Tag: enterprise

What do enterprises want from telcos?

Enterprises are striving for success…

All enterprises want success. The language and specifics that define this may differ across sectors – but the underlying drivers are the same. They include financial, strategic, operational and market-facing factors, as described below.

Success drivers

enterprise

Source: STL Partners

…against a new, transformed backdrop

Demand and supply forces have changed: Customers expect more, but resources are increasingly constrained. Enterprises are pondering the range of new technologies and practices to help them meet the challenges of a Coordination Age:

  • Coordinating outcomes and experiences for customers
  • Collaborating to enable the delivery of more value
  • Bridging the digital and physical worlds

The Coordination Age

Enterprise

Source: STL Partners

Telcos’ national scope and assets mean they are well placed to participate in some of the new opportunity areas of the Coordination Age. Although technologies and applications running over the telcos’ connectivity are often developed at global scale, how they are implemented within local and national markets is likely to vary from one country to the next, owing to regulatory constraints and how these have shaped the structure and priorities of the market. Telcos can help enterprises navigate this path.

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Do enterprises believe telcos can help?

What enterprises think of telcos depends on their tech maturity, their knowledge and experience of telcos, the telcos’ technology capability and the sector that they are in, as shown below.

Factors influencing enterprise consideration

 

enterprisesSource: STL Partners

Telcos must work to understand enterprise needs in their specific markets and how they are best placed to serve those needs.

Table of contents

  • Executive summary
  • Introduction
  • Understanding telco enterprise strategies
  • Seven enterprise growth opportunities

Related research

STL Partners has a research solution focused on growing enterprise revenues. Reports that could be of interest include:

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How to embed sustainability across a telco

Why telcos must embrace sustainability

On a macro level, the need to focus on sustainability is clear. We need to use the world’s finite resources more efficiently. They are depleting, and this is an existential threat to us and the planet. Governments and businesses are beginning to understand that the onus is largely on them to bring about the necessary changes. Telecoms operators have a vital role to play in this effort, as outlined in our vision for the Coordination Age.

For businesses, the need to embrace sustainability is no longer abstract, and the consequences of not doing so are now material. Telcos are acknowledging that their future success is linked closely to their ability to be credible and resilient with regards to sustainability. Increasingly, a more sustainable company is going to be a more valuable company. We can already see this; companies that are focusing more of their efforts on sustainability are performing better financially. Things will continue to shift in this direction. Each year sustainability is moving higher up the global agenda and climate action is becoming ever more imperative.

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All telecoms’ stakeholders have a vested interest in sustainability:

  • Customers – primarily enterprises – but also some consumers, want to purchase sustainable products so they can demonstrate progress towards their own net-zero targets or rest assured that they are taking responsibility and contributing towards a sustainable future. Nearly all operators we spoke with for this research reported rising demands to prove sustainability credentials in customer request for proposals (RFPs).
  • Employees want to work for a company that is sustainable and gain a sense of purpose from contributing to their company’s sustainability A recent survey from IBM found that 67% of respondents are more willing to apply for jobs with environmentally sustainable companies, and 68% are more willing to accept positions from such companies.
  • Governments are increasingly more prepared to help companies that are sustainable in the form of tax incentives, grants, loans and subsidies. The US government recently announced nearly US$400 billion in federal funding as part of its Inflation Reduction Act, much of which is aimed at tackling climate change. The European Commission has also adopted a package of proposals labelled The European Green Deal, and there are talks of further measures being adopted in response to US legislation.
  • Regulators will also increasingly favour companies that are sustainable and hurt companies that are not. Governments have their own ambitious net-zero targets, for instance the UK targets net-zero by 2050. They are likely to begin enforcing stricter regulations as they try to meet these targets.
  • Ultimately, all of this means that shareholders and investors are beginning to put pressure on companies to be sustainable, because the consequences of avoiding it will be too costly to a business over the long term.

There may be some very short-term gains to be made by sidestepping and ignoring sustainability, but these will quickly disappear. Even in the medium term, companies that cannot demonstrate concrete progress on sustainability will struggle to compete.

As Figure 1 demonstrates, getting to net-zero is not straightforward. Telcos that still have low hanging fruit to capture, such as AT&T and T-Mobile, can make faster progress, but those that are further along in their journeys such as BT and Telefónica must now work towards more incremental gains. Other operators risk facing rising challenges in sustainability depending on their strategies, as illustrated by Softbank which has pursued an aggressive M&A strategy to expand beyond telecoms since 2019. This reinforces the importance of ensuring buy-in and commitment at the C-suite and across the whole organisation.

Comparing carbon emissions of major telcos

Source: STL Partners

This report focuses on how to embed sustainability across key telco areas, including the sustainability team, the C-suite, network operations and IT, procurement, the consumer and enterprise units and the finance unit. Each section identifies key actions that these units can take and associated KPIs they can adopt in order to catalyse and measure progress. The research is based on interviews with eight telecoms operators globally as well as extensive analysis of telecoms sustainability initiatives.

Table of contents

  • Executive Summary
  • Why telcos must embrace sustainability
  • Sustainability team: Direction and agenda
    • Developing sustainability targets and agenda
    • Working towards sustainability targets
    • Facilitating and coordinating change
  • C-suite: Vision and structure
    • Vision building
    • Structure
    • Incentives are crucial to delivery on commitments
  • Sustainable network operations and IT
  • Sustainable procurement
    • Circular economy
    • Identifying sustainable suppliers and educating SMEs
    • Fair working practices
  • Sustainability in enterprise and consumer units
    • Delivering services in more sustainable ways
    • Sustainability-enabling products for enterprise
    • Helping consumers become more sustainable
  • Sustainability is now integral to telco finance and investment
    • Future proofing telcos
    • Green finance
    • Appealing to ESG investors
  • Index

  • Related research

  • Driving sustainability in telco metro networks
  • Telecoms sustainability scorecard
  • Net-zero enablement use case directory

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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Telecoms 2023: Meaningful growth in challenging times

The key pillars to change and growth 

Ten years from today, telcos could find themselves growing into national or regional champions of connected technologies, working with enterprises and governments to help the world run better. Or, they may find themselves becoming marginalised, with shrinking relationships with their customers, consigned to corners of the IT market specialising in low-cost connectivity. To establish a clear path to the more desirable option one, and sustainable growth, telcos need to commit to a long-term strategy that will require fundamental changes to their business. A long-term strategy that: 

  • Prioritises service innovation through strong investment in research and development 
  • Funds ongoing innovation by shifting away from the established capex heavy financial model 
  • Re-orientates company systems and culture to become an effective ecosystem player, adaptable and open to multiple ecosystem roles and business models. 

Commitment to this kind of strategy should happen now if it hasn’t already. But current macro-economic and societal challenges may make this focus difficult to achieve. Telcos need to find a way to deal with more immediate turmoil and challenges, and be ready to seize any opportunities they present, while also progressing towards their long-term goals. 

STL believes that the Coordination Age offers telcos a new context for growth. It is built upon demand for more flexible availability and more efficient use of all types of resources (energy, labour, time, etc), combined with multiple new technologies and capabilities (5G, fibre, AI, automation, virtualisation) approaching maturity. The resulting paradigm sees customers demanding coordinated outcomes and experiences, enabled through collaborative ecosystems, with business models spanning the digital and physical world. It is the context within which telcos can hope to become the champions of connected technologies helping the world run better mentioned earlier. 

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Figure 1: The Coordination Age thrives on innovation 

Source: STL Partners 

More immediate concerns – the energy crisis, high inflation, possible recession, the still lurking threat of new covid strains, war, climate change – demand immediate attention. Please see our Beating the crash: What’s coming? report for more details. For all that these can crowd out focus on a more long-term growth strategy and a drive to change the role and meaning of telecoms in society, these factors are actually accelerating changes and mean that a Coordination Age approach is needed more urgently. 

Figure 2: Accelerating changes means the Coordination is now a “must have” 

Source: STL Partners 

Telcos’ national scope and assets mean that they are well placed to take advantage of some of the new opportunities, boosting growth. But they are large and complex businesses with many departments and initiatives to co-ordinate, and broad organisational strategy has to be applied in different areas with a variety of specific goals and capabilities. In this report, STL addresses seven key strategic areas: transformation; consumer; enterprise; edge computing; networks; telco cloud; and sustainability. In each, we present our detailed assessment of how telcos can and should address current challenges and seize new growth opportunities, while building towards long term success in the Coordination Age, and how current and ongoing STL research can provide support and guidance. 

