Quarterly insights on Bridge Member Operators: 4Q2023

 

Dear all

Happy New Year!

At this early phase in 2024, we look to our consulting and research friends for some crystal gazing to see what’s coming up for the telco industry—and it seems a lot of industry chatter is still about artificial intelligence (AI). Here are some of the telco trends that the likes of Juniper Research, Nokia, EIU, Analysys Mason and Gartner foresee for this year:

• AI including Generative AI will revolutionise the automation of personalised marketing campaigns in a number of ways (e.g. Chatbots and Conversational AI, multichannel marketing, user segmentation)​
• Telco APIs increasingly gain traction, helped by the sharp rise in the price of SMS to enhance connectivity, communications and develop new services and applications. Businesses & developers are exploring alternative communications channels via open APIs, such as Number Verify and Silent Authentication​
• 5G Advanced, an evolution in 5G which will empower a diverse new range of industry verticals, such as mobility and XR, is expected to expand this year and will bring significant benefit to entertainment and education sectors
• Satellite Launches to Accelerate: The surge in satellite capacity is fostering numerous telecom partnerships and contributing significantly to growth opportunities. Expect major development of compatible services including 5G IoT, 5G mobile broadband and 5G mobile subscriptions
• Growing Importance of Cybersecurity​: Companies undertaking digital transformations to address associated cybersecurity risks amidst escalating threats and stricter regulatory compliance​
• Initiatives to Cut Costs, Seek New Revenues in Asia​: Drive for cost efficiency in stagnant mobile markets is acute (option to share active network infrastructure or focus on fixed broadband market in developing Asia, boosted by benefits of fixed-mobile convergence)​

The year has only just begun, but we like most in the industry are already in full swing of preparations for the upcoming MWC Barcelona 2024. Drop us a note if you want to meet!

 

IoT/M2M

The future of IoT continues to look bright. Services such as security, cloud and IoT continue to grow at double-digit rates, thus making a real difference to operators’ balance sheets.

There were interesting announcements from Softbank, which is working with MVNOs to address the global and APAC IoT opportunity. First the decision to acquire a majority US$513 million stake Cubic Telecom, an MVNO focusing on automotive and connected cars, a purchase made not through its Vision Fund but an investment from Softbank Corp itself. According to McKinsey, Cubic Telecom is poised to capture a leading share of the rapidly growing connected vehicle market.

You may recall that Softbank took an equity stake in 1NCE in April 2022. From October 2023, SoftBank launched a ‘full-fledged expansion’ of its global IoT business in 19 markets in APAC including Japan, focusing on exclusive marketing of IoT services–mainly the 1NCE IoT Flat Rate–to enterprise customers.

Over in India, Airtel, announced that it has formed a strategic partnership to power up to 20 million smart meters with IntelliSmart Infrastructure Private Limited, a leading smart metering and digital solutions provider. This marks Airtel’s foray into smart metering applications and will significantly contribute towards Airtel’s fast-growing IoT deployment across sectors. Airtel’s IoT proposition includes its proprietary platform the “Airtel IoT Hub” which will help the utility track and monitor these smart meters with advanced analytics.

In December, Singtel became the latest operator to successfully complete its trial of RedCap – the next evolution of 5G radio technology, on its 5G network. Specifically designed to support mid-tier IoT devices, like smartwatches and industrial sensors, 5G RedCap offers an opportunity to diversify network use cases and drive network monetisation.

 

5G/Innovation/AI

Rollout of 5G networks has indeed been widespread, bringing new possibilities and behaviours to smartphone users.  There are already signs that 5G users spend more hours engaging in new experiences such as cloud gaming and AR compared to their 4G ‘counterparts.’

The digital divide between more advanced 5G markets and those at a slower pace is widening. The former are already transitioning to a 5G-SA core network architecture to improve network performance through higher speeds, more bandwidth and capacity, while there are markets where 5G has just launched, or is yet to launch.

Optus has secured 20MHz of mid-range 3.7GHz spectrum in the latest Australian government auction, which looks set to bring consumers in key growth areas like the Gold Coast better network experience. The telco won four spectrum lots for a total of A$33.5 million across North NSW and South Queensland, adding to Optus’ existing 35MHz holdings of 3.6GHz spectrum in this area.

AIS announced Asia’s first ever 5G Standalone (SA) roaming connection to stc Kuwait, also our BMO. The achievement is the result of a partnership with international connectivity provider BICS, the first of its kind to offer a direct connection with AIS SEPP (Secure Edge Protection Proxy) and a full service 5G SA Service Hub to stc Kuwait. The successful connection enabled AIS and stc Kuwait to deliver an international 5G roaming connection carrying data, texts, and calls using a 5G mobile core network.

