Telecom sector up for a strong shake-up across all three performance levers!

Not sure if bottom-lines will improve, but telco's should definitely grab eyeballs of every global investor

While this year, I could not, last year, same time, I had fascinating conversations with leaders across Ericsson, Nokia, Airtel, Jio at the India Mobile Congress. Two developments that caught my eye include :-

1. Monetization of network slicing

2. Growing relevance and adoption of private 5G across use cases in manufacturing and mining

While the year has passed by, to be fair, no major development has happened on these two fronts worth re-collecting. However, two new developments have now caught my eye in the last six months:-

1. Ericsson forming JV with 10+ global telco's for network API monetization 

2. Nvidia and Softbank coming up with AI-RAN along with plan to bring additional monetization sources for telco operators

Let's add these developments together along with some other developments like that of China Mobile plus ZTE bringing up the green Telco cloud. If we see these initiatives in totality, they are actually a strong suite of new age telecom offerings which are targeted on multiple levers:-

1. Increase in average revenue per user (ARPU) through network slicing and the JV with Ericsson which brings up a menu card to users to choose their set of micro services as part of API networks where different developers serve their custom dishes

2.  Wider set of offering suite is enabled at the telecom operator as while implementing the private 5G it earns a chance to command premium while bundling additional network services needed in implementation of a smart factory pilot initiative across both IT and OT layers

3. Bringing in significant cost efficiencies as recently articulated in the benefits of NVIDIA AI-RAN brought in partnership with multiple vendors such as Fujitsu for the radio unit, RedHat for the virtualization platform and obviously NVIDIA for the core orchestrator and Edge AI solutions

Add all this to recent US election results

Do you recall Trump administration's stance on net-neutrality? Do you recall telco and ISV's stance on net-neutrality? Can you relate the concept of net-neutrality to something like network slicing?

Net neutrality is the principle that Internet Service Providers (ISPs) must treat all data on the internet equally, without discriminating or charging differently by user, content, website, platform, application, or method of communication. This means that ISPs cannot block, slow down, or give preferential treatment to any specific content or services

So is net neutrality and network slicing competitive?

While any narrative can be built that suits the needs of the speaker, the fact of the matter is while net neutrality promotes equality, network slicing promotes preferential treatment

Does it matter anymore?

Trump administration has never been a promoter of net-neutrality and the current ties with Elon Musk should signal the start of a new era for telcos not just serving the United States but at a global level where every telco reaps the benefits across newer revenue opportunities, wider service offerings and higher operational efficiencies!

Telecom Industry Analyst Nithya S noted "Recent observations indicate that the telecom sector is not only adapting but actively reshaping itself, making it an increasingly attractive proposition for global investors and fostering new, revenue-generating business models. As quoted already, a notable example is Ericsson's joint venture with over a dozen global telecom operators, which aims to simplify API monetization while positioning telecom operators as key players in the digital transformation of enterprises. The rising demand for private 5G networks, particularly in industries like manufacturing and mining, offers telecom operators unique opportunities to command premium pricing, boosting their average revenue per user (ARPU). The debate over net neutrality versus network slicing raises critical questions about the future of service delivery and regulatory frameworks in an evolving telecom landscape. Another key observation would be the increased integration of AI, cloud, and blockchain technologies, to innovate new service offerings. With numerous partnerships in the works, telecom operators are well-positioned to capitalize on emerging opportunities in a competitive market"

Digital Transformation and Analytics leader, Prabhakar V at Tata Technologies noted "This is a sharp take on the telco transformation! The contrast between net neutrality and network slicing is especially intriguing, one pushes equality, the other prioritizes premium services. With developments like Ericsson's JV, AI-RAN, and green telco cloud, telcos are clearly aiming for new revenue streams, wider offerings, and efficiency gains.

The big question: can these innovations drive sustainable profitability, or are they just steps to grab investor attention? Time will tell, but the momentum is undeniable!"