Telecoms industry set to reveal its hopes and fears

It’s that time of the year when Telecoms.com once again conducts the signature Annual Industry Survey. Answering it will not only let us know what you think, but will benefit the telecoms industry as a whole, and in turn, yourselves too.

The 2019 Annual Industry Survey (AIS) has just gone live. True to its mission, this survey is designed to take the pulse of the telecoms industry, in particular of those topics most pertinent to operators, suppliers, technology vendors, analysts, consultants, and everyone else with a stake in the telecoms ecosystem. It’s my job to write collate the responses and present them to you.

This year’s survey covers many of the core technology topics the telecoms decision-makers are most interested in reading about, including Industry Landscape, 5G, Digital Transformation, IoT, and BSS/OSS. Undoubtedly the readers of this story, you, are in the best position to tell us, and the industry, how you see the current status of the industry and where you see it heading for. So, please, click here to answer it.

I was thinking about giving this story a title like “Your Industry Needs You”, but that would be too Kitchener-esque, plus I don’t have the beard to go with it. Instead, I’ll go full Churchillian: I have nothing to offer but a high-quality survey report for free, a sense of contribution, and the chance to win a new Apple Watch.

If this is your first experience with our AIS, or if you’re simply interested in finding out how correct (or incorrect) we have been with our understanding and predictions, feel free to check out last year’s results.

75% of the telecoms industry think 2019 will be a great year

Three quarters of the respondents to the latest Telecoms.com Annual Industry Survey feel positive or fantastic about the industry’s prospects in the new year.

There is hardly a better way to usher in the new year with a reality check on the industry we are in, and an informed look into the era we are entering. The recently-published Telecoms.com Annual Industry Survey report can very well serve such purposes. Thanks to the enthusiastic responses by well over 1,000 telecoms professionals, the majority of whom having more than a decade’s experience in the industry, we are provided with plenty of optimism as well as sober assessment.

A strong contributor to the optimism towards 2019 is the fast rollout of 5G. Not only will the long-awaited 5G networks be switched on in different parts of the world, consumer mobile devices are so close to hitting the market. In addition to eMBB that has been offered on limited scale in the US and South Korea, more ambitious services will be launched to fulfil the 5G’s promises. But at the same time, 62% of the respondents believe the benefits of 5G have not been properly communicated to consumers.

“Only time will tell what a future 5G truly holds, but it’s safe to say there’s a healthy dose of reality within the carrier market. While the promise of 5G and all its intended benefits are still on the horizon, it seems the industry is still identifying which industries can be best served with 5G,” said Sigal Biran-Nagar, Senior Director for Corporate Marketing at ECI. “It’s likely that confidence in the technology, and the willingness for consumers to pay for it, will only grow after its reliability can be assured, and it’s been implemented for a long time, which would also give critical industries and others the confidence they need that it won’t fail.”

All of 5G’s promises are supported by key technology advancements. One of the most frequently discussed areas is virtualisation. The industry continues to show strong belief in virtualisation, with close to 80% of the respondents recognising the significance of NFV for the success of their business. But it does not mean it would be an easy ride for the enthusiasts.

“We are seeing NFV gathering momentum to ‘cross the chasm’. Most respondents think that NFV is important or critical, and their spending in 2019 will be maintained or will increase.” said F5 Networks. “But challenges clearly remain. Only 8% of respondents think NFV is easy to implement. And two thirds thought that the process could be simplified and that automated systems for purchasing could help.”

All the new technologies that make 5G possible also pose new demands for the capability of testing, measuring, and monitoring. More than ever they should already be extensively implemented at the pre-commercial stage due to the new lead use cases, the complexity of its air interface, as well as the central roles played by software and virtualisation.

“5G is on the horizon bringing new opportunities for business growth. CSPs need to tightly control their ecosystem and ensure 5G is done right to deliver on promises for a whole range of new smart applications,” commented EXFO. “Partnering closely with 95%+ of the top CSPs worldwide, EXFO provides next generation test, monitoring and analytics solutions to support operators end-to-end, from lab to live and from the subscriber to the core. EXFO solutions feature real-time network, service and customer insights, process automation, NFV service assurance, prescriptive analytics as well as troubleshooting embedding machine learning and AI.”

Meanwhile, the industry also recognises that 5G is much more than a technology. For the CSPs, it is a significant step on the journey towards digital transformation. Many operators are seeing 5G as a watershed moment to seriously expand beyond the connectivity utility. One third of respondents believe 50% of revenues could be generated by new digital products and services in four years’ time. Opportunities abound.

“The survey provided an industry viewpoint on how much revenue operators will generate from services enabled by digital transformation. This is the foundation for why transformation is needed in the first place,” said Martin Morgan, VP Marketing, Openet. “The survey also provided a health check on how far the industry is advanced in its digital transformation journey and how far it needs to progress to be able to meet their digital services revenue goals. What this means for vendors is that they can set out realistic transformation roadmaps with their customers using the survey results as an industry benchmark.”