Singtel inked an agreement with Chunghwa Telecom in December which aims to leverage Singtel’s Paragon platform strengths to create an integrated service platform for 5G network slicing and cloud applications. This platform will enable customers to rapidly deploy their 5G slicing applications and access the necessary cloud resources.         

In Macau, CTM joined hands with China Mobile Hong Kong, through its parent company CITIC Telecom’s international roaming hub (IPX) platform of CITIC Telecom, to realize the first 5G SA+VoNR roaming trial between Hong Kong and Macau which can further enhance 5G roaming service experience. The collaboration provides a new 5G roaming service with seamless, high-speed and high security experiences.                 

In Indonesia, Telkomsel, in partnership with ZTE Corp., has launched MarineMobile, a long range mobile communications solution leveraging ZTE’s 5G devices, which aims to help fishermen overcome the operational challenges they frequently encounter. Leveraging ZTE’s 5G devices, this solution provides access to weather forecasts, optimal fishing location determination, GPS tracking, and real-time access to direct fish buyers in the market, already resulting in a significant increase in catch volume in some instances.

In innovation and AI news, SK Telecom has introduced several more AI services to its already burgeoning tally. It launched a service that provides AI-based real-time translation of voice conversations.  The company’s A dot Interpretation Call service is notable as it is the first of its kind in the country. Previously, interpretation was only possible via separate translation applications or using video call tools.

SK Telecom also expanded its AI-powered veterinary service ‘X Caliber’ globally. It entered into a strategic partnership with Vetology Innovations, a California-based medical technology manufacturer, and inked a commercial contract with Vieworks, an X-ray medical imaging device manufacturer with extensive global network, to promote overseas distribution of the service.  This followed strategic partnerships with companies in Australia, Singapore and Japan to promote X Caliber—and did we mention the diagnostic scope has expanded to cats, from only covering dogs?

In the domain of AI for the enterprise, SKT and Deutsche Telekom inked a Letter of Intent (LOI) to jointly develop a telco-specific LLM that enables global telecommunication companies to develop generative AI models easily and quickly. This marked the first deliverable of discussions held by the Global Telco AI Alliance, which both companies are part of. SKT continues to invest in AI startups like Allganize (US$4 million), a large language model (LLM) all-in-one solution company, and USD3 million into ‘Imprimed’, a company that develops AI-based anticancer drug prognosis model for companion animals and humans. As part of the investment, both Allganize and Imprimed will join the SKT-led K-AI Alliance, bringing the total number of members to 16.

Globe VC outfit 917Ventures has also indicated that it will make a ‘strategic move’ into generative AI and is building generative AI products.  917Ventures will also continue to scale its digital health product, KonsultaMD. 

Over in China, China Unicom has also actively implemented GenAI, in its case to improve customer experience and agent efficiency. Its contact centre features an apparently industry-first unified dialect foundation model, a highly humanised AI voice interaction that switches to human agents in a timely manner based on emotion recognition. The manual call connection rate reaches 96.8%, and the manual call connection rate within 15 seconds is 85% or higher.

To encourage innovation,  Telkomsel held its T-Connext event, a company innovation and ecosystem platform to connect digital ecosystems within and outside Telkomsel. During the event, Telkomsel Mitra Inovasi (TMI), its venture capital arm rebranded itself as Telkomsel Ventures and launched a second fund to invest in digital economy firms. Telkomsel is also collaborating with the Bandung Institute of Technology in developing 5G innovations through the 5G Hive technology research centre.

Optus is working hard too to build 5G talent through industry and academic partnerships. It has partnered with Melbourne’s La Trobe University and Cisco to launch the Digital Innovation Hub (DIH), a state-of-the art innovation precinct which offers technological capability for greater collaboration between students, researchers, business and industry. The DIH leverages Optus’ 5G technology and is the only hub in Australia to host Cisco’s Webex Hologram technology, which taps on 5G and creates a live, photorealistic holographic interaction for a truly immersive experience.​

Several BMOs are also looking seriously at mobility innovation and the autonomous transport sector. SK Telecom has launched ‘NUGU Auto 2.0’, an upgraded next-gen AI platform exclusively for automobiles that performs everything from route guidance to schedule confirmation at once with a single word from the driver. ‘NUGU Auto’ is an automobile-specific AI platform that applies SKT’s unique vehicle-optimized voice recognition pre-processing technology. Users can focus more on driving without additional manipulation and allows rivers to execute frequently-used functions in the vehicle.

