FUTURENET WORLD, LONDON — "If you build it, they will come" worked as a catchphrase for the 1989 baseball movie "Field of Dreams." But it's a lousy way to run a business.
In the movie, Kevin Costner plays a troubled Iowa farmer who hears a spirit voice telling him to build a baseball diamond in his cornfield.
Like Costner's character, telcos have been building on faith.
Telcos transitioned from 3G to 4G to 5G based on the expectation that demand would materialize, noted Bruno Zerbib, Orange executive vice president and group chief technology and innovation officer, at a panel here Wednesday morning.
Now, as telcos deploy AI and cloud APIs, they are planning services to meet customer demand and building to meet that demand, Zerbib said.
This transformation includes embracing simple standards that unlock relationships with developers, he said.
"The telecommunications world is not just embracing the technology of the tech world, but also the culture of the tech world, and becoming more agile," Zerbib said. "We are starting to think about what are the key use cases that can be monetized."
Developers can work with telcos to implement quality of service, identity, security and location services so that — for example — a game like Fortnite delivers optimal play experience on mobile devices, Zerbib said.
Demand-based network design
AI is changing network topology requirements, Zerbib said. AI workloads are distributed across networks — in devices, in geographic locations separated by continents, on the network edge. For now, AI interactions are mostly text-based, with chatbots like ChatGPT, but by 2027, these interactions will be multimodal, with a lot of real-time video uploaded to the network for AI analysis, Zerbib said. Until now, networks have been built to assume large data download volumes, but soon AI will demand large upload volumes. Networks will have to adapt.
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For more on that very topic, see our free Fierce Network Research report: "Redefining Connectivity for AI-Driven Enterprises: The unexpected evolution of SD-WAN.".
Delivering the quality of service demanded by emerging network applications will enable telcos to escape the trap of capturing 1% of value while tech companies grab 99%, Zerbib said.
Meanwhile, data volumes are declining, from traditional 50% year-over-year growth to more like 10%, said Gabriela Styf Sjöman, Managing Director, Research and Networks Strategy, BT Group.
Pricing strategies will fundamentally change, Zerbib said. We've grown accustomed to all-you-can-eat pricing — unlimited data, anytime, to anywhere. And we see the same kind of all-you-can-eat pricing in IT services, like Microsoft 365, OpenAI, and Netflix, which charge flat, monthly fees. Those IT services will soon have to start charging based on usage, as AI places expensive demands on pricey GPUs. And telcos will have to follow suit, hearkening back a generation to when telcos charged more for long-distance and less for calls made at night. Telcos will charge more for add-ons like guaranteed quality of service and network slicing.
Telcos will have to transition from building one-size-fits-all networks for the masses. "It's the best effort for everyone, and whatever we built for the masses was good for our business customers as well," Sjöman said. Instead, telcos need to build for specific, edge use cases.
Simple standards succeed
Telcos will have to work together in unison, delivering on simple standards. "If we're not able to simplify our face to the world as an industry, [developers] will find other ways to solve the problem; they will work around us," said Cathal Kennedy, acting EVP and group CTO of Telenor.
Mark Newman, Chief Analyst at TM Forum, agreed. "Application developers have a history of working around connectivity, not working with connectivity," he said.
Newman added a dose of skepticism. "I agree with all of this — but we had this conversation 10 years ago. Are we really doing this?"
And indeed, all of this — capturing value from IT providers, and moving to a more agile demand-based business model — has been discussed for at least a decade. There's even a cringe business buzzphrase to go with it: "telcos to techcos."
But it's also true that telcos have been squeezed financially by increasing costs and demand. That can't go on forever, and things that can't go on forever inevitably stop.
In "Field of Dreams," the main character built his baseball field and they did come. But in the real world, telcos don't have spirit guides and have to instead base planning on reality.