At Ericsson’s pre-MWC get together I sat down with CTO Erik Ekudden and former Vonage head Rory Read, now Head of Business Area Global Communications Platform to find out if anyone is making money out of 5G.
I haven’t seen that much evidence of anyone making much money out of 5G yet. Is that a correct assumption and, if it’s not, can you tell me where that money has been made?
Eric Ekudden: There are two parts of this – one is the uplift in ARPU that we see now in the markets where you have leading 5G deployments, where you have rollout basically countrywide or you’re getting 5G everywhere so you get that boost of performance.
But are you able to charge more for 5G?
EE: There’s good data for the top 20 countries, top 20 operators, where you start to see that the ARPU is going up. And I think that’s because people go for higher price plans or high value plans, which including 5G.
And that pricing would probably be for data allowance or something like that?
EE: That’s one part but also in some of those you have connections to media experience, there are more packages that constitute this ARPU uplift. So on the consumer side you see ARPUs coming up – it’s not by a whole lot, but it’s coming up. And the other part which I think you’re right to ask about is: what’s really happening with 5G beyond consumers?
Do we see something in the early days of smart manufacturing – which is something for the mid to long term – something in terms of smart transportation… we have showed a few of these cases, there there’s no question that there is willingness to pay.
You are replacing a lot of old fashioned local infrastructure, in some cases, no infrastructure, and you get [benefits] immediately. But they are relatively few cases today, so you need to get them to scale before you see it in the numbers…
I guess that’s where your core business case comes in. Because for that to scale, there needs to be a hell of a lot more infrastructure, a lot more radios and dots…
EE: There will be more dots, there will be more local infrastructure.
Rory Read: But they’ll be much more in terms of API’s built to leverage that technology, not just through the subscriptions and the billings through a CSP, but [which] really pull from enterprises and other use cases that are taking these programming bits that are going to leverage this combination of network delivery across the planet – new enhanced features and functions – and then to embed that into workflows, applications and functions on these new use cases that leverage these kinds of activities. That’s going to be a big driver.
You’ve naturally led onto the Vonage angle there – how do you think the markets received the acquisition? Do you think people understand why it was worth Ericsson taking such a big punt on Vonage and how it will eventually pay off?
RR: I think what’s happening right now is people are understanding the concept. So let’s look at it from two angles, one from enterprise and consumers and one from the CSPs and the network, the telcos… I think it is an industry level play. [CSPs] missed the cloud in a significant way… they were late in that space and they weren’t able to participate. This is an opportunity where they can truly leverage this movement around API’s and leverage network capability to build the use cases and build the foundation on which these use cases will be leveraged.
[CSPs] missed the cloud in a significant way… they were late in that space and they weren’t able to participate. This is an opportunity where they can truly leverage this movement around API’s…
And I don’t think anyone is in a better position, because if the CSPs tried to do it individually, they’re too regionalised – they can’t do it on scale and they can’t deliver. Ericsson plays this centralised role inside of the industry and with the relationships… and with the combination of our technology and cloud experience at their access to expose the network… their relationships with the customer, this is the catalyst.
This is an industry wide event and it’s a make or break one. If they don’t do it and it doesn’t happen properly for the industry, they miss again. This is an industry opportunity to change where the technology and the architecture is built. From the consumer and from the enterprise perspective, they are dying to get new capabilities to deliver advanced use cases.
The whole next generation of telemed is going to be huge. There’s real diagnosis, my daughter in law just had a diagnosis on something, she got the proper medication and in two days she was better. This is just the beginning. But where is it going to go from here? All of these use cases are going to drive… I’ve been in this industry more than three decades, this transformation of the industry, it’s been driven over the last 10 years by 4G first with the consumer and 5G now… it’s the bandwidth that’s opened up to the smart devices. That’s enabling this next generation, and the merging of physical and digital experiences is going to really happen.
This is a bet on an industry wide pivot and an opportunity where the winners and losers are not set, and this is our opportunity as a community to get it done.
