By Mika Skarp
Last week we looked back on how well our predictions for 2016 fared. This week, in our last blog of the year ,we’ll say good-bye to 2016 and hazard some predictions for 2017.
In a world propelled by data and all things IP, the mega trends we've seen across the digital spectrum are showing no signs of slowing down. Data volumes will continue to grow exponentially between public and private networks that are all IP. Between these two major network categories, we see the performance of public networks increasing a much more rapid pace than with the private networks. Case in point, new hybrid public safety and security network models like those being built by our partners at FirstNet in the United States and Red Compartida in Mexico will continue to develop bringing new advanced standards to the space.
Although we’re already getting a glimpse of things to come, what big technology categories will be making the headlines in 2017?
We see 2017 being the year of Augmented Reality. Virtual Reality has already demonstrated its power and appeal and has now established itself as mainstream technology. But AR is a significantly more complex beast. It's also enormously promising for a wide spectrum of applications. For this reason we believe that the developments in AR that will take root in 2017 will prove to be truly revolutionary. Not only will AR be delivering real time information about our physical and digital environments, it will provide a long-awaited and much-needed new UI for the Internet. Thus 2017 will be the year that we see the oft-cited Minority Report style 3 dimensional interface coming into play, with fully immersive virtual control over virtual objects, buttons and more. Our excitement about this is only tempered by what we know to be the severe limitations of mobile networks within the now anachronistic, Best Effort paradigm. In order for AR to truly take flight in mobile, drop outs and delays must be eliminated. The good news is consumer demand for these capabilities will be the driving use case for 5G. And even though 2017 isn’t yet the year of 5G, we’re confident that the blueprints for these essential solutions will be laid out in the next 12 months.
And toward that destination we see the eSIM as the next big thing for 2017. Removing the locking restrictions of a physical SIM card, eSIMs will allow users to switch mobile networks on the fly. This not only has the potential to prime the industry for major consolidation it will have an enormously positive impact on customer experience on mobile. While this may not be as big a deal in the US where 3 or 4 major carriers dominate, but in Europe, with its many small local operators and no large, pan-European player, this kind of portability will be a god send. And the timing couldn’t be better. As European operators begin calculating the dicey business case for 5G and roaming charges in Europe will end by this summer, we think it’s quite likely that major brand like DT and Vodafone will launch some pan-European service next year. The only hiccup we can see here is the issue of user data. For example, if I buy a pan-European plan from Vodafone in Finland will it be mandatory to have my subscription data in Finland as well?
The Key Driver for 5G – The Economy
And while we expect important developments of 5G standards in the coming year there is no doubt that it will be a rough year for mobile network infrastructure manufacturers. The economy has an enormously important driving role to play in this and unfortunately with the geo-political tumult of 2016, the economy is anything but stable and predictable going into next year. Thus mobile operators will hold back on major investments in austere preparation for 5G. The good news is that as their businesses move to the SaaS model, and as proprietary hardware goes away, the commodification of the cloud will continue to drive costs down. On the other side of the ledger this will also impact revenues that are already in a nose dive, so manufacturers will have no choice but to look for low cost paths to new revenues.
So far Nokia has bought all of its western competitors out of the market other than Ericsson. This growth-by-acquisition strategy has now come to an end and Cisco is about twice the value of Nokia and Ericsson put together. Now considering that Cloud providers like Google and Amazon are twice the value of than Cisco, you can see where the trends, positive and negative are headed. While it's difficult to predict anything in a space that is so large and constricted, we would not be surprised to see something quite dramatic happening, and certainly the pressure is there for dramatic moves to be made.
And finally, a few words about poor, bedraggled Net Neutrality. It has certainly been a hot topic for the last several years, and here in Europe regulations outlined in 2016 will be in place by this summer. Here at least the regulations strike a perfect balance between consumer protection and allowing innovation by letting a single network provide for different use cases requiring different performance. While in the US similar provisions have been outlined, it has not properly taken root as operators are looking to vertical integrations like the proposed AT&T / Time Warner merger. What happens to all of this in a Trump whitehouse is anyone’s guess, but we do hope that regardless of the outcome the consumer will be given the power to choose what the network delivers for different applications they rely on.
With all of these groundbreaking developments and our own major advances over the year I can’t think of a more exciting time to be in this industry. As we come into a new year, we all look forward to playing our parts in making our connected lives better and watching this great story on fold. As always, we’ll be sharing our observations in these pages. In the meantime, we want to thank you for reading the Cloudstreet blog over the last year and look forward to seeing you in 2017. Barcelona perhaps?
Lastly, we invite you to share your predictions for 2017 in commentary on this post. We’d love to get your take.