Table of Contents

  • Executive Summary 
  • The key pillars to change and growth
  • Transformation: How to adapt faster and better, collectively
    • Why does transformation matter?
    • Why is transformation difficult for telcos?
    • How telcos can operationalise adaptability
    • What must telcos do to capitalise on the adaptive opportunity?
  • Consumer: (Re)engaging through new needs
    • Why does the consumer business matter?
    • What challenges are telcos facing in the consumer market?
    • A three-pronged approach to winning with consumers
  • Enterprise: Becoming a transformative partner
    • Why does enterprise matter?
    • What challenges is the industry facing in enterprise?
    • What are the potential opportunities?
    • What must telcos do to capture the opportunities?
  • Edge computing: Getting compute to where the customer needs it
    • Why does edge computing matter?
    • The key challenges and opportunities the in edge market
    • So where to invest?
    • What must telcos (and others) do to capture the opportunities?
  • Networks: Developing and delivering the best tool for the job
    • The key challenge: Moving to a world of “network diversity”
    • It’s not about 5G, but the best tool for the job
    • What are the potential opportunities?
  • Telco cloud: Making the fabric customer-adaptable
    • Why does telco cloud matter?
    • What challenges is the industry facing in telco cloud?
    • What must telcos (and others) do to capture the opportunities?
  • Sustainability: Making it relevant for everyone
    • Why does sustainability matter?
    • What challenges is the industry facing in sustainability?
    • What are the potential opportunities?
    • How to move the industry forward on sustainability
  • Conclusion

Related research

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Beating the crash: What’s coming?

Signs of tougher times

Tough times are ahead…

As we look ahead, the world faces a number of significant challenges:

  • Global / OECD consumer confidence is diving to startling new depths as people increasingly feel the impact of inflation, supply constraints and a cost of living crisis.
  • This follows the war in Ukraine, the Covid pandemic and long Covid, stresses resulting from diverging political ideologies, growing social unrest, and the ever increasing realisation of the impact of climate change.
  • These seismic tensions are all driven by nearly 8 billion (and growing) people vying for resources and a vision of the future that they can continue to thrive in.

…but it’s not our first rodeo…

We have previously written about, for example:

And before that, there was the Credit Crunch series (2008), the Eurozone Crisis (2012), and technology and market disruptions too numerous to name.

There is always a temptation to think that the latest crisis is the worst. Each one tends to temporarily obliterate one’s view of the future as our imaginations are so absorbed in dealing with the nearby threat that all other considerations become secondary.

…and we believe we can bring some hope

Our solution to these challenges is two-fold. First, there is a lot that can be learned by looking at the lessons from previous traumas. Secondly, it is extremely helpful to be able to position all the individual events within an overall context, as it enables us to more rapidly reorientate after the latest shock.

Our context is The Coordination Age – the vision that the world is entering into a new era where:

  • The primary need is to make better use of available resources (e.g. money, carbon, time, assets, etc)
  • And that connecting technologies (e.g. telecommunications, data, automation and AI) are key elements of the solution.

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Making the Coordination Age work

making-the-coordination-age-work

Source: STL Partners

This report uses these learnings to look ahead to what we see as a challenging time. While some of the forces we outline in this report may seem alarming, this is not a pessimistic picture. We believe that the vision we describe brings opportunities for telecoms – but only if leaders in telecoms and elsewhere act on the vision. We are striving to make this happen, and we hope we can help you do that too.

A scale of discovery

To help contextualise the many forces of change, we have developed a six-stage schematic to generalise how people deal with new forces and changes in their lives. It progresses from the first recognition of a new theme or issue through to normalisation, the point where something is no longer new or different. The graphic below highlights the six stages, and general heuristic descriptions of what you might hear said, risks and threats, mitigations, and the general psychological and emotional mindset of those processing the change or issue in question.

Six stages of dealing with new ideas

six-stages-dealing-with-new-ideas-stl-partners

Source: STL Partners

The body of the report covers the drivers, their impact and consequences for telecoms:

  • Economic drivers, such as consumer confidence, inflation, and rising living costs
  • Environmental drivers, including climate change and carbon reduction
  • Political drivers, including the War in Ukraine, China / US tensions, trade wars and tensions
  • Social drivers, including Covid and Long Covid, inequalities and social polarisation.

Economic drivers: A crisis of confidence

In this section we examine drivers in consumer confidence, inflation / cost-of-living concerns and the consequences for telecoms.

Consumer confidence: An all-time low

The OECD consumer confidence index is a barometer of consumer sentiment. It reflects people’s confidence in their economic prospects. The chart below shows that it is currently reaching record new lows.

The OECD Consumer confidence index is at its lowest ever level

OECD-consumer-inflation-index-june-2022

Source: OECD

This means that consumers feel extremely pessimistic about their economic prospects. The average score is now below where it was at the peak of anxiety about Covid in early 2020, and below where it was in the financial crash in 2008-09. Indeed, the OECD average is now at its lowest ever level since global measures were introduced in the early 1970s, with only Mexico and Indonesia bucking the downward trend.

People are now preparing for a tough period in their economies. Some are worried about making ends meet – having enough to live to the standard they normally expect. This usually means that they will look to cut back on spending, especially for non-essential things.

Inflation is worrying everyone in Summer 2023

The pressures behind this trend are a generalised concern about inflation (rising prices on essential items like food) leading to a cost-of-living crisis.

Inflation overtook other global concerns in April 2022

Inflation-overtook-global-concerns-april-2022-stl-partners

Source: Ipsos

The Google trends chart below shows search interest in ‘inflation’ globally, which is an even more immediate signal of concern. It clearly spikes in July 2022.

Google Trends – searches for “inflation” spiked in Summer 2022

google-trends-searches-for-inflation-summer-2022-stl-partners

Source: Google

The problem is not confined to one or two economies: it is widespread, as the image from the interactive chart below shows.

inflation-global-challenge-2022-stl-partners

Source: FT

The rest of the analysis in this report reviews the macro-economic trends – i.e. the economic, environmental, political and social drivers of change. In a second report, we will cover telecoms industry trends, including technologies, policy, propositions and industry structure.

 

Table of Contents

  • Executive Summary
    • Not one crash, but many
    • 1. Actively realigning with stakeholders
    • 2. Accelerating operational innovation
    • 3. Enhancing resilience and customer security offerings
    • Next steps
  • Introduction: Signs of tougher times
    • A scale of discovery
  • Economic drivers: A crisis of confidence
    • Consumer confidence: An all-time low
    • Inflation is worrying everyone in summer 2022
    • Interest rates: A blunt tool?
    • Stock markets: Not quite sure…yet
    • Moving out of denial on economic problems
    • Consequences in telecoms demand
    • Recommendations
  • Environmental factors: Heating up fast
    • Climate change: Denial is hard these days
    • Decarbonisation: Digitising the industrial landscape, fast
    • Environmental concerns are now mainstream
    • Consequences for telecoms
    • Recommendations
  • Political: Drawing new lines
    • Ideo-conflict: Who’s side are you on?
    • The war in Ukraine: The first Coordination Age war?
    • China and Taiwan: Watching, waiting, wondering
    • Trade wars and barriers in general
    • Global instability: More trouble ahead
    • Consequences for telecoms
    • Recommendations
  • Social: A new order
    • Covid and Long Covid: Living with the virus
    • Rising resentment of inequalities
    • The United Nations Sustainable Development Goals
    • Consequences and recommendations for telecoms
  • Analysis
    • Getting the news in context
  • Appendix 1: Waste, pollution and air quality
    • Waste and pollution: Cleaning up
    • Refugees and migrations: Seeking solace in troubling times
  • Appendix 2: The 17 Sustainable Development Goals

 

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Enterprise Wi-Fi 6/7 is here to stay: 5G is not enough

Overview of Wi-Fi 6/7 for enterprises

This report is not a traditional analyst report on Wi-Fi covering market segments, shares and forecasts. Numerous peer organisations have a long tradition of quantitative marketing modelling and prediction; we are not intending to compete with them. For illustration purposes, we have used a couple of charts with the kind permission of Chris DePuy from 650 Group presented at a recent Wi-Fi Now conference, during a joint panel session with the author of this report.

Instead, this report looks more at the strategic issues around Wi-Fi and the enterprise – and the implications and recommendations for CIOs and network architects in corporate user organisations, opportunities for different types of CSPs, important points for policymakers and regulators, plus a preview of the most important technical innovations likely to emerge in the next few years. There may be some differences in stance or opinion compared to certain other STL reports.

The key themes covered in this report are:

    • Background to enterprise Wi-Fi: key uses, channels and market trends
    • Understanding “Wi-Fi for verticals”
    • Decoding the changes and new capabilities that come with Wi-Fi 6, 6E and 7
    • How and where public and private 5G overlaps or competes with Wi-Fi
    • CSP opportunities in enterprise Wi-Fi
    • Wi-Fi and regulation – and the importance of network diversity.

