2016 was definitely an interesting year in terms of significant advancements in the telecom industry as a whole, but what does 2017 hold for us? Check out the latest predictions!
Commercial deployments of fully standardized, standalone mobile 5G technology are not expected to happen before 2020. Although Verizon is set to begin piloting 5G in the form of fixed wireless access (FWA) towards the end of 2017, we expect mass 5G deployments to still be at least six years away. Until then, Northstream predicts that operators will invest heavily in the advancement of LTE standards, rather than going all-in on 5G before it has been fully standardized.
Telcos will further invest in evolving LTE-Advanced through measures such as cell densification, MIMO and carrier aggregation (in both licensed and unlicensed spectrum). The costs of deploying 5G will be extensive and operators will only invest in 5G technologies if and when these can offer clear benefits compared to 4G standards. Most operators will first want to make sure that the three use cases mainly associated with 5G, namely massive IoT, ultra-reliable communications and enhanced mobile broadband (eMBB) are economically viable for them.
As indicated above, much of the progress towards supposedly 5G speeds is already underway. Carrier aggregation has been around for a while, but we're getting better at it and the trend towards creating many parallel pipes - i.e. MIMO - continues. Already news are everywhere about a new wireless speed record being set on an almost daily basis and by this time next year it's likely the 5G target of 1 Gbps will have already been reached on a commercial network.
For the coming years, Northstream sees the bulk of network investments taking place in existing installation upgrades rather than new roll outs. It's also believed that operators are keen to maintain a power balance between the top three global vendors. This will lead to a stabilization of market share and will ease the price pressure for infrastructure vendors.
In the long run, increased price pressure will further force the infrastructure vendors to consolidate and thus create an unbalanced and unfavorable market for operators. It's in the operators' best interest to maintain at least three global vendors to secure long-term competition and technology development.
Moreover, Northstream predicts a breakthrough and strong growth in NFV activities in 2017. The incentives for operator implementation are high as some new services (e.g. VoLTE) will benefit from virtualized network functions and some future ones (e.g. network slicing) are dependent upon them. As a result, NFV in 2017 will be driven by services such as VoLTE, carrier cloud, WiFi calling, service chaining, resource sharing and network slicing. In parallel, NFV will be driven by the natural evolution of existing infrastructures, rather than acting as a replacement strategy for operators.
Though their focus remains on generating operational efficiencies, the real driver will be the new services NFV creates. For example, NFV provisions service chaining for network functions; which means that network services can be configured dynamically in software without having to make changes to the network at the hardware level. More importantly, a new set of services are emerging which are dependent on NFV.
Another prediction is that telecoms and media will become increasingly hard to tell apart. The fact that Verizon hasn't already ditched Yahoo speaks volumes about how keen operators are to diversify into media activities. The fashionable solution to declining ARPUs for operators is multiplay on steroids - not just bundling content with connectivity but owning it too. Extrapolating this strategy will see consumers turning to a very small number of providers for their every techie need: hardware, connectivity, content, IoT, in-car infotainment, etc.
The consolidation of telecoms and media is happening in Europe too and Telecoms.com believes it's not inconceivable that M&A will be seen going in the other direction, with content and internet players buying their way into connectivity. On the vendor side, Huawei is betting that ‘big video' will be a key growth area for operators as we increasingly consume our video on demand.
Furthermore, globally, operators' IoT revenues as a share of total revenue have been increasing steadily over the last few years. Some operators are now generating up to 1% of their revenue from IoT services and Northstream expects that though most will remain under or around 1% in 2017, a selection of leading operators in the US and Europe such as AT&T, Vodafone, Telefónica and DT will succeed in reaching up to 3%.
These players are capturing revenue not only from connectivity, but also from system integration, security, analytics, connectivity management platforms and vertical solutions. In addition, these large operators have also struck major deals in the connected car market, which has high ARPU and growth. As IoT grows in the next few years, we expect to see even bigger differences in operator revenues across regions and based on operator size and positioning in the IoT value chain.
On the other side, in 2017, automatic speech recognition (ASR) will approach maturity and go from hype to everyday life, from a niche market technology to mainstream adoption. It will have broad applications and a huge impact on both smartphone and IOT devices. However, in stark contrast to historical trends, Northstream thinks Europe will trail behind the US and China in the adoption of this innovation. This will be due in part to language barriers, but also to the lack of investments and the slow pace of innovation within the European local markets towards the growth of ASR technology.
The rapid innovation and commercialization of IoT is supporting the growth of ASR, especially in the domain of smart homes, wearables and smart cars. In 2015, 95% of Apple watch users reportedly used Siri, of whom 50% used it daily and 31% used it several times a day or more. These numbers greatly exceed the frequency of Siri usage among iPhone users. Google claims that 20% of its searches are through ASR. However, ASR usage and satisfaction levels remain relatively flat in Europe as progress in languages other than English and Chinese has been limited. ASR is improving quickly, but to realize its greater potential, it needs to be combined with other AI technologies, such as natural language processing and deep machine learning.
As a final prediction, machines will become self-aware and conclude human beings are obsolete. Artificial intelligence has been a major technology theme, from computers beating humans in games to the growing automation of previously human-only tasks such as customer service. One byproduct of the growth of cloud computing has been the ability to introduce super-computing into every day scenarios, which has greatly assisted the spread of AI. Telecoms.com warns that if human decisions are removed from the work place, AI will begin to learn at a geometric rate.
