Huawei outlines path to future growth for operators - Mobile World Live

Huawei outlines path to future growth for operators

27 APR 2017

PARTNER CONTENT: With mobile operators facing stagnant revenue growth in most markets around the world, telco executives are anxiously searching for new growth streams to drive their businesses over the next decade.

Adding to their woes, operators need to continuously upgrade their network capacity to keep up with soaring data traffic. China Mobile, for example, saw average 4G usage increase 25 per cent in 2016 to 1GB a month – that’s 7.5 times more than 2G/3G usage. But its 4G ARPU is only about two times higher than 2G/3G ARPU.

That ARPU increase requires a huge investment. The world’s largest mobile operator spent CNY188 billion ($27.3 billion) on capex last year, adding 400,000 4G base stations. Even though its 4G network build-out is nearly completed, it is cutting capex just 7 per cent in 2017.

A path to sustainable growth, however, is out there as operators upgrade their networks, argues Qiu Heng, president of Huawei’s wireless marketing operations, who spoke at the company’s Global Analyst Summit in Shenzhen in mid-April.

He pointed to four key areas that collectively can help drive 2 per cent to 5 per cent annual growth over the next five years and boost mobile operators’ total revenue to $1.3 trillion in 2021.

The first is the business-to-consumer market, which currently accounts for the vast majority of operators’ revenue and can drive 2 per cent annual growth if telcos exploit their existing basic services such as big video and home broadband.

Video can be the new cash cow for mobile operators, with the entertainment market opportunity alone estimated at $650 billion worldwide by 2021, according to Huawei’s X Labs Insight. In addition to entertainment, the research unit forecasts the video communications segment at $18 billion by 2020 and use of video in vertical industries to be a $350 billion market.

China Mobile, for example, has a project in Zhenjiang province monitoring villages, restaurant kitchens and factories, with average revenue of $350 per year per camera.

Across the three segments, Heng said, video has the potential to be more than a $1 trillion business not only for mobile operators, but also for fixed-line operators. He suggests operators monetise traffic, as video will generate more than 70 per cent of data traffic in 2020. He said mobile players also can generate revenue by developing a video platform, especially for IPTV services, as well as a video ecosystem.

China Mobile developed its own video app, called Yishijie, which became the number one mobile video brand in Jiangxi province within a year. This is an example of an operator creating an ecosystem that uses a digital services platform to integrate video content from local providers.

Wireless everywhere
The second area is business-to-home services, with a focus on wireless-to-the-x (WTTx). X Labs sees this segment growing 75 per cent annually until 2021.

The vendor’s research unit found that more than 100 WTTx networks serve 30 million households and by 2025 they’ll reach 100 million households with speeds of 1Gb/s. The market will reach $120 billion by 2021.

Heng said operators are attracted to WTTx because of its lower cost per bit and shorter time to recover their initial investment – just two years. Another advance is quick deployment in as little as a day.

These networks then allow operators to develop and launch smart home services, such as emerging home management and video surveillance applications.

AT&T in the US, for example, had 560,000 digital life subscribers in 2016, with an average ARPU of $50.

Expanding boundaries
The third area is emerging applications where operators can develop the necessary ecosystems and expand the boundaries of their business beyond traditional services. The business-to-verticals (B2V) market is forecast to expand by 60 per cent a year for the next five years.

Huawei sees four key services with huge potential: connected vehicles, low-power wide-area (LPWA) IoT networks, public safety communications and mobile health.

Connected-vehicle services – covering infotainment, telematics and cellular vehicle to everything (C-V2X) – are projected to be a $145 billion market by 2021, according to an X Labs whitepaper entitled Smart Transportation Maximize Mobile Networks Value Beyond Connectivity.

LPWA connections are forecast to reach 3 billion by 2020, but Huawei says just 15 per cent of revenue will come from connectivity, with IoT integration and platform services like data analysis accounting for more than 50 per cent of future revenue.

Public safety services are expected to grow to $370 billion by 2020, while m-health services are predicted to hit $106 billion in 2022. Remote monitoring is one of the most promising areas within m-health, with an addressable market of about $69 billion, according to X Labs’ A New Era in Connected Health Care whitepaper.

While the technology for these emerging services is partially ready, Heng said the business models are not clear. “But operators can make money from these services today.”

Future focus
In addition to basic and emerging services running on mobile networks, X Labs looked ahead to future services and sees strong potential for connected drones, precise positioning services and mobile edge services (such as platform as a service or PaaS).

Although these services won’t be available for three to five years, Heng said: “continuous exploration and innovation of these areas will inspire sustainable business growth in the long run.”

Across the four segments, he said: “we have identified nine key opportunities in mobile development that can help mobile operators achieve 5 per cent annual growth until 2021”.

He emphasised there are clearly a number of areas beyond video that have the potential to bring concrete growth for mobile operators – they just need to decide where to concentrate their focus.


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