SKT has also inked a business agreement with Mars Auto, an autonomous truck startup that develops AI-based self-driving software for freight trucks, for business cooperation to advance autonomous driving of AI large trucks. The two companies plan to develop more stable and advanced autonomous driving technology through driving data collection and AI analysis required for autonomous cargo transportation in the middle mile (logistics movement between companies).

Over in the Philippines, Gogoro, the JV between Globe’s 917Ventures Inc., Ayala Corporation, and Gogoro of Taiwan opened its first experience center to open the doors to the next chapter of mobility. The centre gives visitors a taste of what it is like to use a range of Gogoro Smartscooters and battery-swapping. In Malaysia, Maxis is also expanding in this domain with its collaboration with Blueshark, a leading smart scooter provider, and EV Connection Sdn. Bhd. (EVC), operator of the JomCharge charging network, to accelerate the adoption of e-mobility solutions.

 

Private Networks

The private networks market is already intensively competitive. Many service and technology providers see it as a growth market at a time when prospects for other product lines are poor.  However, no provider is strong across all the capabilities that buyers consider when choosing private networks. There is a great opportunity to differentiate from the competition by focusing on areas like pricing, track record and ability to offer a packaged solution. The continued growth of the sector, predicted at US$5.2 billion in 2027 by IDC this year, will hinge on filling the gaps beyond providing the network side alone.

A couple of private network announcements from our BMOs: HKT has introduced Hong Kong’s first 5G Private Network for Kwong Wah Hospital, with an emphasis on time and data security. The network paves the way for 5G operating theatres and services such as remote surgery and 4K livestreaming for specialists, fostering better medical outcomes.

Meanwhile, PCCW Global’s Console Connect now has a new partner in European cloud company OVHcloud, extending private network reach to OVHcloud from hundreds of locations worldwide.

 

Web3

On the Web3 front, although the metaverse can be regarded as the biggest casualty of the Gen AI ‘revolution,’ and Meta seems to have shifted quite a bit of its focus to AI, not all is lost as operators and brands continue to make Metaverse announcements. There is an interesting intersection of geopolitics and technology development which now offer a glimpse into the future opportunities.

In fact, the recent launches by tech giants like Apple and Meta, with the unveiling of VisionPro headsets and Ray-Ban smart glasses respectively, offer glimpses into the technological landscape set to unfold in the coming years. The European Commission has adopted a strategy for Web 4.0 and virtual worlds, while China’s Ministry of Industry and Information Technology (MIIT) revealed plans to create a working group dedicated to defining standards for the metaverse; and in the US the FCC has given the green light to a new class of very low-power devices, including AR/VR headsets, to utilise the 6 GHz, which brings benefits by enabling faster data transfers and minimizing interference.

In Asia, the Koreans are still upping investments in metaverse-related technologies and platforms and SK Telecom with its metaverse service ifland has been quite activee. SKT introduced an ‘economic system’ to ifland, adding 16,000 items to the existing 4,000 and even introducing an ifland currency ‘Stone’ and ‘Points’ system to further vitalise the service and enrich the user experience, also allowing for influencers and creators to monetise content. SKT also continued to expand ifland globally, entering into partnerships with telco CelcomDigi Berhard (Malaysia), game developer Agate (Indonesia) and Cosmic Technologies, an IoT platform provider and consumer electronics and mobile devices supplying company in the Philippines. They will work to boost ifland in their local markets through localised content and marketing, and primary customer support.

Over in Japan, SoftBank Corp together with Keio Research Institute at Shonan Fujisawa Campus (‘KRIS’) and O Ltd. announced the launch of a virtual campus for the SFC campus of Keio as part of the activities of the “Digital Twin Campus Consortium” operated by KRIS. The virtual campus is now available on O Ltd.’s metaverse (virtual space) platform ‘MEs’. They have also been conducting pilot experiments to conduct lectures and other activities in a virtual ‘next generation campus’ to encourage more student participation.

Gaming never runs out of fashion, with Vietnam and Indonesia among the top gamer markets in the region. MobiFone launched a new cloud gaming service powered by Blacknut’s SDK solution and Radian Arc’s proprietary GPU Edge, giving users unlimited access to a curated catalog of premium PC and Console video games, leveraging the telco’s 4G and 5G network coverage.

Telkomsel and Goto joint venture Majamojo launched Wardeka Battleground in October, with the support of the Indonesian Ministry of Communication and Information. Majamojo will work with Telkomsel to push for the game to be a contender for competitive esports at events like the Esports President’s Cup.

 

Enterprise

On the enterprise side, quite a few announcements were made by BMOs as they keep chasing the opportunity to capture enterprise business or enhance their digital transformation. Stc’s cybersecurity outfit sirar inked a managed security services provider partnership agreement with Group-IB, thus allowing its clients to leverage Group-IB’s cybersecurity products.

