Of the big four US mobile operators, AT&T has been the most innovative in pushing open, disaggregated architectures to prepare for 5G, while Verizon has stood out for its early commercialization and its hunt for new revenue streams. Its fixed wireless access (FWA) service has so far been underwhelming in performance or impact, by all accounts, but it does demonstrate some bold thinking by a telco which is under intense pressure in many other areas of its business.
Verizon has insisted that FWA is a standalone business case, not just a way to get services out quickly before the challenges of mobility – such as broad coverage and affordable handsets – are addressed. And while AT&T has demonstrated complex architectures, including slicing, to enable a wider variety of services, and rescue it from a mobile broadband price war with T-Mobile, Verizon has announced a larger number of practical activities with the same end in view. The latest is a partnership with Corning to enable smart factories (see separate item below).
At Mobile World Congress Los Angeles (MWC LA) last week, Nicola Palmer, Verizon’s SVP of technology, said the business strategy had to be very different from that of 4G, when most of the additional value generated by the new networks was taken by other companies, such as over-the-top providers. “We learned a few things with 4G,” she said. “There are a lot of others that use this fantastic network that we developed to develop their own business models and innovate on top of it. We are determined not to make that mistake again and to be better at it.”
This has entailed a far closer cooperation with a wider variety of industrial partners and potential customers, with many use cases tested in labs, working with large and small ecosystem players. Currently, enterprise business accounts for 24% of revenue (across wireless and wireline, which have been consolidated in the Verizon structure), but the wireline side is vulnerable to rising competition and limited reach, so 5G will take much of the responsibility for maintaining and then increasing that 24% figure, in order to offset pressures on the consumer market.
Tami Erwin, group CEO of Verizon Business, echoed the sentiment in a keynote address, saying: “5G is so powerful that the best way to think about it is as a wholly new technology.” Talking up the ability to blend the physical and digital to support processes such as robotics and 3D printing, she referred to a new collaboration with enterprise software giant SAP. This will combine SAP’s Leonard IoT platform, edge services, analytics, computing and data management capabilities with Verizon’s 5G, software-defined network (SDN), ThingSpace IoT platform, and edge networking platform. The combination will support real time decision support for sectors such as logistics, said the partners.
“The network that makes those connections possible is the key to everything else. So even if you’re not ready for 5G today, it is essential for the future no matter what industry you’re in, that network will transform businesses in three fundamental ways,” Erwin said, referencing 5G partnerships with Xerox, airline JetBlue, and Anthem.
AT&T’s CTO, Andre Fuetsch, was also focusing on real world tests and trials, telling the LA audience: “We really think that the sweet spot for 5G, initially, is going to be the enterprise. We have dozens of trials underway to prove this out”, from smart factories to “office of the future”.
“There’s so much to be excited about in 5G because it is a completely different architected network,” Fuetsch said. “I think those are going to be the things that 5G, and the use cases, that are really going to transform the world.”
While the enterprise, industrial and IoT opportunities are undoubtedly essential for many operators to hope to achieve strong ROI on 5G, not every MNO will be able or willing to fulfil this strategy. Some will look to economies of scale in the conventional mobile broadband market to justify their investment – by merging with other operators or sharing their networks; by leveraging the spectral and operational efficiencies of a full 5G platform; by engaging in price wars to seize market share.
T-Mobile USA may well be in this category, if it succeeds in boosting its scale through merger with Sprint. It has disrupted the consumer mobile market in the USA in recent years with its ‘Uncarrier’ bundles, tariffs and marketing and is promising video and fixed/mobile services based on 5G. So its CTO, Neville Ray, was keen to tell the LA event that the enterprise opportunity is over-emphasized, and the consumer impact underestimated.
“There is a lot of discussion on enterprise and what can happen in the enterprise space,” he said. “But there are a lot of things that are going to happen in the consumer space … “he world of connected things is enormous but I’m as excited about consumer IoT as I am in connecting things in business. We don’t spend enough time talking about the consumer benefits that will come.”
He acknowledged: “We never had the network to compete effectively in enterprise — I can say that”, but insisted that this was changing and TMO was pushing into new vertical markets, a process that will certainly be helped if it is allowed to buy Sprint. That deal, if it gets past current lawsuits, would bring a large amount of valuable midband capacity spectrum as well as an established IoT and wholesale platform to help diversify the business model.
Sprint’s own CTO, John Saw, was more enterprise-focused in his remarks, saying: “5G is actually designed purposefully for vertical industries. You can do a lot of things in 5G that you just don’t have the scale and the capacity to deal with on LTE.”