One of these growth areas is IoT. 56% of respondents saw IoT as an important driver to expand their service portfolio, while 46% saw it as significant channel to deliver new revenues. Both the short-range IoT, the largest part of the total number of connections, and wide-range including cellular-based IoT, are expected to grow very fast in the coming years, with the latter registering a much faster pace of growth.

“Never before has the digital world impacted the physical world as it does today. IoT drives autonomously driven cars, turns on lights, controls the quality of water, and lets you know who is standing at your front door,” said Ronen Priel, VP Product and Strategy at Allot. “This requires ubiquitous connectivity and security. With 5G mobility, wireless technology, and Fiber to the X (FTTx), connectivity is sorted. But, security is lagging far behind.”

Security is indeed one of the biggest threats to the industry, and that goes beyond IoT. 74% of companies responding to the survey have seen an increase in cyberattacks to their customers over the past year. Businesses are busy shoring up their defence, but they need to recognise that as attacking techniques constantly evolve, so should the defending technologies and business processes.

“We are privileged to contribute to the Telecoms.com 2018 survey report. The survey revealed that end-users and network operators still rely on legacy technology: 63% of network operators use DNS blacklisting for end-user protection. Also, 45% operators are not confident that they are ready to manage IoT security requirements for their customers. It’s crucial to use next-gen technology and start protecting users proactively,” explained Einaras von Gravrock, CEO of CUJO AI.

Now that this report is in front us to provide a panoramic view of the industry today and tomorrow, it will be fascinating to observe how our fellow professionals are turning those promises into reality. You can download your copy of it here. Happy 2019, everyone!

Paranoid US politicians urge Google to break ties with Huawei

An open letter signed by a US Senator and three members of Congress to Google CEO Sundar Pichai suggests the internet giant should end its relationship with Huawei on the grounds of national security.

Signed by Senator Marco Rubio of Florida, Congressman Mike Conway of Texas, Congresswoman Liz Cheney of Wyoming, and Congressman Dutch Ruppersberger of Maryland, the letter expresses ‘concern’ about the relationship, and the knock-on effect on national security due to the assumed ties between Huawei and the Chinese Government. Anti-China sentiment is hardly a new development in the US, though the threat to Huawei’s ability to operate is starting to become more dangerous.

“We write to express our concerns about Google’s ‘strategic partnership’ with Huawei Technologies,” the letter states. “Chinese telecommunications companies, such as Huawei, have extensive ties with the Chinese Communist Party. As a result, this partnership between Google and Huawei could pose a serious risk to US national security and American consumers.”

Six US intelligence agencies have already warned American citizens not to use Huawei products or services, FBI Director Christopher Wray has testified expressing concern over Huawei’s influence and the influences on Huawei and recent reports over espionage have also began to emerge. It would appear the US is starting to build a case to take Huawei down the same road as ZTE.

ZTE is one company which has already felt the consequences of getting on the wrong side of the US government. A ban on using US technology or services crippled the companies supply chain, effectively rendering the business useless, and while Huawei is not as dependent on the US as ZTE, any actions which would be deemed even remotely similar would be a very negative turn of events for the vendor.

“We urge you to reconsider Google’s partnership with Huawei, particularly since your company recently refused to renew a key research partnership, Project Maven, with the Department of Defence,” the letter states. “This project uses artificial intelligence to improve the accuracy of US military targeting, not least to reduce civilian casualties. While we regret that Google did not want to continue a long and fruitful tradition of collaboration between the military and technology companies, we are even more disappointed that Google apparently is more willing to support the Chinese Communist Party than the US military.”

The politicians seem to be playing on the patriotic values of Pichai, though we feel this is not the most effective route for the budding public servants to head down. Unlike the Senator and members of Congress, Google is a global company with ambitions to work collaboratively with the international community. They are not pro-isolationist, like many of US politicians seem to be positioning themselves, and are keen to make money. Ending the relationship with Huawei on the grounds of paranoia would not be an effective commercial decision for one of the world’s heavy economic powers. There will need to be a more effective argument, and, above everything else, more evidence.

Such developments however should be quite a worry for Huawei. Aside from ending a relationship with one of the world’s most innovative companies, it would also mean no more access to Google’s products. Some could be replaced, however not being able to access the Android operating system would be crippling for the consumer division. Huawei has been working on an in-house alternative for the worst case scenario, though we worry about the effectiveness of such an alternative.

A couple of weeks ago we ran a poll with the Telecoms.com readers asking whether a Huawei ban on US technology impact your decision to buy a Huawei Smartphone or wearable device. It is not exactly the right question for developments here, though it does provide some insight into the communities thoughts on a Huawei operating system. 27% said they would continue to buy Huawei devices, while 21% said it would depend on how good the OS actually is, but 27% said Android was what made the devices any good and 24% would be worried about influence of Chinese government. Clearly ending the relationship with Google would not be a good move.

