    • Barriers to wider and less linear ecosystem practices
    • Conclusion
  • Energy crisis sparks efficiency drive
    • Innovation is happening around energy
    • Orange looks to change consumer behaviour
    • Moves on measuring enablement effects
    • Key takeaways
  • Telco Cloud: Open RAN is important
    • Brownfield open RAN deployments at scale in 2024-25
    • Acceleration is key for vRAN workloads on COTS hardware
    • Energy efficiency is a key use case of open RAN and vRAN
    • Other business
    • Conclusion
  • Consumer: Where are telcos currently focused?
    • Staying relevant: Metaverse returns
    • Consumer revenue opportunities: Commerce and finance
    • Customer engagement: Utilising AI
  • Enterprise: Are telcos really ready for new business models?
    • Metaverse for enterprise: Pure hype?
    • Network APIs: The tech is progressing
    • …But commercial value is still unclear
    • Final takeaways:
  • Private networks: Coming over the hype curve
    • A fragmented but dynamic ecosystem
    • A push for mid-market adoption
    • Finding the right sector and the right business case
  • Edge computing: Entering the next phase
    • Telcos are looking for ways to monetise edge
    • Edge computing and private networks – a winning combination?
    • Network APIs take centre stage
    • Final thoughts
  • AI and automation: Opening up access to operational data
    • Gathering up of end-to-end data across multiple-domains
    • Support for network automations
    • Data for external use
    • Key takeaways

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5G impact on transport and logistics: $280bn of benefits in 2030

The challenges facing the transport and logistics industry

The transport and logistics industry is a fundamental sector that acts as the backbone to a country’s economy, and plays an essential role underpinning other core sectors such as manufacturing and retail. Challenges and opportunities facing the transport and logistics industry are also closely tracked and influenced by national and local governments, who are often responsible for investments in supporting transport infrastructure (e.g. roads, rail networks etc.).

As the movement of people and goods across the world increases, the industry is evolving to meet these demands. However, it faces challenges in doing so. The logistics industry has been under significant pressure for some time. Capital and fixed operating costs are high, and companies are struggling to differentiate. Despite growing demand, many firms are suffering from eroding margins. The UK market exemplifies these issues, with revenue growth across the industry low or negative. The COVID-19 pandemic has exacerbated these issues and thrown up unforeseen challenges, with the airline industry being particularly badly hit.

UK top 100 hauliers reported operating margin

Declining logistics margins

Source: FTA Logistics Report 2019

Although the rise in online retail and growing international trade have helped to stimulate the industry, there are still pain-points that are hindering growth. These include volatile diesel prices, driver shortages, and increasing pressure from governments and the general public to be more environmentally friendly.

The focus for the majority of the industry is therefore on cost-cutting and improving operating efficiency. For many companies, investing in new technologies provides an opportunity to transform their operations and drive efficiencies. There is significant scope to do this since the industry as a whole is generally not as digitised as other verticals, and because there is room to make improvements to currently under-utilised assets. For example, in the UK, 30% of goods vehicles on roads are running completely empty, and the freight vehicles that are carrying goods carry an average of 60% of their potential capacity.

UK logistics industry focus is cost-cutting and efficiency

Cost-cutting and efficiencies in logistics

Source: FTA Logistics Report 2019

As well as looking to improve efficiencies, safety and environmental impact are key areas of focus for the transport and logistics industry and government stakeholders:

  • Safety: enhancing safety of transport, particularly road transport, which is the most widely used, is an ongoing goal for the industry. Doing so benefits society as a whole, with fewer casualties due to road traffic accidents, for example, but also directly benefits transport and logistics companies through a positive impact on their branding and a decrease in insurance premiums. The industry is adopting new innovations and technologies such as ‘black box’ driver monitoring and/or alerts to improve safety.
  • Environmental impact: the drive to become greener is increasingly paramount. The industry is currently responsible for almost a quarter of the world’s CO2 emissions , and 14% of overall emissions. Road vehicles are responsible for the majority of this, contributing to nearly three-quarters of global transport emissions. As the population becomes more environmentally conscious, governments are passing regulations and setting sustainability targets to try to reduce emissions and consumption of non-renewable energy sources. For example, the United Nations has adopted 17 Sustainable Development Goals (SDGs) that aim to reduce inequality while tackling climate change. The industry must adapt to these regulations, and large players are taking steps to improve their practices. Logistics heavyweight DHL has committed to zero emissions by 2050 and in the shipping industry, the International Maritime Organisation (IMO) have declared they will halve carbon emissions in this time period.

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The role of technology in driving efficiency

For the industry to address these challenges and achieve efficiencies, it will need to adopt new technologies.

The catalyst for digital transformation will be data – in particular the generation of richer and more comprehensive data and the analysis of this data to produce insights to better inform decision making. The figure below shows the four pillars of technology that will drive improvements in efficiency.

The four pillars of technology that will help in driving efficiency

Digital pillars for efficiency

Source: STL Partners

Digital transformation: Transport and logistics lags behind

The need to digitise is not only driven by internal ambitions for greater efficiency in operations, but also by external pressures as customer expectations change. Requirements for last mile experiences in particular are evolving, as customers become accustomed to shorter and more flexible delivery times and greater visibility of the delivery process. Their cost expectations are also changing, with these improvements being expected for a smaller fee or even for free.

Despite the impetus to transform, the logistics industry lags behind other industries when it comes to digital transformation. There are two core reasons for this:

  • The degree of automation is limited
  • There is a reluctance to share information

The role of 5G networks in digital transformation

5G especially holds the potential to help drive digitalisation and address some of these challenges, both through enabling new and improved use cases and in its role in helping to catalyse the digital transformation journey. As 5G is rolled out, it could have a significant effect on supply chains, the wider transport industry and society more generally. This report explores the benefit of 5G to the industry and consider the actions that need to be taken by the industry, by governments, and by telecoms operators to reap the benefits.

Report findings are based on extensive research into the impact of 5G on the transport and logistics industry, including 10 interviews with enterprises and telco executives and an industry survey with more than 100 participants in both developed and developing markets.

Table of contents

  • Preface
  • Executive Summary
    • 5G can provide $280Bn of benefits to the transport and logistics industry
    • 5G’s unique capabilities enable new and enhanced use cases
    • However, there are challenges to adopting 5G
  • Introduction: A major industry under increasing pressure
    • The challenges facing the transport and logistics industry
    • The role of technology in driving efficiency
    • Digital transformation: Transport and logistics lags behind
    • The role of 5G networks in digital transformation
  • The impact of 5G on the transport and logistics industry
    • What is 5G?
    • 5G’s relevance in transport and logistics
  • New and improved use cases and applications enabled by 5G
    • Real-time routing and optimisation
    • Automated last 100 yards delivery
    • Connected traffic infrastructure
  • 5G impact: Increased productivity to drive $280bn rise in GDP
    • It’s not just about money: 5G’s socio-economic benefits
  • Next steps for the T&L industry
    • The role of governments
    • Collaboration with the telecommunications industry
  • Conclusion

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