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Wi-Fi’s background and history

Today, most readers will first think of Wi-Fi as prevalent in the home and across consumer devices such as smartphones, laptops, TVs, game consoles and smart speakers. In total, there are over 18 billion Wi-Fi devices in use, with perhaps 3-4bn new products shipping annually.

Yet the history of Wi-Fi – and its underlying IEEE802.11 technology standards – is anchored in the enterprise.

The earliest incarnations of “wireless ethernet” in the 1990s were in sectors like warehousing and retail, connecting devices such as barcode scanners and point-of-sale terminals. Early leaders around 2000-2005 were companies such as Symbol, Proxim, 3Com and Lucent, supplying both industrial applications and (via chunky plug-in “PCMCIA” cards) laptops, mostly used by corporate employees.

During the 2003-2010 period, Wi-Fi exploded for both enterprises and (with the help of Apple and Intel) consumer laptops, and eventually early smartphones based on Windows and Symbian OS’s, then later iOS and Android.

The corporate world in “carpeted offices” started deploying more dedicated, heavyweight switched systems designed for dense networks of workers at desks, in meeting rooms and in cubicles. Venue Wi-Fi grew quickly as well, with full coverage becoming critical in locations such as airports and hotels, both for visitors and for staff and some connected IT systems. A certain amount of outdoor Wi-Fi was deployed, especially for city centres, but gained little traction as it coincided with broader coverage (and falling costs) of cellular data.

A new breed of enterprise Wi-Fi vendors emerged – and then quickly became consolidated by major networking and IT providers. This has occurred in several waves over the last 20 years. Cisco bought Airespace (and later Meraki and others), Juniper bought Trapeze and Mist Systems, and HP (later HPE) acquired Aruba. There has also been some telecom-sector acquisitions of Wi-Fi vendors, with Commscope acquiring Ruckus, and Ericsson buying BelAir.

While telcos have had some important roles in public or guest Wi-Fi deployments, including working with enterprises in sectors such as cafes, retail, and transport, they have had far less involvement with Wi-Fi deployed privately in enterprise offices, warehouses, factories, and similar sites. For the most part that has been integrated with the wired LAN infrastructure and broader IT domain, overseen by corporate IT/network teams and acquired via a broad array of channels and systems integrators. For industrial applications, many solution providers integrate Wi-Fi (and other wireless mechanisms) directly into machinery and automation equipment.

Looking to the future, enterprise Wi-Fi will coexist with both public and private 5G (including systems or perhaps slices provided by telcos), as well as various other wireless and fibre/fixed connectivity modes. Some elements will converge while others will stay separate. CSPs should “go with the grain” of enterprise networks and select/integrate/operate the right tools for the job, rather than trying to force-fit their preferred technical solution.

Roles and channels for enterprise Wi-Fi

Today, there are multiple roles for Wi-Fi in a business or corporate context. The most important include:

  • Traditional use in offices, both for normal working areas and shared spaces such as meeting and conference rooms. There is often a guest access option.
  • Small businesses use Wi-Fi extensively, as many workers rely on laptops and similar devices, plus vertical-specific endpoints such as payment terminals. Often, they will obtain Wi-Fi capabilities along with their normal retail business broadband connection from a service provider. This may include various types of guest-access option. Common use of shared buildings such as multi-tenant office blocks or retail malls means there may be a reliance on the landlord or site operator for network connectivity.
  • Working from home brings a wide range of new roles for Wi-Fi, especially where there is an intersection of corporate applications and security, with normal home and consumer demand. A growing range of solutions targets this type of converged situation.
  • Large visitor-led venues such as sports stadia, hotels and resorts are hugely important for the Wi-Fi industry. They often have guests with very high expectations of Wi-Fi reliability, coverage, and performance – and also often use the infrastructure themselves for staff, displays and various IoT and connected systems.
  • Municipal and city authorities have gone through two or more rounds of Wi-Fi deployments. Initial 2010-era visions for connectivity often stalled because of a mismatch between usage at the time (mostly on laptops, indoors) and coverage (mostly outdoors). Since then, the rise of smartphone ubiquity, plus a greater array of IoT and smart city devices has made city-centre Wi-Fi more useful again. Increasingly, it is being linked to 5G small cell deployments, metro fibre networks – and made more usable with easier roaming / logon procedures. Some local authorities’ scope also covers Wi-Fi use within education and healthcare settings.
  • Public Wi-Fi hotspots overlap with various enterprise sectors, most notably in transport, cafes/restaurants and hospitality sectors. Where organisations have large venues or multiple sites, such as chain of cafes or retail outlets, there is likely to be some wider enterprise proposition involved.
  • The transport industry is a hugely important sector for enterprise Wi-Fi solutions. Vehicles themselves (buses, planes, trains, taxis) require connectivity for passengers, while transport hubs (airports, stations, etc.) have huge requirements for ease-of-access and performance for Wi-Fi.
  • Wi-Fi technology is also widely used as the basis for fixed-wireless access over medium-to-wide areas. Sometimes using vendor-specific enhancements, it is common to use unlicenced spectrum and 802.11-based networks for connectivity to rural businesses or specific fixed assets. A new version of Wi-Fi technology (802.11ah HaLow) also allows low-power wide area applications for sensors and other IoT devices, which can potentially compete against LoRa and 4G NB-IoT, although it is very late to the market.
  • Niche applications for Wi-Fi technology also exist, for example backhauling other wireless technologies such as Bluetooth, for in-building sensing and automation. There are also emerging propositions such as using high-capacity 60GHz Wi-Fi to replace fibres and cabling inside buildings, especially for rapid installation or in environments where drilling holes in walls requires permits.

Enterprise Wi-Fi solutions cover a broad range of contexts and uses

Given the range of Wi-Fi enterprise market sectors and use cases, it is unsurprising that there are also multiple ways for companies and organisations to obtain the infrastructure, as well as operate the connectivity functions or services.

Some of the options include:

  • Self-provision: Many large organisations will source, install, and operate their own Wi-Fi networks via their IT and networking teams, as they do for fixed LAN and sometimes WAN equipment. They may rely on vendor or outsourced support and specific tasks such as wiring installation.
  • Broadband CSP: Especially for smaller sites, Wi-Fi is often obtained alongside business broadband connectivity, perhaps from an integrated router managed by the ISP.
  • Enterprise MSP: Larger businesses may use dedicated enterprise-grade service providers for their Internet connections, UCaaS services, SD-WAN / SASE networks and so on. These organisations may also provide on-site Wi-Fi installation and management services, or work with sub-contractors to deliver them.
  • Solution providers: Various IT and OT systems, such as building management systems or industrial automation solutions, may come with Wi-Fi embedded into the fabric of the proposition.
  • Managed Wi-Fi specialists: Especially for visitor-centric locations like transport hubs, Wi-Fi coverage and operation may be outsourced to a third party managed service operator. They will typically handle the infrastructure (and any upgrades), authentication, security and backhaul on a contractual basis. They will also likely provide staff/IoT connections as well as guest access.
  • Network integrators: Enterprises may obtain Wi-Fi installations as a one-off project from a network specialist (perhaps with separate maintenance / upgrade agreements). This may well be combined with fixed LAN infrastructure and other relevant elements. This may also be a channel for hybrid Wi-Fi / private cellular in future.
  • Vertical specialists: Various industries such as hotels, aviation, hospitals, mining and so on will often have dedicated companies catering to sector-specific needs, standards, regulations, or business practices. They may tie together various other technology elements, such as IoT connections, asset tracking, voice communications and so forth, using Wi-Fi where appropriate.
  • In-building wireless specialists: Various companies specialise in both indoor cellular coverage systems and Wi-Fi. Often linked to tower companies or neutral-host business models.

Table of Contents

  • Executive Summary
  • Introduction
    • Structure and objectives of this report
    • Background and history
    • Roles and channels for enterprise Wi-Fi
    • Recent enterprise Wi-Fi market trends
    • Note on terminology
  • The evolution of “Wi-Fi for verticals”
    • Understanding Wi-Fi “verticals”
    • Existing vertical-specific Wi-Fi solutions
    • Wi-Fi in industry verticals – building ecosystems
  • Wi-Fi 6, 6E & 7: Rapid cadence or confusion?
    • Continual evolution of Wi-Fi capabilities: 6, 6E, 7
    • Wi-Fi 7 may be a game-changer for enterprise
    • The long-term future: Wi-Fi 8 and beyond
    • Other Wi-Fi variants: 60GHz and HaLow
  • Where do Wi-Fi and 5G overlap competitively?
    • Does private 5G change the game?
    • Convergence / divergence
  • The political and regulatory dimensions of enterprise wireless
    • 6GHz spectrum
  • CSPs and enterprise Wi-Fi
    • CSPs and large enterprise / industrial Wi-Fi
    • Wi-Fi service value-adds
    • Wi-Fi and edge compute
  • Conclusions

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Telco edge platforms: Balancing speed vs value

Defining the edge

Edge computing has been hailed as key to help deliver the promises of 5G, enabling transformative use cases and experiences. Significantly for mobile service providers, deriving value from their networks and presence at the edge remains an aspiration for a new source of revenues and a more favourable position in the value chain. There is strong belief that this needs to exceed what was achieved with 3G and 4G, where OTT players built entire businesses through successful services using centralised platforms leveraging fast, ubiquitous internet access. Mobile operators remain hopeful that they can evolve from ‘dumb pipes’ and derive more value from dynamic connectivity services, value added platforms, and partnerships.

