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Jonas Martinsson
By Jonas Martinsson
June 1, 2017

"If I had asked people what they wanted, they would have said faster horses."

- Henry Ford

The speed of technological change is accelerating at a steady rate. Mobile network operators serve twice the amount of bits compared to just 16 months ago. Internet connection speeds show a consistent  exponential growth over the last 35 years.

At a philosophical level, this growth can be difficult to grasp. With the eyes of the inventions in the present it is challenging to truly believe that, for example, Moore’s Law could continue for much longer. We can point to physical limits showing how long technical growth is sustainable. For an ecosystem to truly sustain exponential growth over a long period of time, there needs to be a mechanism that transcends these physical limits of technology. We call these mechanisms "paradigm shifts", and they are driven by market inventions that bring revolutionary changes in the order of magnitude.

Let’s do as Marty McFly in Back to the Future, and travel back in time to the 1950’s, in order to give an example.

In the end of the 1950’s, vacuum tubes defined a limit of computational power that appeared impossible to scale up. At a reasonable cost, it seemed Utopian to perform more than 10 calculations per second. The year after, the transistor became reality. 100 calculations per second was suddenly affordable, and technological growth continued with evolutionary improvements to the transistor. The physical constraints of yesterday's technology was no longer a limiting factor.

What is the point of this history lesson, you might ask. How is this relevant to the mobile industry?

I am arguing that there are several key business insights to be made from exploring market data of exponential growth and the imminent adoption of 5G networks.

Firstly, bandwidth growth is, and will for the foreseeable future remain, a challenge that network operators need to deal with. This aspect of the market is not going away. Simultaneously, the continued data usage growth is posing new challenges to the market and ecosystem. With the Internet of Things (IoT), there are new and unique network requirements looming on the horizon, waiting for savvy network operators and other key market players to solve and monetize. The new requirements also create a golden opportunity for operators to move up the value chain and create unique new value offerings to subscribers.

Secondly, the common person finds it difficult to envision a paradigm shift ahead of time. When Henry Ford stood at the verge of the automotive revolution, had he asked potential customers how they would want to improve transportation, he would have heard: "faster horses!" It is easy to be constrained by your own past experiences, and the cognitively bias of Functional Fixedness prevents us from thinking outside-the-box. Operator would be well advised not to ask subscriber what they want, when working on a vision.

Thirdly, IoT will bring network traffic control and traffic management back into focus for operators. During the evolution of 4G networks, Policy and Charging Control use cases witnessed a transition from network control at the onset, to today's subscriber control, for use cases that directly drive revenue and subscriber retention. With new latency and bandwidth requirements, driven by IoT and enabled by 5G, the need for traffic management ensures that Policy will play an even more central role in tomorrow's mobile networks. It serves a mandatory purpose in controlling traffic, but even more importantly, it plays a unique role in building new business models around novel use cases for the new era. Abundant opportunities are available for operators to take advantage of new ecosystems where they climb the value chain.

To paraphrase Henry Ford above, just serving faster horses will not be enough for network operators to realize the potential of the paradigm shift that is taking place with 5G and IoT. This is a time for exploring new revenue streams and new business models, by redefining the operator's role in the telecom ecosystem.


Topics: Featured Blog Header, IoT, 5G, PCC