What is lying in wait for telecoms in 2021?

Observers and practitioners take it on the chin to predict what the telecoms industry may look like in the coming year.

A piece of witticism goes something like this:  It is difficult to make predictions, especially about the future. There are slightly different ways to put across the idea, which has been variably attributed to Niels Bohr, Yogi Berra, Piet Hein, Mark Twain, Samuel Goldwyn, Robert Storm Petersen, the Buddha, and Nostradamus. It is such a truism that there is plenty of truth in it, as those of us who have been involved in looking into a crystal ball, or a blank spreadsheet, can all relate to.

Presumably, though, some predictions are more difficult than others. For example, it is more likely that we get long-term trends more correct than short-term forecasts. John Maynard Keynes famous said, “In the long run we are all dead.” This is clearly correct, though it doesn’t solve the problem, or easy the pain to recognise that in the short-term we’re more often wrong than right. As a matter of fact, immediately in front of that often misunderstood revelation, Keynes wrote, “The long run is a misleading guide to current affairs.”

Even the brightest brains have struggled to get short-term predictions right. Bill Gates was one of the few high-profiles voices that have warned the world the danger of a pandemic but even he was unable to tell us such an apocalyptic strike could hit us this year. So we could in a way stop being too harsh on ourselves for failing to foresee the coming of COVID-19 this time last year. And it should also make us feel slightly more comfortable when we are at it again.

If there is one thing that we can almost be sure of about 2021, it will be that “it will be very different to the one just closing,” as James Crawshaw, Principal Analyst at Omdia, puts it. Crawshaw also tells an inconvenient truth about the industry: telecoms is a utility and we have to accept it. “We can all look forward to a gradual return to normality in 2021. The telecom industry has come through 2020 relatively unscathed, as one would expect of a utility service. The market for IT systems that support telcos barely declined in 2020 and should return to low single digit percentage growth in 2021. Not a very exciting headline growth rate compared with some other technology fields but within that overall market trajectory there are some faster growing segments. Omdia’s ICT Enterprise Insights Survey suggests that the majority of service providers will increase their spend on AI tools in 2021. More than half plan to up their spend on customer engagement systems (CRM, mobile apps, etc.). A microservices-based architecture is a pre-requisite for most new software purchases, as is the ability to deploy the software on public cloud. IT budgets remain under pressure in the telecom industry but there is an increasing realization by the C-suite that without IT modernization, telcos will remain commoditised connectivity providers. That is not a future that many boards are prepared to accept.”

“Unprecedented” has become a cliché when used to describe 2020 and the impact of COVID-19 has on every aspect of life, but it doesn’t make it less true. Some changes brought about by the pandemic will go away when life goes back to normal, other changes will be here to stay and become new normal. One of such likely long-term shift is remote working, enabled largely by the communications industry. A result of this change is likely to be a “significant urban-rural migration”, as Mark Evans, CEO of O2 sees it. “The enforced requirement to ‘work from home where possible’ has changed the face of global business and proven the effectiveness of remote working. As a result, an increasing number of people are quitting urban areas in favour of more rural ones,” Evans reckons. “I expect to see this trend continue well into 2021 and beyond and, in turn, increasing pressure will be placed on rural infrastructure. This exodus to the countryside will put pressure on leaders to put rural Britain first for a change. As well as constantly investing in hard-to-reach connectivity, O2 is working with its fellow operators, the UK Government and Ofcom to deliver the The Shared Rural Network (SRN). This will ensure the best possible mobile connectivity for everyone, in all parts of the UK.”

COVID-19 has undoubtedly wreaked havoc to millions of lives, but not everyone has suffered in the same way. Some have even benefited from it, an indication that the pandemic has further polarised the consumer demographic. “There will be ‘the new poor’, those who lost their income, often young and willing to spend on technology, and ‘new rich’,  those who have saved a lot during lockdowns but are reluctant to spend it,” Dario Talmesio, Research Director of Omdia acutely observes. “Cracking such a commercial dilemma will be crucial for CSPs in 2021 because 5G consumers are instrumental for a more critical 5G-related business opportunity. CSPs will start commercializing 5GSA with network slicing, and many more CSPs will deploy 5G core in 2021. After having spent a good part of the past two years in technical and commercial ad-hoc trials, CSPs will be able to start mass-customizing networks for enterprises and industries and demonstrate the benefits of these networks.” Talmesio also believes that there are things that will not change for telcos. “The drive to automation and digitization, the perennial quest to remain relevant beyond connectivity, the cloudification of networks, and the increased involvement of hyper-scale operators in CSPs’ networking businesses will continue to happen and eventually accelerate the pace of a decade-long transformation of the telecom industry into something that is more Tech and less Telco.” When it comes to 5G markets, Talmesio sounds a more optimistic note. “2021 will be the year for 5G mass-market readiness: there will be 0.55 billion eMBB connections by the end of the year supported by more than 270 CSPs globally. With 5G devices in the hands of consumers and Apple’s marketing dollars’ superpowers, some of the anti 5G conspiracists will finally dissipate.”

There is no denial that having the new iPhones supporting 5G has vastly improved the awareness of and enthusiasm about 5G among consumers, but for most consumers the cost of a 5G device is still a key barrier. To this end, Neil Mawston, Executive Director and Devices Analyst at Strategy Analytics, believes that we’re going to see the first 5G phone go below $100. “The average price of 5G Android handsets has halved in 2020. They will halve again through 2021. Surging global volumes, chipset innovation from Qualcomm or MediaTek, and intense rivalry among Chinese device brands mean there will be a race to the bottom on 5G Android smartphone pricing. Expect to see the first sub-$100 models in China, Europe and elsewhere toward the end of next year,” Mawston tells us.

