What Is the Future for Mobile Network Operators?
The telecommunications industry continues to resist structural change, but the reality is that if it doesn’t transform then technology will do this for it. We have seen the fixed telecom operators slowly being pushed back into the infrastructure utility market. They have been unable to provide new services further up the value chain and are stuck with providing a basic access service. On the other hand, consumers are judging telecoms more and more on a range of new interactive services delivered over the network and it is companies such as Facebook, Google, Amazon and Apple that are reaping the financial benefits of this.
Mobile networks are moving in that same direction. With currently two, three or four mobile infrastructure providers per country and little economic advantage in overbuilding the basic fixed telecoms infrastructure, the industry is facing serious problems. At the same time, customers are using the mobile network to access their apps and most of them are offered by organisations other than the mobile operators.
The major use of mobile phones is in data and use of the many apps involved is likely to increase. For the operators this means that in order to handle the capacity, the underlying backbone network needs to be fibre based. Already most mobile base stations in cities are linked to fibre optic networks, with more and more being connected to fibre year after year. 5G is likely to speed up that development and only a fibre network would be able to handle the increased broadband traffic. Large mobile tower operators are taking over more of these towers as it doesn’t make economic sense for every mobile operator to deploy its own towers and build its own fibre network to these towers.
With mobile towers being placed closer and closer to the end user, there is an opportunity for the mobile operators to offer effective high-speed broadband in competition with the fixed network operators. This would offer customers more choice and the competition will likely drive the costs of high-speed broadband services down further.
Most fixed network connections are still based on the copper network that is of inferior quality and not able to deliver true high-speed services to the end-users. The next step for the fixed operators is to decide how to proceed beyond the copper or the hybrid fibre-coaxial (HFC) networks. Fibre-to-the-home and fibre-to-the-curb are the most likely options here and 5G is one of the options to drive proper high-speed broadband into people’s homes.
A convergence is taking place. The backbone networks for the mobile operators increasingly mimic the fixed ones with little room for duplication, so wireless could increasingly become a retail element rather than a basic network. This would allow for more retail organisations to become involved in high-speed services and increase innovation and competition.
The effects of these industry changes are already reflected in the value of some of the mobile network operators (MNO’s) and mobile tower operators. Those values of the MNO’s are going down while those of the tower operators are going up. This is a clear indication of where the market is moving to.
So, rather than resisting change, the MNO’s should take a leadership role in the transformation of the industry, especially with the inevitable changes that are going to occur in the fixed network. A holistic approach will be needed instead of one that is aimed at protecting a sharp divide between mobile and fixed networks.
Global Seven News