The mobile industry should learn from the mistakes they made in the past if they want success in the future – Review Strand Consult’s record on predicting the developments of the mobile industry, 2002 to 2016
The fact that the telecommunications industry has challenges is not a news. In fact, the challenges facing the industry with 5G today are no so different than those they faced when moving from 2G to 3G and from 3G to 4G. In this research note, we have found some of our old research notes so that you can see how the facts have proven Strand Consult’s predictions.
Since 2002, Strand Consult has published predictions. Each year we provide a link to predictions to all the previous years. We believe that one shouldn’t judge the fortune teller on what he says about the future, but whether he was right in his predictions in the past. Strand Consult’s predictions having consistently proven true, and you can find our old predictions here.
Right now, there are many who talk about 5G and have unrealistic expectations for 5G, reminding us of dreamers from the days of 3G. Back in 2002 Strand Consult was first to publish two exciting and comprehensive reports that documented that South Korea (not Japan) was the world’s most advanced mobile market. We sold these reports to operators around the world. One of our conclusions was that 3G would not give the growth in revenue and earnings that many predicted. We got right, but many who didn’t listen to us lost a lot of money on the 3G hype. See our 2002 research note on South Korea, the leading mobile market at its time.
We used our research and insight into the South Korean market to tell operators that to be successful with 3G, they needed to make structural changes and move quickly ahead. We describe this in a 2002 note Status on the 3G survival game – Many operators are 2-3 years behind schedule, and in danger of not making it to the finishing line.
Experience shows that some operators listen and learn but others don’t. In 2009, we repeated much of what we said in 2002, which still rang true. In the note from 2009 The 10 biggest challenges for the future mobile broadband service business models In 2017 the challenges that we described in 2009 (and in 2002) still remain, and operators still have not addressed them.
With each new generation of technology evolve, you need to run your business more efficiently.
When you go from one generation of network technology to the next, you also need to make your business more efficient. It’s not just about upgrading mobile networks, but running them more efficiently and reducing costs. Back in 2002, we told the story about how the South Korean government played an active role in the consolidation of the mobile market when it went from 5 to 3 operators. You should read this note from 2002 The consolidation from 5 to 3 mobile operators and ban on mobile phone grants boosted the 2.5G rollout in Korea!
Fortunately, this has been understood in the United States where we have seen consolidation and a high level of investment. Europe unfortunately has gone the opposite way, fighting against consolidation for political appearances rather than making the industry more efficient. We made this note in 2016: EU competition authorities’ email to Strand Consult reveals the lack of evidence for statements used to support denied mobile industry mergers.
One way to reduce costs is to address the market using a combination of MVNOs and sub-brands, a strategy that made KPN (E-Plus and Base) successful for a long period of time. We described this strategy in 2002 in Sub-brands can help European mobile operators become profitable.
Put simply: it’s about running a cost-effective business. We described this in 2007 when we made this note Lean and Mean is the way forward for a great many mobile operators. These research notes illustrate how Strand Consult provides its audience telecom access to visions and cases from around the world. In 2008 we made a note about the politically unpopular things about the industry, the things that everybody know but nobody dares to say. “Strand Consult has identified 10 taboos in the mobile industry”
We can learn a lot from the iPhone, but it has not added value to mobile operators
Strand Consult was critical of the iPhone which was introduced in 2007. We have nothing against the product, but we took issue with the claim that Apple and the iPhone would create value for mobile operators shareholders. We were right, and our repo 2009 story shows it, The story behind Strand Consult’s iPhone report. Apple may have baked a big cake, but they did not share it with the operators.
In 2011 we looked at this topic again and in The sales of smartphones is currently exploding, but are mobile operators experiencing similar growth on their bottom line? We concluded that the smartphone did not add value to mobile operators’ revenue and earnings.
Strand Consult predicts that 5G will not give mobile operators higher revenue and earnings. In fact, we believe that it will be the device and OTT service providers that will snatch the 5G cake, leaving operators yet again with the bill for infrastructure and spectrum. Politicians like to grandstand on 5G, but it will be no goldmine for mobile operators.
Many mobile operators overlook the low hanging fruits.
For Strand Consult we have been working on a number of projects for several years in order to change the regulatory framework for building infrastructure. We succeeded in Denmark to significantly reduce the costs operators expend in infrastructure by working with stakeholders to build frameworks to fast track the deployment of networks. While Danish operators experience declining site rental prices, this is not the case from the rest of the world. See our 2013 note Increasing rental costs for countries where mobile masts have been erected is a ticking bomb under the mobile industry.
It is not only mobile operators that are affected by these challenges; infrastructure vendors are also affected by rising rental costs and regulation that make it difficult and expensive to build infrastructure. See our 2013 note Infrastructure providers are losing revenues to do operators’ challenges
In 2017 many operators still don’t understand the market, and it costs their shareholders money every day.
The US moves ahead and the EU falls behind, again. There is a lot to learn from the pro-market model that makes American model a success. Strand Consult works with mobile operators around the world and have has firsthand knowledge about what is happening. In 2014 we made a report that looked at compared US and EU telecom policy. See this note The EU’s broadband and telecom policy is not working. Europe is falling further behind the US.
The EU’s telecommunications policy is a disaster in many ways, and it is certain that 5G development will take place outside the EU and in other parts of the world where politicians have a vision to for the mobile market or at least will not stand in the way. But the failing of the EU should be no surprise. We have called it for years. See our 2015 note EU Commission’s schizophrenic telecom policy: hurts investments, costs jobs, and pulls EU’s digital development even further back compared to other parts of the world.
Learn from past or be doomed to make the same mistakes.
Operators should study mistakes and learn from them, but that doesn’t mean that they should not have ambitions. They just need to be realistic and tap Strand Consult to help them navigate in a complex world. For yet another example of Strand Consult’s expertise, see our previews and postviews of the Mobile World Congress, which we have been doing since 2005.
To succeed in the telecommunications industry, you must combine knowledge, experience, vision and savvy. To understand the market today, it is not enough to recognize technological developments and business models; understanding policy and regulation is also necessary.
One shouldn’t judge the fortune teller on what he says about the future, but whether he was right in his predictions in the past. Strand Consult has correctly predicted the market for nearly two decades. We have the experience and an international team of experts to get it right. You can hire us to conduct a workshop for your management and board of directors. Contact us today so that you are smarter tomorrow.