The threat of Huawei heading down the same route of ZTE is not imminent, but it is certainly more than a distinct possibility. Politicians seems to be building the case, and considering the current Murica-first rhetoric which seems to be flooding the country, it is certainly something the Huawei executives should be concerned about.

Trump finishes posturing and squares up to China

President Donald Trump has often proved consistent with campaign promises, and kicking off a trade-war with China is just another example of his reliability.

The Mexican wall is still in the works, a bill to ease gun-carrying rights in schools passed House in December and federal regulations are disappearing faster than a toupee in a hurricane. Protecting the US people from the evil foreigners and their dastardly business ambitions was another which is now moving from dream to reality. Steel and aluminium tariffs are close and now Chinese technology is firmly on the radar.

Yesterday saw the signing of a Memorandum which the spin doctors in the White House say targets China’s economic aggression. 1300 products and services have been reviewed over the last couple of weeks, though the list has not been published yet. Ambassador Robert Lighthizer has been tasked with releasing this list within the next 15 days, though it is suspected there will be a heavy Chinese technology influence to it.

“This has been long in the making,” said President Trump during the signing ceremony. “You’ve heard many, many speeches by me and talks by me, and interviews where I talk about unfair trade practices.

“But we have one particular problem.  And I view them as a friend; I have tremendous respect for President Xi.  We have a great relationship.  They’re helping us a lot in North Korea.  And that’s China [the problem].”

The US has a trade deficit which Trump wants to address, and part of reversing this trend is to put Silicon Valley back on its mantle. While Silicon Valley still is viewed as the place to be worldwide for technology firms, this strangle-hold on the industry has been waning in recent years. Eastern Europe, India and China are just three of the regions across the world which has been making waves in technology, but part of the reason for China’s rise could be deemed as an uneven playing field.

China’s economy is generally protected by the government, as table stakes and working conditions do generally favour domestic companies over international businesses. This does seem to be the playbook when it comes to making an impact on the international scene; generate a ridiculous cash cow in the domestic market before taking advantage of advantageous trading conditions on the global stage. It’s the best of both worlds; just ask Huawei.

Few countries have taken a stance against this apparent advantage Chinese companies have on the global stage, mainly because of the riches which are on offer should you be able to break into China. It is one of the largest and fastest growing economies in the world, the world’s largest manufacturing economy and exporter of goods and second-largest importer of goods. In terms of digital transformation, many of these businesses are behind the curve compared to Westernised economies, and the increasingly affluent and digital aware consumers are prime for profit.

This is where Trump has to be very careful. Yes, standing up to China fulfils one of his campaign promises and inspires US citizens to be the self-appointed defenders of the free world once again, but is this the most pragmatic approach to encourage growth in the US technology sector? We’re not too sure.

When you look at companies like IBM, Google, Amazon, eBay, Intel, Apple, Microsoft and HP, these are not organizations which are going to make the desired profits without looking to the growth economies of the world. These companies, the internet giants to a lesser degree, are looking to economies like China to replace the lingering growth which was previously in the US. Putting walls up around countries will not work out well for the US tech sector; growth and profitability is in the international markets not the US domestic market.

Another interesting consequence of such a trade-war is not just the selling side, but manufacturing as well. It would be perfectly reasonable to assume that as well as blocking trade from the US, the Chinese government would be just as difficult in terms of manufacturing goods in the country as well. This would be bad news for Apple.

On the surface, Apple being unable to manufacture its products in China would be a win for Trump, as it might possibly force jobs back in the US, but it could have a very detrimental impact on Apple as a business. This is a very interesting article which explains the disaster it would be.

In short, for Apple to maintain current profitability levels with the manufacturing process taking place in the US, each unit would have to be sold in the $30,000 – $100,000 range. This is down to capacity. The US does not have the skills to meet market demand, Tooling engineering is an example, meaning supply would be reduced from hundreds of millions to millions. The US would of course be able to generate this workforce, but this would take years. This would put Apple is a very difficult situation.

Tariffs sound fantastic to Trump supporters, some of whom are becoming increasing afraid of the term ‘globalization’, and they do keep the President honest to campaign promises, but it doesn’t seem to be a very pragmatic move. It seems to be a short-term gain for a long-term catastrophe.

Now your correspondent does not claim to be a genius and would assume the people advising the President are more intelligent; surely these scenarios have been examined. Perhaps President Trump doesn’t care about the long-term of the US economy. Logically, we are not too sure how this benefits the US tech sector. The global economy is a thing and there is no going back. Success in a digital world which does not recognise international borders will only come with cooperation. Anyone who thinks trade barriers are going to be a good thing are quite frankly deluded.