The edge means different things to different people, so it is useful to define terminology and clarify the scope of this report. We understand the edge to refer to compute, storage and networking infrastructure, facilities, software, and services which exist physically or architecturally between typically non-telco cloud data centres and end-devices. This report will focus on the ‘telco edge’ for both mobile and fixed line telecoms operators.  The term MEC (initially ETSI’s Mobile Edge Computing which evolved to Multi-access Edge Computing) has historically been used for telco edge predominantly with a focus on deployment in the access network, however as we will see its use has somewhat broadened as telcos initially deploy edge computing more centrally.

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The edge continuum spans between end devices and hyperscale cloud

It is common practice to define an edge continuum in a diagram such as below which shows the different edge locations between an end device and the hyperscaler cloud. Typically, the physical distance, the number of network hops, and network latency will increase the further the edge location shifts to the right.

The edge continuum

edge platform

In considering the telco edge, we will primarily be focussed on the network edge, consisting of data centres logically situated in telco’s access, transport, and core network facilities. The on-premise edge (sometimes referred to enterprise or private edge) may be offered by telcos and others to enterprises but is closely related to private 4G/5G networks and single tenant propositions which are out of scope of this report. STL has written about this in reports such as Private networks: Lessons so far and what next and Combining private 5G and edge computing: The revenue opportunity.

The network edge affords a wide range of choices to deliver edge services from within the network. Network edge also includes neutral host providers that offer facilities for multiple infrastructure providers, which support enterprise applications, as well as radio access networks. These may be offered by traditional telcos, tower infrastructure providers and others.

The regional edge sits outside telco networks at internet exchanges, carrier exchanges, interconnect points, co-location, and data centre facilities. Multiple parties can deploy infrastructure at such locations which are designed as neutral, well-connected locations for third party equipment.  For some use cases, these locations are considered as ‘close enough’ or ‘near enough’ edge sites.

Edge computing drivers and benefits vary depending on the use case

While low latency is often cited as the justification for moving application workloads from the cloud to the edge, there are other drivers such as reduced data transit, data sovereignty and improving redundancy. These factors may be just as relevant as low latency, or more so, depending on the specific use case.

Edge computing benefits

Migrating workloads from end-devices to the edge can also bring benefits such as reduced power consumption, allowing smaller form factors at lower costs, and enabling experiences that are simply not possible on existing devices due to heavy computational requirements. Processing in the cloud may have been previously dismissed due to its limitations or constraints. One consumer example would be Instagram or Snapchat real-time video filters with heavy machine learning processing requirements. The processing for these may move to the edge to improve and standardise performance across devices, by not relying on the end-device’s processing power. Partners

However, the public cloud is well established and here to stay, so it is prudent to view the edge as complementary to and an extension of the public cloud, offering characteristics which may be important for specific components of certain use cases.

Table of Contents

  • Executive Summary
    • Most telcos do not yet see demand for a fully distributed edge
    • The platform is an important piece of the edge, but the verdict is still out on which approach to take
    • Telcos need to guarantee multi-cloud and multi-edge orchestration for their customers
    • Next steps
  • Introduction
    • Defining the edge
    • The state of the edge
  • Cloud vs edge
    • Contrasting public cloud and public edge
    • Latency in fixed vs mobile networks
    • The rationale for telco edge
  • Telco edge propositions and use cases
    • Internal applications for telcos
    • External applications for telcos
    • Telco edge propositions based on telco’s capabilities
    • Potential use case opportunities for telco edge
  • Where is the telco edge?
    • Edge really means core for now
    • Challengers to the telco edge
  • Building the telco edge platform
    • Edge developers want a consistent and seamless experience
    • The potential providers of network edge platforms
    • Cloud-centric capabilities and business models are key the success of telco edge platforms
  • Overcoming challenges
    • Telco industry challenges
    • External challenges
  • Conclusion: What should telcos do?

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The new telcos: A field guide

Introduction

The traditional industry view is that “telcos” are a well-defined and fairly cohesive group. Industry associations like GSMA, ETNO, CTIA and others have typically been fairly homogeneous collections of fixed or mobile operators, only really varying in size. The third-ranked mobile operator in Bolivia has not really been that different from AT&T or Vodafone in terms of technology, business model or vendor relationships.

Our own company, STL Partners used to have the brand “Telco 2.0”. However, our main baseline assumption then was that the industry was mostly made up the same network operators, but using a new 2.0 set of business models.

This situation is now changing. Telecom service providers – telcos – are starting to emerge in a huge variety of new shapes, sizes and backgrounds. There is fragmentation in technology strategy, target audiences, go-to-market and regional/national/international scope.

This report is not a full explanation of all the different strategies, services and technological architecture. Instead of analysing all of the “metabolic” functions and “evolutionary mechanisms”, this is more of a field-guide to all the new species of telco that the industry is starting to see. More detail on the enablers – such as fibre, 5G and cloud-based infrastructure – and the demand-side (such as vertical industries’ communications needs and applications) can be found in our other output.

The report provides descriptions with broad contours of motivation, service-offerings and implications for incumbents. We are not “taking sides” here. If new telcos push out the older species, that’s just evolution of those “red in tooth and claw”. We’re taking the role of field zoologists, not conservationists.

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Field guides are collections/lists of natural & human phenomena

animal-species-telcos-stl-partners

Source: Amazon, respective publishers’ copyright

The historical landscape

The term “telco” is a little slippery to define, but most observers would likely agree that the “traditional” telecoms industry has mostly been made up of the following groups of CSPs:

  • MNOs: Countries usually have a few major mobile network operators (MNOs) that are typically national, or sometimes regional.
  • Fixed operators: Markets also have infrastructure-based fixed telcos, usually with one (or a small number) that were originally national state-owned monopolies, plus a select number of other licensed providers, often with greenfield FTTX fibre. Some countries have a vibrant array of smaller “AltNets”, or competitive carriers (originally known as CLECs in the US).
  • Converged operators: These combine fixed and mobile operations in the same business or group. Sometimes they are arms-length (or even in different countries), but many try to offer combined or converged service propositions.
  • Wholesale telcos: There is a tier of a few major international operators that provide interconnect services and other capabilities. Often these have been subsidiaries (or joint ventures) of national telcos.

In addition to these, the communications industry in each market has also often had an array of secondary connectivity or telecom service providers as a kind “supporting cast”, which generally have not been viewed as “telecom operators”. This is either because they fall into different regulatory buckets, only target niche markets, or tend to use different technologies. These have included:

  • MVNOs
  • Towercos
  • Internet Exchanges
  • (W)ISPs
  • Satellite operators

Some of these have had a strong overlap with telcos, or have been spun-out or acquired at various times, but they have broadly remained as independent organisations. Importantly, many of these now look much more like “proper telcos” than they did in the past.

Why are “new telcos” emerging now?

To some extent, many of the classes of new telco have been “hiding in plain sight” for some time. MVNOs, towercos and numerous other SPs have been “telcos in all but name”, even if the industry has often ignored them. There has sometimes been a divisive “them and us” categorisation, especially applied when comparing older operators with cloud-based communications companies, or what STL has previously referred to as “under the floor” infrastructure owners. This attitude has been fairly common within governments and regulators, as well as among operator executives and staff.

However, there are now two groups of trends which are leading to the blurring of lines between “proper telcos” and other players:

  • Supply-side trends: The growing availability of the key building blocks of telcos – core networks, spectrum, fibre, equipment, locations and so on – is leading to democratisation. Virtualisation and openness, as well as a push for vendor diversification, is helping make it easier for new entrants, or adjacent players, to build telecom-style networks
  • Demand-side trends: A far richer range of telecom use-cases and customer types is pulling through specialist network builders and operators. These can start with specific geographies, or industry verticals, and then expand from there to other domains. Private 4G/5G networks and remote/underserved locations are good examples which need customisation and specialisation, but there are numerous other demand drivers for new types of service (and service provider), as well as alternative business models.

Taken together, the supply and demand factors are leading to the creation of new types of telcos (sometimes from established SPs, and sometimes greenfield) which are often competing with the incumbents.

