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22 June 2021

MNOs should prepare now for 5G hypergrowth later, urges IBM

It is a becoming a common call for MNOs – to prepare now for 5G riches in around five years’ time. The latest call has come from the less familiar source of IBM, the godfather of big iron computing that has reinvented itself several times to survive as a major force in enterprise IT today.

This has taken the company recently into the expanding field of mobile edge computing and it is from that vantage point that IBM has conducted a survey of telco CEOs, seeking to identify how operators can grow and expand in the 5G era through new services and added value, rather than being confined to provision of connectivity networks. The findings overlap, to some extent, with those from another recent CEO survey conducted by PricewaterhouseCoopers (see separate item) on the importance of redesigning internal BSS/OSS systems.

IBM’s takeaway is that 5G hypergrowth, as it puts it, will really only get going after the middle of this decade, but that MNOs face a crunch decision point now. The question is whether they should be content to provide faster higher capacity services, much as they did under 4G, or attempt to move up the value chain of service provision and offer services that ride over their infrastructure.

But that should not really be a question, in IBM’s view, because operators content to remain merely providers of connectivity face long term decline in the face of the onslaught from as hyperscalers such as Amazon AWS, Microsoft Azure, Google and Alibaba, as well as a clutch of smaller providers, often operating on a regional or niche basis.

“Communication service providers shoulder most of the burden of investing in infrastructure, but most money is being made by using that infrastructure — not building it,” noted the IBM report. “5G is, of course, no different. CSPs have incurred tremendous costs preparing for 5G-enabled edge computing, and so the top performers are focusing on finding new revenue streams to drive profit.”

That last point is significant because it indicates MNOs that have already assembled their own cloud-based platforms, using capacity provided by the hyperscalers where necessary, have outperformed the field.  Of 500 CEOs interviewed, around 70 (14%) said their companies had been outperforming their competitors for several years. Of these, 91% expected to continue doing so for the next five years as a result of further development of hybrid cloud business platforms built to exploit edge computing and 5G.

Hybrid clouds combine at least one public cloud with a private cloud built on physical infrastructure acquired by an enterprise for a cloud network solely for its own use. The term multicloud has evolved from this to denote hybrid clouds combining more than one private cloud with multiple public clouds.

The IBM report suggested that CSPs were moving at different rates towards hybrid clouds, with a distinction between those that are moving more “aggressively and consciously” towards this goal and those that seem to be dragging their feet. The latter are leaving themselves vulnerable in the race to capture the value of 5G edge, according to IBM’s VP for global telecom industry Craig Wilson.

On that basis, he argued, MNOs face little choice but to prepare now for an impending explosion around the edge from 2025.