The Future of Telecom in the Web3 Era

Perhaps no other industry has contributed as much over the past 25 years to the well-being, productivity and expansion of economies as the telecommunications sector.

Most operators were born almost 100 years ago to produce sound. But no one wants to pay for voice anymore. So operators have new challenges with new networks, and they have to figure out what their new purpose is, what their new core product is. They were lucky to find clues. Data is something that everyone wants, and data volumes are growing 30-50% year-on-year, but until now operators have not been able to monetize data.

However, the transformation is here, they should no longer consider this telecom industry as the traditional telecom industry that built the voice ecosystem. It’s a different ecosystem, a different, much more intelligent network that’s more like a big, decentralized computer that’s compatible with blockchain. And so, it’s a whole new era for mobile operators. Most major operators understand that the Web3 concept is a new version of thePage and that it is moving towards a three-dimensional Internet. Models that are built for the 2D web will not necessarily work for Web3.

Web3 is the combination of several technologies: fiber deployment, autonomous 5G, edge computing, edge computing, networked or network-integrated blockchain, cyber security, network software (virtualization). Below is a summary of one interview of José María Álvarez-Pallete López who is Chairman and CEO of Telefónica

Delaying

Goodbye embedded model, hello layerless capabilities.

Operators must decide which network elements they can build their future with, which are strategic and which are non-essential. It’s not about delaying, but it’s also about disabling legacy networks, those that won’t be fully integrated into this new Web3 concept. So the delay has to have a purpose, which means you can create value with the delay, but it has to align with your strategy. They need to launch new growth engines for the company, Orange, Deutsche Telekom, Vodafone, Telefonica have realized this as they continue to pile layers of complexity on their companies, either based on legacy systems or adding new layers like video initiatives, cloud. or cyber security.

But it is essential to delay the complexity. Because if you want to integrate a business into a seamless platform that will interface with other layers, the less complexity you try to integrate into that platform, the better. For example, the various operators have mostly created or co-created companies that manage their tower infrastructure. Thanks to this, some have been able to gradually crystallize the value of the towers in the future, selling the business at a very high multiple. At the same time, they have created a secondary market for the towers, which is a resource they will need in the future. So they were able to reinvest some of those funds into fiber and 5G deployment, and be ready for standalone 5G, while reducing their debt.

Another example Deutsche Telekom expanded its strategic investment in Teridion with a $25 million equity investment, further strengthening its partnership with the Israel-based provider of multi-cloud wide area network (WAN) connectivity solutions. enterprises can dynamically create and use cloud-hosted connectivity as needed: connect their sites to cloud centers, applications and support their employees from anywhere. To make this work, Teridion is deployed in 25 different cloud providers and extends its network to 500 points of presence worldwide.

The delay is an important part of the strategy because as he sets up this new strategy, they reallocate capital.

New model

A few years ago mobile operators defined a single voice standard applied worldwide. And thanks to this success, they were able to create one platform with more than six billion people, perhaps the most influential platform in terms of creating well-being in the last 25 years through the mobile phone!

Operators need new models with open APIs. Now imagine putting these APIs on hyperscaler stacks. And whenever someone develops code for a new business model, they can remove lines of code not only from the hyperscaler side, but also from these sets of global telecommunications standards. It would work for identity, cyber security, billing, signage, geolocation. Having common APIs allows companies to integrate their complexities into this platform?

If a company’s development teams are mixing code with mobile operators’ APIs. And if so, then there is a new source of revenue from developers who will use your APIs to build their business model. Currently, any such integration, for example with Netflix on a network, CDN, is done on a case-by-case basis. But in the future this kind of integration will be done during the creation of the next Netflix.

Other songs

Today, around 56% of European network capacity is used by just five OTT (over-the-top) players who pay nothing for network usage. The huge increase in traffic during the pandemic has highlighted that there is an asymmetric effort here, surely it is time for more players to pay their fair share of the cost of investing in networks. If you’re a hyperscaler, you’re already paying both developers and customers. If you’re Uber, you charge drivers, but you also charge passengers. App stores are not only funded by customers downloading an app, a developer has to pay a certain share of revenue to offer their product. The question is not new. Especially since Europe has a digital agenda which specifies targets for fiber deployment and financing in the coming years. According to the first estimates, there is a deficit of 300 billion dollars to achieve the announced investment targets. Will it be difficult to force existing players to meet these targets if they do not perform well?

Currently, European telcos spend around €20-40 billion in network capacity investments every year to cope with these recent massive traffic increases. If the negotiations can lead to making this a joint effort between the telecom and OTT players that are driving traffic growth, we believe this could drive an additional 1.5% of GDP growth for the European economy.

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