While there is a stereotypical lobbying complaint about “level playing fields”, the reality is that there are now a whole range of different telecom “sports” emerging, with competitors arranged on courses, tracks, fields and hills, many of which are inherently not “level”. It’s down to the participants – whether old or new – to train appropriately and use suitable gear for each contest.

Virtualisation & cloudification of networks helps newcomers as well as existing operators

virtualisation-cloudification-networks-STL-Partners

Source: STL Partners

Where are new telcos likeliest to emerge?

Most new telcos tend to focus initially on specific niche markets. Only a handful of recent entrants have raised enough capital to build out entire national networks, either with fixed or mobile networks. Jio, Rakuten Mobile and Dish are all exceptions – and ones which came with a significant industrial heritage and regulatory impetus that enabled them to scale broadly.

Instead, most new service providers have focused on specific domains, with some expanding more broadly at a later point. Examples of the geographic / customer niches for new operators include:

  • Enterprise private 4G/5G networks
  • Rural network services (or other isolated areas like mountains, offshore areas or islands)
  • Municipality / city-level services
  • National backbone fibre networks
  • Critical communications users (e.g. utilities)
  • Wholesale-only / shared infrastructure provision (e.g. neutral host)

This report sets out…

..to through each of the new “species” of telcos in turn. There is a certain level of overlap between the categories, as some organisations are developing networking offers in various domains in parallel (for instance, Cellnex offering towers, private networks, neutral host and RAN outsourcing).

The new telcos have been grouped into categories, based on some broad similarities:

  • “Evolved” traditional telcos: operators, or units of operators, that are recognisable from today’s companies and brands, or are new-entrant “peers” of these.
  • Adjacent wireless providers: these are service provider categories that have been established for many years, but which are now overlapping ever more closely with “traditional” telcos.
  • Enterprise and government telcos: these are other large organisations that are shifting from being “users” of telecoms, or building internal network assets, towards offering public telecom-type services.
  • Others: this is a catch-all category that spans various niche innovation models. One particular group here, decentralised/blockchain-based telcos, is analysed in more detail.

In each case, the category is examined briefly on the basis of:

  • Background and motivation of operators
  • Typical services and infrastructure being deployed
  • Examples (approx. 3-4 of each type)
  • Implications for mainstream telcos

Table of contents

  • Executive Summary
    • Overview
    • New telco categories and service areas
    • Recommendations for traditional fixed/mobile operators
    • Recommendations for vendors and suppliers
    • Recommendations for regulators, governments & advisors
  • Introduction
    • The historical landscape
    • Why are “new telcos” emerging now?
    • Where are new telcos likeliest to emerge?
    • Structure of this document
  • “Evolved” traditional telcos
    • Greenfield national networks
    • Telco systems integration units
    • “Crossover” Mobile, Fixed & cable operators
    • Extra-territorial telcos
  • Adjacent wireless providers
    • Neutral host network providers
    • TowerCos
    • FWA Fixed Wireless Access (WISPs)
    • Satellite players
  • Enterprise & government telcos
    • Industrial / vertical MNOs
    • Utility companies offering commercial telecom services
    • Enterprises’ corporate IT network service groups
    • Governments & public sector
  • New categories
    • Decentralised telcos (blockchain / cryptocurrency-based)
    • Other “new telco” categories
  • Conclusions

Related Research

 

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IoT security: The foundation for growth beyond connectivity

Introduction

The European Union Agency for Cybersecurity (ENISA) defines the IoT as “a cyber-physical ecosystem of interconnected sensors and actuators, which enable intelligent decision making.” In this ecosystem, the information or data flows among the various components of the IoT enable informed decision making for machines, objects, and the spaces in which they operate. Through this web of tightly interconnected cyber-physical systems, the IoT underpins a variety of applications such as smart cities, smart factories, smart agriculture and so forth.

While these applications touch all the areas of our living and working activities, bringing enormous benefits and possibilities, they also exacerbate system complexities and, in turn, significantly enlarge the domain of threats and risks. As a result, securing the IoT is a very complex task, involving the implementation of highly specialised security measures. In market terms, this complexity translates into rich ecosystems of skills and expertise, where there is not one player in charge of securing the IoT, but it is both a responsibility and an opportunity for all players in the value chain.

Thinking about IoT security, the fundamental objective is ensuring the trust between the provider of an IoT solution and the IoT solution adopter. Microsoft IoT Signals, a well-known survey of 3,000 organisations adopting the IoT, emphasizes this in its 2021 edition, where 91% of the organisations surveyed have security concerns about adopting the IoT. 29% of those organisations do not scale their IoT solution due to security concerns. These concerns hamper the benefits enterprises can gain from IoT solutions. For instance, in the same survey, more than 55% of organisations said they were becoming more efficient adopting the IoT, and 23% claimed that their IoT solution has a direct impact on revenue growth. These benefits come from the variety and volume of data gathered through the IoT to drive better informed operational decisions. The result is that IoT data becomes a fundamental and necessary asset that must be protected.

While managing security risks in IoT is often perceived as a necessary burden, this report will instead highlight securing the IoT as an opportunity. For telecoms operators, this opportunity may not always be directly evident in new revenues, but it is fundamental to the creation of trust between provider and the adopter of IoT services. That trust, built through IoT security services, provides a stronger foundation from which to develop new revenue-generating services beyond connectivity.

This report also argues that by building more comprehensive data insights services into their existing IoT platforms mobile network operators are in a strong position to bring that trust to enterprises. As operators expand their security offers from well-known security functions provided at connectivity level – almost embedded in an operator – to more sophisticated security services across the IoT architecture, they can position themselves as a partner and guide to enterprises as they likewise become more sophisticated in their security needs.

The report is structured in three main parts:

  1. Discussion of the key vulnerabilities in the IoT and responses to those defined by regulators and security bodies such as ENISA, NIST, IoT Security Foundation and others.
  2. Analysis of the roles mobile network operators are playing in the IoTsecurity services market.
  3. Analysis of the opportunities for mobile network operators in security services for the IoT.

The research is based on the author’s extensive experience in IoT security, and enriched by interviews with IoT security experts close to the world of mobile network operators. Finally, an understanding of the most authoritative guidelines and analysis (ENISA, NIST, IoTSF, GSMA, OWASP) on IoT security supports the research.

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Why IoT security is rising up the agenda

In the fervent debates on the development of the IoT, the security aspect is often hidden or avoided. This stems from a common view among IoT solution companies and end-users that security is a heavy point of discussion that hampers business enthusiasm. This perspective is both unhelpful and dangerous, actively hindering greater scale and trust in the IoT. We strongly believe the argument should be flipped around. Although IoT security is a fundamental risk for the development of the IoT, it is also the means through which to develop robust, reliable, and lucrative IoT solutions. Therefore, IoT security should become a priority in IoT strategy and project development.

There are three considerations that are driving a fundamental shift in perceptions of security from a barrier to an enabler of IoT solutions, both among providers and adopters:

  1. Rising frequency and prevalence of avoidable large scale IoT security breaches.  There are plenty of examples of hacking of connected devices and large IoT systems that have dramatically compromised IoT solutions’ functioning, the business case linked to them, and relationships with customers. Recent examples include:
    • In May 2021, Colonial Pipe suffered a ransomware attack that impacted the computerised equipment monitoring the entire pipeline system from Texas to New Jersey, carrying 2.5 million barrel of oil a day. The entire system, based on a vast IoT solution of several sensors along the pipeline, was blocked. To re-boot the system, Colonial Pipeline paid 75 Bitcoin (the equivalent of $4.4 million at the time). (The solution to this type of breach is implementation of a remediation strategy.)
    • Consumer IoT devices are no less attractive than big corporations to hackers. In June 2021, the McAfee Advanced Threat Research identified a potential security vulnerability in the Peleton Bike+: “The ATR team recently disclosed a vulnerability (CVE-2021-3387) in the Peloton Bike+, which would allow a hacker with either physical access to the Bike+ or access during any point in the supply chain (from construction to delivery), to gain remote root access to the Peloton’s tablet. The hacker could install malicious software, intercept traffic and user’s personal data, and even gain control of the Bike’s camera and microphone over the internet.” The Peleton Bike+ vulnerability almost become a matter of national security in the US, considering that President Jo Biden is, apparently, a Peleton Bike+ user. (The security solution to this type of breach is software and system updates.)

2. Regulatory bodies are responding to the increasing incidence of IoT attacks with guidelines and regulations. Realising the danger of connected devices and systems developed with inappropriate security features, regulators worldwide are issuing specific procedures and policies in IoT security. In some cases these are mandatory and in other cases function as guidance and support.