While 5G is going mainstream, so are its failures to deliver on some of its high promises. This has driven certain quarters of the industry to start talking about 6G, though there has been plenty of uncertainty on what 6G is about. Alan Carlton, VP of InterDigital Europe, among many industry executives, believes that 6G must finish the work 5G set out to do but has failed to accomplish. Carlton sees 2021 as “the year that industry attention will turn to 6G. While 5G has made significant moves to a more software defined Core Network and RAN, there are some big steps remaining. Take extended reality—mainstream adoption requires the technology to facilitate both augmented and virtual reality as well as piece the experiences together in real time. This roadmap is very rich, and the truth is 5G may only take us so far.” Another issue that has troubled the 5G ecosystem is power consumption. Despite skilful spinning by companies like Nokia, who argues that energy consumption per gigabit in 5G is lower than 4G, it doesn’t change the fact that 5G’s overall energy consumption will significantly increase because 5G will require much higher data units than any previous generation. Carlton therefore calls for action from the industry to address this issue. “6G must fix 5G’s sustainability shortfall. Put simply, to claim 5G is more sustainable is to say that a Bugatti Chiron is more efficient than a Toyota Yaris because it uses less fuel per horsepower,” Carlton muses.

When it comes to new experience, immersive experience, including AR, VR, or collectively know as XR, has gained much attention, but the total market volume has remained small and consumer purchase limited. This is because, according to Peter Richardson, VP, Partner & Research Director at Counterpoint Research, XR is not a consumer-led market segment, at least not yet. “Throughout most of human history, military arms races drove technical innovation. In more recent times, enterprise needs to enable productivity gains took over as the catalyst for technical developments. From the late nineties, however, the consumer market has been the leading driver of technology innovation. But in VR and AR, military and enterprise needs are, once again, the most powerful forces for change,” Richardson observes. “The launch of Oculus’ 2nd- generation standalone VR headset in October 2020 excited interest, and its relatively low starting price is driving sales, but poor optical quality and a narrow range of either dull or expensive content means we’re not yet an inflection point in consumer interest. However, in the enterprise market, players like Varjo are solving many of the limitations to delivering truly immersive experiences, and this is changing the way enterprises can work and military operatives can train, in fundamental ways. Consumer interest is likely to remain muted in 2021 with VR acting as little more than a niche within the wider gaming market. But as enterprise-focused innovations begin to filter through to consumer-orientated devices, the market will gather pace, multiplying more than six-fold between 2021 and 2025 to be worth over $40 billion,” Richardson predicts.

2020 has also been a year when Open RAN has become the focus of many discussions, ranging from FCC hosted webinar to many inches of columns, including those on this publication. Despite the buzz the technology has generated, its large-scale commercial success has proved elusive, especially in 5G. Robert Finnegan, the new boss at Three UK, recently suggested that Open RAN has already missed the 5G boat. John Strand, Analyst at Strand Consult and often a maverick voice, believes 2021 will be a year of reckoning for Open RAN. “In 2021 the OpenRAN movement will be hit by a reality check. People will recognize that it will take many years before OpenRAN can replace classic RAN on a 1:1 basis. Promised savings for operators will not be so great, and the purported openness of the solution will not necessarily deliver security, at least in the expectation of OpenRAN reducing reliance on Chinese vendors,” Strand predicts. “China Mobile, China Unicom and China Telecom are among some 41 Chinese technology companies which are members of the OpenRAN Alliance. Among the member companies are ZTE and Inspur already banned in the US because of their links to the Chinese military. OpenRAN was purported to give countries an option that was not Huawei, but instead they offer other Chinese entities which have the same security threats.”

This leads us to a prediction of the grander scheme of things, from our own Telecoms.com’s editors. 2020 has seen continued escalation of disputes between the western world, especially the US, and China across many sectors, with Huawei at the centre of the storm. Many have blamed the outgoing Trump administration for the situation we are in due to its combative style. If Huawei, and other Chinese companies caught in the crosshairs (for example SMIC or ZTE), should wish for a reprieve from the incoming Biden presidency starting in January, or even expect an complete change of fortune, or at least to go back to the “good old days”, they may well be in for a big surprise. In a polarised political landscape that is the present-day America, one of the very few policies that can win and has won bi-partisan support is to stand up to China. Recent events do not help. In particular, the Chinese government’s role in the botched IPO of Ant Financial, an Alibaba affiliated company, have pretty much nullified Huawei’s carefully crafted and persistently delivered narrative that it is a private company and the Chinese government, or the country’s ruling political party, has no power to coerce it to do anything. If there is any change in the American policy towards China, it will likely be a more concerted front adopted by the western countries, thanks to Mr Biden’s team’s more collaborative approach towards its allies.

With that we wrap up this list of predictions for the telecoms industry in 2021. Depending on where you stand, some of what is predicted may be good read, some may be bad, and some may even be ugly, but it will not be dull year. None of our contributors has chosen to predict another black swan event like COVID-19, which is probably the last thing this industry, or the world, needs to go through again.

Incidentally, when this piece was going to press, Bill Gates, who has been in the thick of the battle against COVID-19, shared his insight into next year. “In the spring of 2021, the vaccines and treatments you’ve been reading about in the news will start reaching the scale where they’ll have a global impact,” he said. “Life will be much closer to normal than it is now.” Plenty to look forward to.