The Road to 2025: A glimpse into the future of telecoms

By Thomas Campbell

Industry analyst firm Ovum has attempted to forge a very large crystal ball in the form of its Road to 2025 research project. To find out about Ovum’s discoveries, and how they will be reflected and represented at next month’s Broadband World Forum (20-22 October 2015, Excel, London), Telecoms.com spoke to Ovum analyst and report author Steven Hartley.

Telecoms.com: Clearly the Road to 2025 represents a huge, ongoing research project. But if you had you to pick one definitive take-home from what you’ve been looking at so far, what would it be?

Steven Hartley: I think it has to be the sheer, undeniable importance of connectivity to the future. It’s very easy to say, well, that’s nothing new, but actually, what is connected, how it’s connected, the demands placed on that connectivity — in terms of capacity, location, the sorts of devices, processing and applications that that connectivity is going to be supporting —  to the sheer quality of connectivity required, is really important.

You can see that it’s fibre that’s going to underpin the digital transformation we’re talking about. Without that connectivity, digital transformation doesn’t really happen. You can’t have cloud computing, you can’t have the Internet of Things, you can’t have intelligent machines, you can’t leverage the power of things like analytics and artificial intelligence. These things are great in isolation, but it’s only when you start connecting them that they become truly powerful. I think that’s what’s really important over the next ten years. There are huge opportunities in terms of demand.

But is it fair to say that, this need for connectivity represents a double-edged sword for service providers?

Very pertinent question. It is. Every silver lining has a cloud. There is no denying that demand for connectivity is set to sky rocket: but it has to make sense from a cost perspective both from a supply and demand side. On a demand side, it’s got to be cheap. You’ve got to have that affordable connectivity. Otherwise, the benefits that digitalisation and digital transformation promise aren’t going to be realised, because businesses are just going to say, “well it’s cheaper for me to do the unconnected alternative”.

A good analogy is if you think of something like fracking for oil, it’s not viable right now, and a lot of projects have been put on hold simply because the cost of oil has plummeted. All the while that stays low it’s not viable. When the cost of oil starts rising again then it will come back on the agenda. The same could happen to technologies such as the Internet of Things if costs are too high.

And then I suppose there’s the matter of quality of service?

Absolutely. Service Providers must deliver this connectivity to many more applications, industries and customers than they’ve ever had. That’s a challenge in terms of sales and support, and product and service development. They have to make sure they can operationally support this very broad range of connectivity. Customers are not going to say, “well the internet went down and that’s fine”. There has to be that quality of service there. That’s going to be really expensive to supply. And how can you do that while at the same time putting in bigger and bigger and at the same time remain price competitive?

Certainly in terms of volume of traffic, it’s not going to map against the growth rates of revenues. We’re already seeing that of course. A fundamental shift is needed in how telcos operate, function and think of themselves.

What other changes does this point towards?

We’re already starting to see the beginning of the end for this notion of, “we’ve just got to keep upgrading the network and that’s fine”, in considerations of 5G for instance.

There’s serious talk of this being the last network generation overhaul. How does that fit in with the equipment vendors’ ten year upgrade cycle? That’s what their investors are living off. Well, if 5G is more about software and upgrading capabilities moving forward, then you’re not going to get the infrastructure upgrade. At the same time vendors won’t have to build that kit so margins could be higher if you moving towards a more software centric model. But then vendors come up against the big software companies that are interested in moving into this space as it’s playing into their core competencies.

Also, the whole transformation of the telco in terms of operational efficiency, in terms of software centricity, is really only just beginning now. Over the next ten years we’ll certainly see it becoming more and more prevalent as operators realise they can’t afford to keep maintaining the physical infrastructure in quite the same way as they have been. There’s always a strain on legacy, of course, and that’s not going to go away. You’ll certainly see more emphasis on operational efficiency though. You’re going to see more consolidation in the industry as well, both between fixed and mobile players, and in-market domain consolidation.

What significant indicators of this future are you expecting to encounter at this year’s Broadband World Forum?

I think on the wire line side, clearly we’re going to be hearing more around fibre, fibre deployments and the fibre business case. And what I would term ultrafast services – ten gigabits per second and the sort of thing you can get today in Japan. I think you’ll hear more examples of launches that are ultra-speed, and you will hear more from the vendors around technologies that support that.

I also think we’ll hear a lot about technologies like G.fast that help Service Providers to sweat legacy copper networks. Where you have a lot of copper in the ground, it’s is a great way of sweating those assets without having to replace absolutely everything and make the copper network redundant. I think we’ll hear a lot about G.fast, particularly for developed market incumbents. I know BT is the host service partner and it’s been triaging G.fast, so I hope to hear some results on how that has been going.

Trevor Linney, BT’s head of access network research, will be leading an Interactive Discussion on Day One (20^th October) of this year’s Broadband World Forum, asking ‘Is G.fast Delivering on its Promise?’ Here he is introducing the theme…