    • Australia has created a voluntary code of practice, Securing the Internet of Things for Consumers, focussing on issues of authorisation, authentication, and access of IoTdata in consumer devices.
    • Singapore has issued the IoT Cyber Security Guide to support enterprises to develop secure IoT systems. Enterprises should also comply to IoT-related standards in sensors, sensor networks, and devices.
    • The United Kingdom has focussed on security around IoT devices with the first Code of Practice for Consumer IoT Security published in 2018.
    • The European Union is focussing on the development of an “IoT Trust” label for IoT consumer devices.
    • The United States launched legislation in 2020 – IoT Cybersecurity Improvements Act – which, through a combination of subsidies and project grants, incentivises companies that build and sell IoT solutions to develop them with a security-by-design

These initiatives are all specifically designed around IoT devices and systems. However, it is important to highlight that the relevant legal framework is wider. For example, in the European Union, the three key regulations applying to the sale and use of IoT devices and ecosystems are CE Marking (health and safety of products sold in the EU), GDPR, and the Network and Information Security Directive (NIS Directive). It is well known, but important to stress it, that violation of GDPR – data breaches and misuses of data – can cost up to EUR20 million. A similar legal framework exists in the United States, in which there are three Acts relevant for IoT devices: Federal Trade Commission Act (FTC Act), the Cyber Security Information Sharing Act (CISA), and the Children’s Online Privacy Protection Act (COPPA). Those who violate America’s Federal Trade Commission Act could face fines of $41,484 per violation, per day.

It is also worth noting that many of these regulations focus on the consumer IoT because it has been the weakest in terms of attention to security features, there is a direct link to data privacy (i.e. by hacking into IoT devices malicious actors can gain access to other digital profile data), and most consumers do not have the skill or resources to protect themselves.

3. The increasing business and economic impact of IoT data. Organisations of all kinds are increasingly relying on data for their strategy development, optimisation of processes, increasing engagement with customers and innovating their business models. The data needed for all these activities is increasingly machine generated by an IoT solution. To illustrate this value, there have been several studies on understanding the economic impact of IoT data. For example, in April 2019, GSMA Intelligence estimated that the economic impact of IoT on business productivity was in the order of $175bn, 0.2% of the global GDP. GSMA Intelligence also forecasted that by 2025 the economic impact would increase to $371bn, 0.34% of the global GDP, with IoT companies generating almost a trillion dollar in revenues. Ultimately, if a competitor or malicious actors gets hold of an organisation’s data, then they have accessed one of its most important assets. Therefore, as organisations become ever more data-driven in their strategic decision making, the importance of securing the systems gathering and storing that data will rise.

Defining IoT Security

The US NIST (National Institute for Standards and Technology) defines cyber-risk as “a function of the probability of a given threat source’s exercising any potential vulnerability and the resulting impact of that adverse event on the organisation.” The IoT security risk is one of many cyber-risks to any organisation and refers to the unforeseen exploitation of IoT system vulnerabilities to gain access to assets with the intent to cause harm.

A major challenge in assessing the IoT system vulnerabilities and threats comes from the technological complexity of an IoT solution and the diversity of applications and environments the IoT solution serves. Therefore, IoT security can be assessed in two levels. The first level regards the IoT architectural stack, which is common to different domains and applications. The second level is solution-specific and requires specialised services depending on the domain of applications.

The starting point of the analysis is a model of IoT architecture, illustrated in a simplified format in the diagram below.

Simplified IoT  architecture

Simplified-IoT-architecture-STL-Partners

Source: STL Partners

 

Table of contents

  • Executive Summary
    • Security can enable MNOs to build beyond connectivity in IoT
    • Next steps: Building on security in the Coordination Age
  • Introduction
    • Why IoT security is rising up the agenda
  • Defining IoT security
    • Key IoT vulnerabilities
    • Enterprises’ view on securing IoT
    • How to meet enterprise needs: Delivering security across three dimensions
  • Mobile operators’ roles in IoT security
    • Telco strategy comparison: IoT security offers vs dedicated business units
    • Assessing operators’ security services by function
    • Takeaways
  • Future growth trends for operators to capitalise on
    • eSIM and integrated eSIM (iSIM) capabilities
    • 5G private network security services
    • Managing encryption requirements
    • Blockchain in telecommunications
    • Secure communication through quantum information and communication technology

Related research

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Forecasting capacity of network edge computing

We have updated this forecast. Check the latest report here

Telco edge build has been slower than expected

Telecoms operators have been planning the deployment of edge computing sites for at least the last three years.

Initially, the premise of (mobile) edge computing was to take advantage of the prime real estate telecoms operators had. Mobile operators, in particular, had undergone a process of evolving their network facilities from sites which housed purpose-built networking equipment to data centres as they adopted virtualisation. The consolidation of networking equipment meant there would be spare capacity in these data centres that could easily host applications for enterprises and developers.

That evolution has now been accelerated by the advent of 5G, a mobile generation built on a software-based architecture and IT principles. The result will be a proliferation of edge data centres that will be used for radio access network and core network hardware and software.

However, the reality is that it has taken time for telcos to deploy these sites. There are multiple reasons for this:

  1. Cost: There is a cost to renovate an existing telco site and ensure it meets requirements common for world-class data centres.
  2. Demand: Telcos are hesitant to take on the risk of building out the infrastructure until they are certain of the demand for these data centres.
  3. 5G roll-out: Mobile operators have been prioritising their 5G RAN roll-out in the last two years, over the investment in edge data centres.
  4. Partnership decisions: The discussion around who to partner with to build the edge data centres has become more complicated, because of the number of partners vying for the role and the entrance of new partners (e.g. hyperscalers) which has slowed down decision-making

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Early adopters have taken significant strides in their edge strategy in 2021

2020 and 2021 have been seen as inflection points as a number of leading telecoms operators have launched edge sites: e.g. AT&T, Verizon, Cox Communications, SK Telecom and Vodafone. Arguably, this was triggered by AWS announcing partnerships on AWS Wavelength with four telecoms operators in November 2019, with more recently announced (e.g. Telstra in 2021).

Going forward, key questions remain on the trajectory of telco edge build:

  • How many edge data centres will telcos build and make available for consumer/enterprise applications?
  • How much capacity of telco edge computing will there be globally?
  • How much of telco edge computing will be used for distributed core network functions vs. consumer/enterprise applications?
  • What proportion of telco edge data centre capacity will be taken up by hyperscalers’ platforms?

This report seeks to forecast the capacity at telecoms operators’ edge data centres until 2025 and provide clarity on the nature and location of these sites. In other words, how many sites and servers will be available for running applications and where will these sites be located, both physically and logically in the telecoms operators’ networks.

Before reading this report, we would recommend reading STL Partners’ previous publications on telco edge computing to provide context for some of the key themes addressed, for example:

The report focuses on network edge computing sites

Edge computing comprises of a spectrum of potential location and technologies designed to bring processing power closer to the end-device and source of data, outside of a central data centre or cloud. This report focuses on forecasting capacity at the network edge – i.e. edge computing at edge data centres owned (and usually operated) by telecoms operators.

The initial version of the forecast models capacity at these sites for non-RAN workloads. In other words, processing for enterprise or consumer applications and the distributed core network functions required to support them. Future versions of the forecast will expand to RAN.

Forecast scope in terms of edge locations and workload types

The report covers two out of three scenarios for building the network edge

Table of content

  • Executive summary
  • Introduction
  • There are 3 key factors determining telco edge data centre build out
  • Logically, most network edge will be in the transport aggregation layer
  • Geographically, we will see a shift in the concentration of network edge data centres
  • The limited capacity at network edge DCs will largely be used for edge applications
  • Most telecoms operators are taking a hybrid approach to building their edge
  • Conclusions and next steps
  • Appendix: Methodology

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The Coordination Age Companies: The First Release

This is the first report in a series outlining companies that we think are lighting the path on the journey to the Coordination Age. Its goal is to deepen understanding of the Coordination Age and to inspire innovation and engagement in this crucial transition.

What is the Coordination Age?

The Coordination Age is STL Partners’ term for the new economic and technological era that the world is transitioning to. In the Coordination Age, the over-arching need of governments, companies and individuals is to make better use of the available resources to “make the world run better”. This means managing those resources to deliver better outcomes, better experiences, and less waste.

Connected technologies, including 5G, IoT, Artificial Intelligence, automation, Cloud and Edge Computing, are key tools to the efficient use, management and distribution of those resources. Resources include time, money, carbon, goods, water, land, buildings, raw materials, energy, and so on.

Why Coordination?

Managing resources better requires multiple partners to coordinate their actions and processes to deliver outcomes for maximum efficiency and effect. There does not need to be an all powerful, central ‘coordinator’. That is often neither desirable nor possible. Instead, there will be a multitude of interconnected processes and players that achieve coordination on demand to deliver the outcomes needed within the ecosystem overall.

Coordination, transformation and technology

Much of the action of coordination will be automated – processes or parties communicating with another automatically for the sake of speed, cost and efficiency, but the whole system will be under the control of people and organisations as it is now.

