The telecoms recession may be bottoming out

When reflecting on the recent Network X telecoms trade show it was just possible, if you looked hard enough, to detect a cautious buzz and nascent optimism from an industry that has had little to get excited about in recent years. The show itself seemed lively and we understand key metrics such as size and attendance we up year-on-year in the 15-20% range, which is especially impressive given the aforementioned doldrums.

The keynotes started on a relatively optimistic note. While the growth numbers shared by Omdia Analyst Dario Talmesio (pictured) were low, they still indicated persistent growth following similarly persistent decline. That alone could be viewed as an inflection point, with the hope that it’s the start of a trend that will extrapolate to steeper growth in future.

For all the talk of digital transformation and agility, the telecoms industry still has a supertanker turning circle. So, for the foreseeable future, substantial change will be measured over the course of years, not months. We discussed those keynotes in a podcast recorded from the event and Heavy Reading Analyst Gabriel Brown seemed to approve of Talmesio’s message, while also seeking to proceed with caution.

Brown also noted that telecoms is a momentum business in which change, to paraphrase Hemingway, can happen slowly then suddenly. So many of the telecoms trends and buzzwords that have been chucked about in the 5G era come down to putting the pieces in place for future innovation, diversification and growth. This all amounts to a massive leap of faith for an industry that has little alternative, given the diminishing returns on its legacy business models.

At the event we spoke to Orange CTIO Arnaud Vamparys. He reflected on how much Orange was able to learn from being the sole private network supplier to the recent Paris Olympics. These included exploiting the low-latency capabilities of 5G, especially when it comes to enabling devices to quickly access the cloud for all this GenAI fun we’re constantly hearing about.

Vamparys was also keen to talk up opportunities presented by the macro-trend towards sustainability. Telcos are massive energy consumers, so any technologies that help reduce that can have a significant impact on their bottom line. Europe has the opportunity to be a global leader in this area and the EU seems keen to throw public money at the telco cause. The presence of so many sophisticated operators, as well as two of the biggest telecoms kit vendors, in Europe presents the region with unique opportunities, such as the Sylva telco cloud project, that it would be mad not to exploit.

Network X is especially strong on the fixed-line side of things. One of the things we heard most about is the underappreciated domestic router, or ‘gateway’ as we’re apparently supposed to refer to it now. Qualcomm was there, talking up its most recent announcement in that area, and we also had a good chat with Airties, which works in the AI-optimised wifi space. It’s clear that a lot of innovation is taking place around gateways and that your next router is likely to much more highly-specced and featured than its predecessor.

Talking of innovation, we published the Global Telecoms Awards 2024 shortlist at the start of this week and it paints a picture of an industry working harder than ever to evolve. The shortlist offers a great snapshot of what the industry is up to when it comes to new products, services, and initiatives and, if nothing else, offers reassurance that all the stops have been pulled out in the name of generating growth.

It’s only in hindsight that it’s possible to identify the end of a downturn with any confidence. Analyst firm Dell’Oro has just published a report that, while continuing to forecast RAN market revenue declines for the rest of the decade, anticipates 6G RAN revenues will hit $30 billion by 2033. Reading between the lines its tone follows the cautious, tentative optimism expressed by the earlier analysts.

“Some skepticism is warranted,” said Stefan Pongratz of Dell’Oro. “After all, operators invested over $2 trillion in wireless capex between 2010 and 2023 to build out 4G and 5G, yet revenues remain flat. Looking ahead, operators will need to optimize their spectrum roadmaps to address various data traffic scenarios.

"Our base case assumes that mobile data traffic growth will continue to slow, enabling operators to improve their capital intensity ratios, which will in turn put further downward pressure on the RAN market. However, additional capacity will eventually be required, and at that point, leveraging larger spectrum bands and the existing macro grid will likely offer the most cost-effective solution.”

The report goes on to note that centimetre-wave spectrum (7-15 GHz) is expected to be a major new feature of 6G, an assumption echoed by a recent 5G Americas study. But 6G is such a vague and distant concept at this stage that Vamaprys and Orange prefer not to use the term at all, preferring instead to just refer to ‘mobile technology evolutions beyond 2030’.

We’re inclined to agree, as we concluded in our podcast from the show. Mobile telecoms is no longer about big generational jumps, if it ever was. Instead we should make our peace with steady, incremental change in technology and business practice. Hopefully we will one day look back at the mid 2020s as the time at which the reinvention of the telecoms industry started to finally take effect, resulting in lots of lovely new revenue streams. Hopefully.