Telecoms and Development

5G and the New Kenyan Economy

In their 2019 Hype Cycle report for Enterprise Networking, Gartner placed 5G services at the Peak of Inflated Expectations. This means that we are at the peak of media and marketing hype about 5G. In this phase, people are over-expectant about what the technology can deliver coupled with unrealistic projections of the same becoming available to the wider population. The report also says that 5G is about 10 years away from showing real-world benefits and being consumed by the mass market. The fact of the matter however is that 10yrs is not a long time and 5G is coming and it will change the economy in more significant ways than the current and previous mobile generations did.

The question in many people’s mind however is why is the world rushing to 5G when much of the worlds population isn’t even covered by 4G? The other question is some people’s mind is also why do we need higher speeds yet the current needs are being met twice over by the existing generation? The answer lies in how this new generation of mobile technology is designed. Unlike previous generations, 5G is designed with three things in mind namely; Offer higher speeds, connect a much large number of devices to the network and do this at a much lower latency.
These three focus areas of 5G means that wireless mobile networks will no longer just be high-speed highways to access content online, but will morph and become part of our critical supporting infrastructure to provide services such as urban transportation, medical services, e-government and run smart cities.

The same way previous generations of mobile networks have created jobs and revolutionized how we live and work (e.g. mobile money, internet, social media use), 5G will do even more. For example, to deliver low latencies on some critical services such as remote medical and machine operation procedures and access to the cloud, content providers will need to host their content and Machine Learning code as close as possible to the end-users. To achieve this, they will need to host their content, not on the cloud, but at the edge. Edge computing is going to experience an exponential growth as content providers host content at edge. This will democratize storage service provision and enable smaller investors and players to invest in edge computing services in their locality. A staff sacco for example, instead of doing the usual land-buying ritual as a form of investment can build small green energy powered data centers in rural Kenya and lease them out to 5G network operators and content providers.

The ability to connect a significantly large number of devices to the network is also a strong point of 5G. Unlike previous generations that only connected mobile phones, 5G will connect sensors and other everyday items such as cars, home electronics, gates, windows and doors, pets, furniture and many more to the Internet. The same way mobile devices have created employment for the masses ranging from those who sell them, repair or even maintain them or even sell airtime scratchcards, these newly connected devices and sensors will likewise create new business and job opportunities for the citizens in ways we cannot imagine today.

Finally, the higher throughput that 5G will bring will usher new ways of accessing online content and infotainment, due to low latency and high bandwidth in 5G, technologies such as Virtual Reality (VR) and Augmented Reality (AR) will go mainstream, product owners will be creating VR/AR tours of their products for marketing and sales purposes, e-learning will change from being presented on a 2D screen into an immersive 4D experience and this will change how education is delivered. All these technologies will spur new industries the same way the initial internet and mobile revolution spurred new jobs and careers for web and mobile app designers, social media influencers and vloggers. The lower latency and bandwidth will also enable the remote operation of machinery and patients by experts from halfway round the world and would bring world-class medical care or technical expertise close to where its needed in a cost effective way. This development will also spur new opportunities and business models will emerge. If you are amazed by the current mobile revolution, prepare to be one hundred times more amazed by what 5G will usher into the world.

Broadband and Internet

What’s attracting Microsoft to Nokia again?

There is a prediction by CSS Insights; a market research company, that Microsoft might buy Nokia Networks in 2021. This is because of the former’s new found appetite in acquiring Telecom gear companies as it reposition itself as a highly vertically integrated operation. Microsoft recently acquired Affirmed Networks and Metaswitch in a drive seen by many as positioning itself as the dominant cloud player. In 2013, Microsoft bought Nokia’s devices division for $7B in a largely failed deal that was seen as Microsoft’s attempt to catch up on the mobile space which it had lagged to innovate/invest into for some years.

With the telco network going to the cloud, it is now possible to host in the cloud, RF and other equipment traditionally found in a base station, on the cloud and share these resources across the entire network. With this change, telcos can roll out services with lightning speed and lower network costs significantly as resources are cross-shared on the cloud and can therefore be purchased as-a-service and not as equipment. Telcos will also enjoy a pay-per-use model which will significantly lower their capex on network roll-out and maintenance. The role of the telco equipment manufacturer is also changing as they now move from sale and maintenance of network equipment to the sale of full scale telco services from the cloud. This means that manufacturers such as Nokia, Huawei and Ericsson will run massive cloud based telco networks and lease these as a service to operators. This possibility of running large parts of mobile networks on the cloud is what is I believe is what the market analysts see as attracting Microsoft to Nokia. The reverse is also true, for Nokia to offer telco on the cloud, it will need robust cloud infrastructure and services which it currently lacks, pairing up with a large cloud player such as Microsoft will give it access to an already existing cloud platform run by Microsoft.

The other factor that I think is giving this prediction higher chances of coming to pass is that Over The Top (OTT) content providers market reach is being slowed down by telcos who levy a fee to subscribers for them to access the internet/content. By eliminating them from the content supply chain, OTT content providers such as Facebook, Netflix, Google and and cloud platforms will reach more customers who are currently unable to enjoy their services due to data costs. At the moment in many countries including Kenya, Facebook Inc is already working with telcos to zero rate access to Facebook page and WhatsApp on many data plans. Facebook does not believe you should pay your mobile provider to use their services, same for Google, Netflix, Microsoft who also fortunately or unfortunately have deep pockets and research and development teams to roll out far superior networks. These players will soon start taking up shareholding telcos as is the case of Facebook’s recent $5.7B investment in India’s Relliance-Jio. I discussed this developing trend of OTT content providers investment in telecommunication services in detail in a previous post here.

The ongoing trade war between China and the US which saw Huawei network gear and software being banned in US network could also be a factor. I discussed this trade war in detail here. With no major US based telco equipment manufacturer (after Nokia absorbed Alcatel-Lucent), Microsoft sees an opportunity to build an image of a US-owned supplier with the acquisition of Nokia as it will position Microsoft/Nokia as the preferred supplier to US networks. With 5G being heavily dependent on the cloud and edge computing, Nokia’s experience at the edge will enable Microsoft dominate the 5G space from the cloud to the edge with ease.