The Coordination Age is the master key to the puzzle of digital transformation. While the technologies have implied what is possible, the Coordination Age shows what it is for and why transformation is necessary, and what it will take to make it work in practice in real world ecosystems – the how.

Role of this report

This is the first report in a series outlining companies that we think are lighting the path on the journey to the Coordination Age. Its goal is to deepen understanding of the Coordination Age and to inspire innovation and engagement in this crucial transition.

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The Coordination Age 100: Inspiration for change

We aim to profile 100 companies across a number of industries as inspiration for new business models, how to transform a business to succeed in the Coordination Age; and/or as potential partners for the telecom industry. The Coordination Age is well underway and many companies have been built around driving this step change in our economy, or are transforming themselves to adapt to it. Some telcos have already started on the Coordination Age path as we have looked at this in Are telcos smart enough to make money work?, The roles of 5G & private networks and Can telcos create a compelling smart home?. However, for companies not already on this path, it’s hard to know where to start and what emerging technologies, business models and ecosystems driving that are Coordination Age.

What is a Coordination Age company?

  • A Coordination Age company delivers better use of resources to their customers by combining different technology resources such as connectivity (IoT, 4G, 5G, Wi-Fi, etc.)​, cloud/edge computing, AI and machine learning, and automation
  • It operates in a B2B2X environment, bringing together previously siloed data, processes, companies, and customers
  • A Coordination Age company usually operates across physical and digital worlds, but in some cases the resources can be predominantly digital too (e.g. in financial services or entertainment)

Benefits: better use of  / returns on resources

coordination age benefits

Table of content

  • Executive summary
  • Introduction – the Coordination Age and this report
  • What is the “Coordination Age 100”?
    • The Coordination Age 100: Inspiration for change
    • What is a Coordination Age company?
    • Coordination Age natives vs transformers
  • Ten company profiles
  • Coordination Age natives vs transformers
    • Coordination Age natives
      • Octopus Energy
      • Ocado
      • Booking.com
      • Babylon Health
      • Starling Bank
      • Upstart
    • Coordination Age transformers
      • Hitachi Rail
      • Rolls Royce
      • Orange Money/Orange Bank
      • Signify

 

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Microsoft, Affirmed and Metaswitch: What does it mean for telecoms?

What is Microsoft doing, and should telcos be worried?

Over the past two years, Microsoft and its cloud business unit Azure have intensified and deepened their involvement in the telecoms vertical. In 2020, this included the acquisition of two leading independent vendors of cloud-native network software, Affirmed Networks and Metaswitch. This move surprised many industry observers, as it represented an intensification of Microsoft’s involvement in telco networking.

In addition, in September 2020, Microsoft announced its ‘Azure for Operators’ strategy. This packages up all the elements of Microsoft’s and Azure’s infrastructure and service offerings for the telecoms industry – including those provided by Affirmed and Metaswitch – into a more comprehensive, end-to-end portfolio organised around Microsoft’s concept of a ‘carrier-grade cloud’: a cloud that is truly capable of supporting and delivering the distinct performance and reliability that telcos require from their network functions, as opposed to the mainstream cloud devoted to enterprise IT.

In this report, our discussion of Microsoft’s strategy and partnership offer to telcos is our own interpretation based on our research, including conversations with executives from Microsoft, Affirmed Networks and Metaswitch.

We examine Microsoft’s activities in the telecoms vertical in the light of three central questions:

  • What is Microsoft doing in telecoms, and what are its intentions?
  • How should telcos respond to Microsoft’s moves and those of comparable hyperscale cloud providers? Should they consume the hyperscalers’ telco cloud products, compete against the hyperscalers, or collaborate with them?
  • And what would count as success for telcos in relationship to Microsoft and the other hyperscalers? Are there any lessons to be learned from what is happening already?

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Microsoft’s telecom timeline

The last couple of years has seen Microsoft and Azure increasing their involvement in telecoms infrastructure and software while building partnerships with telcos around the world. This march into telecoms stepped up a level with Microsoft’s acquisition in 2020 of two independent virtual network function (VNF) vendors with a strong presence in the mobile core, among other things: Affirmed Networks and Metaswitch. Microsoft was not previously known for its strength in telco network software, and particularly the mobile domain – prompting the question: what exactly was it doing in telecoms?

The graphic below illustrates some of the key milestones in Microsoft’s steady march into telecoms.

Microsoft’s move on telecoms

Microsoft’s five partnership and service models

Microsoft Azure’s key initiatives over the past two years have been to expand its involvement in telecoms, culminating in Microsoft’s acquisition of Affirmed and Metaswitch, and the launch of the Azure for Operators portfolio.

As a result of these initiatives, we believe there are five models of partnership and service delivery that Microsoft is now proposing to operators, addressing the opportunities arising from a convergence of network, cloud and compute. Altogether, these five models are:

Five business models for partnerships

  • A classic telco-vendorrelationship (e.g. with Affirmed or Metaswitch) – helping telcos to evolve their own cloud-native network functions (CNFs), and cloud infrastructure and operations
  • The delivery and management of VNFs and CNFs as a cloud service, or ‘Network Functions-as-a-Service’ (NFaaS)
  • Enabling operators to pursue a hybrid-cloud operating model supporting the delivery of their own vertical-specific and enterprise applications and services, or Platform-as-a-Service (PaaS)
  • Rolling out Azure edge-cloud data centres into telco and enterprise edge locations to serve as a cloud delivery platform for third-party application developers providing low latency-dependent and high-bandwidth services, or ‘Network-as-a-Cloud Platform’ (NaaCP)
  • Using such Azure edge clouds – in enterprise and neutral facilities alongside telco edge locations – as the platform for full-fledged ‘net compute’ services, whether these are developed collaboratively with operators or not.

Table of Contents

  • Executive Summary
    • Microsoft wants to be a win-win partner
    • What should telcos and others do?
    • Next steps
  • Introduction
    • What is Microsoft doing, and should telcos be worried?
  • What has Microsoft done?
    • Microsoft’s telecom timeline
  • What is Microsoft’s strategy?
    • Microsoft’s five partnership and service models
    • The ‘Azure for Operators’ portfolio completes the set
    • 5G, cloud-native and net compute: Microsoft places itself at the heart of telco industry transformation
    • Cellular connectivity – particularly 5G – is pivotal
  • Telco-hyperscaler business models: What should telcos do?
    • Different hyperscalers have different telco strategies: comparison between Azure, AWS and Google Cloud
    • What should telcos do? Compete, consume or collaborate?
  • Microsoft’s ecosystem partnership model: What counts as success for telcos?
    • More important to grow the ecosystem than share of the value chain
    • Real-world examples: AT&T versus Verizon
  • Conclusion: Telcos should stay in the net compute game – and Microsoft wants be a partner
  • Appendix 1: Analysis of milestones of Microsoft’s journey into telecoms
  • Appendix 2: Opportunities and risks of different types of telco-hyperscaler partnership
  • Index

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Growing B2B revenues from edge: Five new telco services

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Edge computing has sparked significant interest from telcos

Edge computing brings cloud capabilities such as data processing and storage closer to the end user, device, or the source of data. There are two main opportunity areas for telcos in edge computing. Firstly, telcos have an opportunity to provide edge computing via edge data centres at sites on the telecoms network – network edge, sometimes referred to as multi-access edge computing. Secondly, telcos can offer edge-enabled services through compute platforms at the customer premises – on-premise edge.

Although there is an opportunity for telcos to offer new services and an enhanced customer experience to their consumer customer base, much of the edge computing opportunity for telcos is in the B2B segment. We have covered the general strategy operators are taking for edge computing in our previous report Telco edge computing: What’s the operator strategy? and through insights on our Edge Hub. Within enterprise, edge offers a chance for operators to move beyond offering connectivity services and extend into the platform and application space.

However, the market is still young; enterprises are still at an early stage of understanding the potential benefits of edge computing. There is limited availability of network edges; telcos are still deploying sites and few have begun to offer mechanisms to access the edge compute infrastructure within them. As a result, developers are only just starting to build applications to leverage this new infrastructure.

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Telcos are still grappling with defining the opportunity. Since adoption is so nascent, many feel that they are not able to prove the commercial case to unlock significant investment. Some operators are pushing ahead by building out edge infrastructure, securing partnerships and launching edge computing services. Nonetheless, even these operators are keeping an open mind to edge and waiting to see what unfolds as the market matures. What is clear is that, with the hyperscalers and others moving into the edge, telcos are increasingly keen to capitalise on the edge opportunity and solidify their position in the market before it’s too late.The sweet spot opportunity for edge is highly dependent on telcos’ starting points: some have existing capabilities within B2B networking and cloud, partnerships, and strong customer relationships. But for other telcos, the B2B business is at a very early stage. Meanwhile, edge infrastructure build differs across telcos, with some choosing to partner with hyperscalers to create the hardware and software stack within edge data centres while others are opting to build their own stack.