This got talked about 25 years ago, okay, but it couldn’t be done. 10 years ago the experience was terrible, five years ago they were unusable… in the last four years they’ve accelerated, and it’s only accelerating from here. And if we expose the proper network capabilities, we’re going to introduce those devices that will determine how successful this is. This is a bet on an industry wide pivot and an opportunity where the winners and losers are not set, and this is our opportunity as a community to get it done.
It strikes me that the companies best positioned to exploit those opportunities are probably the big public cloud giants. So what do you think CSPs can do to make sure that public cloud doesn’t eat their lunch?
EE: Yes, we both have seen this movie play out before. But I do think that operators are now getting to a point where they realise that the network is their biggest value, which means it’s not the cloud platform as such, but it is the way that I tried to depict it with devices and cloud. And that is why I think that cloud providers on their own cannot do it. This is not just about the network knowledge and the reach around the world, it is also about how does this ecosystem really function?
What is needed to make it tick? Chipsets, the devices, end-to-end testing new features and functions, I always talk about this as the fastest growing technology industry there is, even compared to cloud, because it’s actually moving new features and functions faster even than on the cloud. So I think they realise that they have something unique and they want to hold on to that. We want to work with them because collectively we can actually get to the global scale. Some of them are of course feeling that this is a tough time, because there is competition and the developer ecosystems are very, very clear, also on the cloud side. But that’s really where it comes into to the network piece and the CPaaS and UCaaS… because this is again, complimentary. We’ll see who comes out as winners and losers to your point, but it is really a new area that we’re forming.
RR: What’s interesting is that these CSPs have a different kind of view. In my first eight months being part of the team, I always viewed the network as a black box. Most developers do. We don’t get exposed to the real technology and support… cloud [providers] are going to give kind of lowest common denominator API’s in this space. That’s fine, they’ll do that and they could be successful over time. But the real players here are the ones that can expose the really differentiated capability. With Ericsson and the CSPs, there’s an opportunity to create APIs that are truly differentiated, and create these different use cases that are able to happen.
Cloud players and other players will introduce APIs, but they won’t have the exposure and the access to the full network.
And what I’ve seen in my first eight months here is… I’ve met with a lot of CSPs at the very highest level and they’re interest in CPaaS is real, they see it as an opportunity to go after this space and prosecute this opportunity, and not to miss this this change. And I think that the combination of Vonage, Ericsson and the CSP are uniquely positioned with their knowledge of unlocking it.
Cloud players and other players will introduce APIs, but they won’t have the exposure and the access to the full network. Now we’re going to make them open, because we want it to be big, but we’re going to be the first movers in these spaces to introduce these new opportunities. And we want them to ultimately be successful, just following us with the CSPs down that path.
For those people who are still sceptical going into MWC that 5G is delivering return on investment, can you each of you give me a single use case or killer app to reassure them?
EE: I’m not going to give you [only] one… I’m excited by what we see in the entertainment space. immersive experiences in stadiums… augmented reality. I know it’s early days, and you sort of get a part of that experience. But I think that that’s exciting because it really shows that also on the consumer side, there is value in 5G. I think on the enterprise side, I can just go on and on and on because we have so many good proof points. You could call them killer applications.
Do any stand out?
EE: The best ones today they are related to mundane things… about connecting your drones and UAVs, to the efficiency gains in in smart utilities, smart transportation, smart manufacturing. Those are the things that really bring back the business.
RR: What gets me excited about it is all these applications or use cases, they’re going to be powerful. It’s this concept of a platform for network APIs. Whether it’s implemented by this troika of Ericsson, Vonage and the CSPs, or some other party is going to happen. I think we’re uniquely positioned and I think that platform of enablement, the combination of bandwidth and higher level feature function that comes with 5G and 6G. That’s what changes the game in a whole set of use cases. That’s the platform, that’s the component, that’s the piece that changes the game. And that’s the race in the industry right now as to who is going to create that capability and allow this ecosystem take advantage. I think we’re in a good spot to do it.