Operators facing a 'perfect storm' of commercial and technology challenges in 2014
Real Wireless warns that operators lack clear strategies to deal with the issues, from coverage to CapEx and M2M to spectrum
The analysis was taken from a landmark manifesto, launched today, looking at every aspect of the wireless industry in 2014 and beyond, from 5G to small cells, spectrum, backhaul, M2M and more. These issues affect not just operators but regulators, vendors - and all of those that use wireless technology, from consumers to transport operators, stadium owners or enterprises.
With the wireless industry under unprecedented financial pressure and subscribers demanding ever more from their wireless service in terms of better coverage and more capacity, while technology complexity continues to accelerate, Real Wireless has found that 2014 will see a multitude of issues and challenges come to a head.
"We've taken a look at every aspect of the wireless industry, from spectrum to technology, the economics, the locations people are using wireless and the commercial opportunities. All included we've found that mobile operators are facing a perfect storm of challenges starting from this year. The next few years pose an unprecedented challenge, and few operators are preparing for it," said Professor Simon Saunders, Director of Technology and co-founder of Real Wireless.
"While there's never an easy time to be an operator, technology challenges are increasing in complexity at the same time as financial pressures bite. More CapEx is needed to support data traffic growth, improve coverage and build out 4G, but revenue & ARPU are under strain - indeed, in Europe the industry has moved ex-growth."
Some of the challenges include:
- Small Cells. Sophisticated operators have developed plans for seizing the opportunities of small cells, and see them as an important source of competitive advantage. Crucially, the technology enables them to re-engineer processes and human capital. They also involve partnering and outsourcing more operations, often to landline operators and MSOs. Other operators risk being commercially blind-sided.
- 5G is coming faster than many appreciate, with vendors demonstrating technology and standards activity progressing. However, as complex as spectrum has been for LTE, with UEs having multiple product SCUs to complicate roaming, it will be even harder for 5G. There will be increasing tension between mobile operators, satellite operators, broadcast TV and other spectrum users. Few operators or regulators are prepared for these issues, which will come to the fore at WRC15.
- Having 2G, 3G, 4G and 5G all running, all interacting and all needing spectrum will be a technical nightmare and financially insupportable - yet few carriers have planned for how to switch off any of their technologies - while growing use of M2M on 2G complicates this. 2G will be largely unaffected this year, but pressures to eventually phase it out will grow progressively. Meanwhile, other operators will make serious plans to phase out 3G in favour of 4G.
- Wireless consumers and users are becoming more demanding. The remorseless growth in traffic poses its own challenges, but they are also increasingly unwilling to accept poor coverage. Enterprises, stadium owners, retailers are increasingly aware of this, and see good wireless service as business critical. Some operators have developed strategies for how to serve this demand in a responsive and cost-efficient way. Others are in jeopardy of falling behind.
2014 will see change at both ends of the technology scale. It is difficult to phase-out 2G with concerns from rural users and the growing M2M market, but operators need to develop plans quickly. At the same time, Real Wireless warns that 5G is appearing on the horizon and operators need to plan for the next wave of generation upgrades, migrations, devices and service shifts. Operators will also need to manage increasingly complex spectrum-sharing arrangements and roaming agreements.
"What will make 2014 different from any other year is that there are so many big challenges across such a wide range of areas all at the same time," added Saunders. "We're anticipating further consolidation of both networks and operators as demanding consumers and new market entrants put pressure on an industry that is already seeing its growth slow."
The Real Wireless manifesto, 'How wireless will - or should - evolve', is available to download free of charge here. Bringing together the views of experts across the wireless industry, it highlights the challenges and opportunities for the sector over the next 12 months, with insights from the Real Wireless on how to best shape mobile and wireless strategies.
Real Wireless Ltd
Real Wireless delivers independent, informed and innovative consultancy services in every aspect of wireless, from the technical to the commercial. It works with mobile operators, governments, venues, building owners and regulators to bridge technical and commercial domains to help its clients get the best from wireless. With experts in every aspect of wireless and a proven track record, Real Wireless is one of the world's leading wireless consultancies.
Its clients include Ofcom, Wembley Stadium, BAA, The European Commission, major network operators and many others.
For more information visit www.realwireless.biz