It is therefore critical for telcos to:

  1. Assess whether they can leverage existing B2Bservices, customers and partners versus where they need to invest to fill the gaps
  2. Understand which factors may affect how successful they are in offering new edgeservices
  3. Prioritise which servicesthey could offer to B2B customers

In this report, we focus on answering the following questions:

Which B2B services can edge computing add value to? And how ready are telcos to take new edge services to market?

In order to better understand how operators are thinking about edge services and what they are looking to offer today, we interviewed eight technology and strategy leaders working in operators primarily across Europe.

To ensure an open and candid dialogue, we have anonymised their contributions. We would like to take the opportunity to thank those who participated in this research. A summary of the interviewee profiles is provided in the Appendix.

Telcos’ B2B businesses today

As consumer revenues come under increasing pressure, operators are looking to their B2B businesses to provide a new source of revenue growth. The maturity of their B2B businesses today varies from those who have a limited offering focussed primarily on phones, SIMs and basic connectivity (particularly mobile-only telcos, e.g. Three UK), to those who are providing full vertical applications or taking on the role of systems integrator (often incumbents or telcos with fixed networks, e.g. DTAG, Vodafone). Many telcos are looking for opportunities to take on more of the latter role, by expanding their B2B offerings and increasing their foothold in the value chain e.g. by offering managed services. Particularly with the arrival of 5G, they see greater potential to grow revenues through B2B services compared with B2C.

Maturity levels of telcos’ B2B business

Table of content

  • Executive Summary
  • Introduction
  • Strategic principles for B2B telco edge
    • Telcos’ B2B businesses today
    • Three telco strategies for B2B edge
    • On-premise edge and network edge are separate opportunities
    • Telcos are open to partnering with the hyperscalers for edge
  • Five types of B2B edge services
    • Edge-to-cloud networking
    • Private edge infrastructure
    • Network edge platforms
    • Multi-edge and cloud orchestration
    • Vertical solutions
  • Evaluating the opportunity: How should telcos prioritise?
    • It’s not just about technology
    • However, significant value creation does not come easy
    • Telcos should consider new business models to ensure success
  • Next steps for telcos in building B2B edge services
    • Prioritise services to monetise edge
    • Evaluate the role of partners
    • Work closely with customers given that edge is still nascent
  • Appendix
    • Interviewee overview
  • Index

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Growing B2B2X: Taking telcos beyond connectivity and 5G

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The telecoms industry is looking to revive growth

Telecoms operators have enjoyed 30 years of strong growth in all major markets. However, the core telecoms industry is showing signs of slowing. Connectivity revenue growth is declining and according to our research, annual growth in mobile operator revenues pre-COVID were converging to 1% across Asia Pacific, North America, and Western Europe. To help reverse this trend, telecoms operators’ have been investing in upgrading networks (fibre, 4G, 5G), enabling them to offer ever-increasing data speeds/plans to gain more customers and at least sustain ARPUs. However, this has resulted in the increasing commoditisation of connectivity as competitors also upgrade their networks. The costs to upgrade networks coupled with reducing margins from commoditisation have made it difficult for operators to invest in new revenue streams beyond core connectivity.

While connectivity remains an essential component in consumer and enterprises’ technology mix, on its own, it no longer solves our most pressing challenges. When the telecoms industry was first founded, over 150 years ago, operators were set up to solve the main challenge of the day, which was overcoming time and distance between people. Starting in the 1990s, alongside the creation of the internet and development of more powerful data networks, today’s global internet players set out to solve the next big challenge – affordable access to information and entertainment. Today, our biggest challenge is the need to make more efficient use of our resources, whether that’s time, assets, knowledge, raw material, etc. Achieving this requires not only connectivity and information, but also a high level of coordination across multiple organisations and systems to get it to the right place, at the right time. We therefore call this the Coordination Age.

Figure 1: New challenges for telecoms in the Coordination AgeThe coordination age overview

Source: STL Partners

In the Coordination Age, ‘things’ – machines, products, buildings, grids, processes – are increasingly connecting with each other as IoT and cloud-based applications become ubiquitous. This is creating an exponential increase in the volume of data available to drive development of advanced analytics and artificial intelligence, which combined with automation can improve productivity and resource efficiency. There are major socioeconomic challenges that society is facing that require better matching of supply and demand, which not only needs real-time communications and information exchange, but also insights and action.

In the Coordination Age, there is unlikely to be a single dominant coordinator for most ecosystems. While telecoms operators may not have all the capabilities and assets to play an important coordination role, especially compared to the Internet giants, they do have the advantage of being regulated and trusted in their local markets. This presents new opportunities for telecom operators in industries with stronger national boundaries. As such, there is a role for telcos to play in other parts of the value chain which will ultimately enable them to unlock new revenue growth (e.g. TELUS Health and Elisa Smart Factory).

New purpose, new role

The Coordination Age has added increased complexity and new B2B2X business model challenges for operators. They are no longer the monopolies of the past, but one of many important players in an increasingly ecosystem-based economy. This requires telcos to take a different approach: one with new purpose, culture, and ways of working. To move beyond purely connecting people and devices to enabling coordination, telcos will need a fundamental shift in vision. Management teams will need to embrace a new corporate purpose aligned with the outcomes their customers are looking for (i.e. greater resource efficiency), and drive this throughout their organisations.

Historically, operators have served all customers – consumers, small and medium-sized enterprises (SMEs), larger enterprises from all verticals and other operators – with a set of horizontal services (voice, messaging, connectivity).  If operators want to move beyond these services, then they will need to develop deep sector expertise. Indeed, telcos are increasingly seeking to play higher up the value chain and leveraging their core assets and capabilities provides an opportunity to do so.

However, in order to drive new revenues beyond connectivity and add value in other parts of the solution stack, telcos need to be able to select their battles carefully because they do not have the scale, expertise or resources to do it all.

Figure 2: Potential telco roles beyond traditional connectivity

Source: STL Partners

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Clearer on the vision, unclear on the execution

Many telcos have a relatively clear idea of where they want to drive new streams of revenue beyond traditional connectivity services. However, they face various technical, strategic and organisational challenges that have inhibited this vision from reaching fruition and have unanswered questions about how they can overcome these. This lack of clarity is further evident by the fact that some telcos have yet to set explicit revenue targets or KPIs for non-connectivity revenue, and those that have set clear quantifiable objectives struggle to define their execution plan or go-to-market strategy. Even operators that have been most successful in building new revenue streams, such as TELUS and Elisa, do not share targets or revenues for their new businesses publicly. This is likely to protect them from short-term demands of most telecoms shareholders, and because, even when profitable, they may not yet be seen as valuable enough to move the needle.

This report focuses not just on telco ambitions in driving B2B2X revenues beyond core connectivity and the different roles they want to play in the value chain, but more importantly on what strategies telcos are adopting to fulfil their ambitions. Within this research, we explore what is required to succeed from both a technological and organisational standpoint. Our findings are based on an interview programme with over 23 operators globally, conducted from June to August 2020. Our participant group spans across different operator types, geographies, and types of roles within the organisation, ensuring we gain insight into a range of unique perspectives.

In this report, we define B2B2X as a business model which supports the dynamic creation and delivery of new services by multiple parties (the Bs) for any type of end-customer (the X), whether they be enterprises or consumers. The complexity of the value chains within B2B2X models requires more openness and flexibility from party providers, given that any provider could be the first or second ‘B’ in the B2B2X acronym. This research is primarily focused on B2B2X strategies for serving enterprise customers.

In essence, our research is focused on answering the following key question: how can operators grow their B2B2X revenues when traditional core connectivity is in decline?

Table of Contents

  • Executive Summary
  • Introduction
    • The telecoms industry is looking to revive growth
    • New purpose, new role
    • Clearer on the vision, unclear on the execution
  • Beyond connectivity, but where to?
    • “Selling the service sandwich”
    • Horizontal play: Being the best application enabler
    • The vertical-specific digital services provider
    • There is no “best” approach: Some will work better for different operators in different situations
    • 5G is a trigger but not the only one
  • Accelerating the shift towards partnerships and ecosystems
    • Some operator ‘ecosystems’ look more like partnerships
    • Not all telcos define ‘ecosystems’ the same way
    • Most telcos focusing on ecosystems want to orchestrate and influence the proposition
    • Many see ecosystems as a key potential route but ecosystems come with new requirements
  • The market is ripe for telco ecosystems
    • The interest in network intelligence is not new but this time is different
    • Telcos can provide unique value by making their networks more accessible
    • But so far, telcos have not fully embraced this vision yet
  • Conclusions and recommendations

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