The constant stream of Covid-19 news can be exhausting, even in the hi-tech sector where, despite some inevitable shocks and setbacks, there is a far higher level of resilience than in most other industries, because getting through the crisis is so reliant on cloud and connectivity.
At Wireless Watch, as a weekly analyst report rather than a real time news service, we are trying to draw a balance between assessing the impact of the pandemic on the mobile industry, without allowing this one topic, however important, to overshadow everything else. We seek, in general, to judge implications of new developments over a multiyear period, and currently, the huge number of uncertainties about what the next few months will bring make it impossible to do that with any confidence.
So we will confine ourselves to drawing out a few key trends and airing a few key questions, while not losing sight of other decisions and deployments that operators must continue to make.
Some of those trends can be glimpsed immediately, such as the effect on traffic patterns and general usage of broadband services, including mobile (though, with everyone confined to home, the impact is clearly greater on fixed lines, in markets where there is significant wireline infrastructure). We provide a summary of the first operators’ traffic reports in the separate item below.
Other outcomes are more speculative, but may have greater long term resonance for many operators and their suppliers. For instance, it can be argued that the pandemic will intensify operators’ need to transform their cost base for 5G and converged networks. They may need to scale up their capacity more quickly than they had envisaged, at least for a few months.
But in times of uncertainty, they will certainly not want to increase their spending significantly to do that, and so risk unsettling shareholders. And there will be disruption to the pace of 5G deployment, at least for the next six months or so, because of delays to standardization and product development, and also because of restricted access to labor, sites and so on.
However, we believe these will be temporary hiccups, while in the meantime, operators will seek to monetize their existing 4G and cloud assets as effectively as possible. They may see the opportunity to generate some new enterprise revenues more quickly than expected, since many companies are being forced to adjust their ways of working and go through a rather hasty and impromptu migration to digital processes and the cloud. To take advantage of that, mobile operators may bring forward deployments of technologies such as edge computing and virtualized core in order to support customer requirements that were previously not expected to materialize at any scale for a couple more years.
Both radical cost reduction and the flexibility to deliver new services and infrastructure quickly rely on migration to the cloud. Vodafone, for instance, says that the demands of Covid-19 response accelerated the completion of its roll-out of NVI (network virtual infrastructure) across its European footprint. This will reduce the cost of its core networks by half while enabling new services and more efficient capacity management, the operator claimed (see report below).
And while Covid-19 was not so explicitly called out in other cases, there has been a string of operator announcements in the past week, related to adoption of edge computing and cloud-native architectures, in a quest to transform cost and service agility for the mobile and converged operator.
Perhaps, when we look back on this period from a safe distance, this will be one of the major impacts that we see the crisis to have had on the telecoms industry. In the same way that the 1990 recession helped drive the rise of online commerce and so changed the way the enterprise world worked, so the coming Covid recession, 30 years later, may accelerate migration to cloud, edge, AI and dynamic slicing – and all the business changes that will entail, for operators and for the wider commercial sector.