The Telecom Operators VBE Model Part 5

Write your text here...

Reminds me of Steve Jobs quote, “Stay Hungry Stay foolish “and take the right path.

Huawei, Ericsson and Nokia (HEN) have faced an uphill battle in selling 5G equipment. Their VBE model is based on a "Data Pipe equipment provider" model and the telecom operators already have 4G and earlier networks providing services to their customers and these Huawei, Ericsson and Nokia (HEN) want them to scrap the 4G networks and upgrade to 5G network equipment. They(HEN) are missing the point that the 5G network does not lead to a value add to most of their telecom operator customers and they also do not give services which will enable new revenue streams if they switch their equipment to 5G networks, neither have they thought through how the 5G will help deliver new services to the end customers of the telecom operators. The niche areas like driverless cars, online network gaming etc which can benefit with 5G network are only a small percentage of the revenue streams which make sense to have 5G. While they have kept their eye blind to how 5G could help the majority of customers through Security, Sustainability and material circularity. This would necessitate changing the "Data Pipe Equipment " provider model to an "identity and use equipment " provider model. This model with partnerships, will create value to the telecom operators customers and also boost the revenue streams of the telecom operators if they use 5G networks to deliver solutions in security, Sustainability and material circularity. And the (HEN) Companies will have challenges in the future if they stick to their "Data Pipe Equipment" provider Model and neglect the 3 primary assets the telecom operators are sitting on to provide a "Identity and use equipment" model. There are two alternative paths they can proceed on, one path takes them to irrelevance where they will be replaced by better VBE model companies or to the relevance path where they will have to think before they proceed. The choice is theirs. There are two word which I focus on in the blog, one is Tower and the other is Communication. I have chosen the two words as with the first word there is history in the telecom Industry as I highlighted in yesterdays blog of optical towers in 1792 and communication as that has to be the direction the HEN companies should explore in.

First let us take the word Tower.

The concept of "Tower" has evolved significantly. In 1792, Claude Chappe and his brothers built an optical telegraph system in France, connecting 556 stations over 4,800 km for military and national communication. If electricity had never been discovered, this system could have expanded globally, employing one operator at each optical tower to relay messages using telescopes and mechanical signals. These optical towers only worked during clear weather conditions and daylight time.

With the advent of the electric telegraph, communication became faster and more dependable, unaffected by weather or time of day. This same evolution applies to modern cell towers from Ericsson, Nokia, and Huawei. Originally serving as optical towers, they have transformed into cell towers covering 25 km each. Telecom operators continually upgrade from 1G in the 1990s to 5G today, with 6G expected in the 2030s and 7G in the 2040s.

The analogy to the Optical telegraph was the means to transmit information which gave advantages over transmitting the message over a horse carrier. Having the towers manned across fifteen kms of optical sighted towers, is similar to the dynamics of telecom operators making a site ready to receive Mobile signals. The typical coverage area of a cell tower is 5Kms in dense urban environments.

Now take the same development which overtook the optical towers business of Claude, the electric telegraph, and the same development we see today of satellite communication providers called LEO companies like Starlink etc.

No need to maintain towers and an organisation like a telecom operator who caters to keeping the cell towers working and in good condition and would in the future give high data connectivity speeds and low latency and soon a direct connection to your phone. And the government has already got the money by auctioning the bandwidth use to the satellite companies. So where would the Ericsson Nokia and Huawei’s cell tower Infrastructure business be in the next 20 years in the face of new developments like LEO Satellite companies. It looks similar to the fate of Claude Chappes optical towers after the electric telegraph arrived. This word was the disadvantage I pointed to for the HEN companies. Now lets look at the cards they have in their hand with the word communication.

Now lets us consider the second word communication. The word communication signifies exchange of information. The reason people and companies communicate, and exchange information is to make a change in their life. What are the actions that they can help their customers to ensure the advantages of communication and what are the challenges the world wants to be addressed today like Climate change and circular materials models, can our 5G and 6G technology address that, And I believe 5G or 6G communication enables IOT device communication which can help address the climate goals. But the companies need to build it into their offerings to the ecosystem, so that 5G or 6G brings a value that the world does not have today.

All is not gloom and doom if they understand the basics of VBE models, VBE models deliver value to an ecosystem that accepts the value. And there are three pieces of oilfields the telecom operators are sitting on which are.

1. Verified identity of the person or organisation.

2. A communication link to the user

3. Location of the user.

In addition to that there are challenges the world faces of keeping to within the 1.5 degrees change in global temperature average.

But the CEOs of Ericsson Nokia and Huawei are caught up in their world of 5G,6G and low latency and high data speeds to give any thought to the VBE model their companies represent and which will be swept away soon. The Nokia CEO gave a lot of presentations talking about Climate change in Nokia presentations, but no actual steps to make that happen. There is a difference between speculation and having a humble attitude to listen to changes to make it happen.

So in this story of VBE models for telecom operators equipment suppliers, I have presented two roads an equipment maker can take, one is understanding his VBE model and evolving the model to take a path that addresses the requirements of the stakeholders and also the business of communication they are in or take the second path and be blind to the evolving VBE model for communications and take the road to irrelevance.

Claude Chappes Optical Communication tower with regulators, Indicators and telescopes

Todays Modern communication towers