It looks like cybersecurity has never been as important. Singtel announced that it will be developing Singapore’s first National Quantum-Safe Network Plus (NQSN+), for enterprises, in partnership with global industry leader, ID Quantique (IDQ). To be launched in mid-2024, the network will employ modern quantum-safe technologies such as quantum key distribution, which is a secure method for distributing encryption keys only known between shared parties, and post-quantum cryptography, a new, advanced form of encryptions algorithms that are secure against attacks from quantum computers.

The Singapore-headquartered BMO also said that is developing a new generation of sustainable and hyper-connected ‘AI data centres’ optimised to support the intensive AI workloads of enterprises and cloud companies. These data centres will incorporate more efficient cooling solutions like direct-to-chip liquid or immersive cooling to avert over-heating and prevent expensive GPUs from damage or malfunction.

Singtel has also launched Singtel CUBΣ, a unified suite of network solutions and services taking a Network-as-a-Service (NaaS) approach that helps enterprises subscribe and manage services and vendors as well as gain insights on network utilisation, workload performance and sustainability metrics via a single sign-on digital portal.

Also on the cybersecurity front In the Philippines, Globe and universal bank Security Bank signed an MoU to boost cybersecurity initiatives to address rising volume and complexity of financial crimes in the Philippines. The agreement aims to enhance the joint capability of Globe and Security Bank to fight financial crime and identity theft and to work together in fraud investigations. FundSpace, 917Ventures’ loan aggregator is collaborating with BPC Lending Inc. to increase the accessibility of micro, small and SMEs and individual borrowers across the Philippines to financial services. With this agreement, FundSpace can now offer tailored loan options ranging from PHP5,000 (US90) to PHP200,000, addressing the needs of small sole proprietorships for more substantial business operations.

Also working to support MSMEs, Maxis and Digital Penang in Malaysia have inked a Memorandum of Understanding to develop the digital and technology ecosystem space in that segment and support MSMEs in digital transformation and reskilling. In India, Airtel announced that it will collaborate with Amdocs to drive 5G and IoT monetisation and enhance its end-user customer experience. Amdocs will create a digital platform to automate and digitize Airtel’s business operations and help the Indian operator create a single-bundled plan and bill for all its services.

 

Unified Communications/Communications Platform-as-a-Service (CPaaS)

The CPaaS sector is currently seeing the following trends:

• Integration of AI and Machine Learning (ML). These technologies are transforming CPaaS solutions by enabling smarter and more efficient communication systems;
• Omnichannel: As consumers expect seamless communication across various channels, CPaaS is evolving to offer true omnichannel experiences into a unified platform;
• Customization: CPaaS providers are increasingly offering customizable solutions, allowing businesses to tailor communication tools to their specific needs.
• Leveraging data analytics to gain insights into customer behavior, preferences, and communication effectiveness.

Among BMOs, Airtel is the most (extremely!) active in this space. Airtel Business launched “Airtel Advantage”, a unified platform offering global interconnect solutions (International Voice, A2P, P2A, P2P SMS, Direct Inward Dialing (DID) and International Toll Free Service (ITFS)). It enables carrier partners globally to seamlessly address their connectivity needs. Airtel also launched india’s first integrated omnichannel cloud platform for CCaaS (Contact Center as a Service), an omni-channel cloud platform that offers a unified experience for all contact center solution requirements, thus enabling enterprises to reduce investments in sourcing voice and cloud services from multiple vendors.

Airtel also collaborated with Microsoft to offer Indian organizations calling services over Microsoft Teams through an integration with Airtel IQ. With Airtel IQ for Microsoft Teams, enterprises will soon be able to make and take calls to external users through the Teams experience, streamlining communications and workflow.

In Japan, SoftBank strengthened its partnership with Twilio. It will carry Twilio’s cloud-based communication Application Program Interface (“API”) service in the Japanese market.

 

Cloud

In the cloud space, many telcos are using the cloud to create more cost-efficient networks which can reduce operating expenses/revenue ratios by more than 10%. Apart from cost optimization, the cloud also opens new revenue opportunities for operators, such as re-imagining product lines and capabilities. 

SK Telecom launched a low-power, high-efficiency ARM-based cloud infrastructure business that can reduce corporate IT infrastructure construction and operation costs. Compared to existing x86-based servers, the expected total cost reduction is up to 40%, which can dramatically reduce investment and operating costs. In addition, customers can utilize carbon reduction certification results from cloud appliance purchases, supporting corporate ESG management.