6 keys to understanding what has happened in the Telco market in the first half of 2024

Just past the halfway point of the year, the Telco market makes a final sprint to finish the season before going on vacation. As it could not be otherwise, there are many announcements, resolutions, curiosities and unexpected changes in the sector that are worth keeping in mind and evaluating their possible consequences.

1. In recent months, the first critical voices have emerged questioning the success of 5G technology and the slow pace of the results obtained. After the large investments that have been made at all levels and instances, public and private, to promote the technology, there are voices that wonder why, today, five years after the first 5G networks came onto the market, there are so few disruptive and innovative 5G use cases that did not already exist in 4G.

Along these lines, we find some Mobile Operators who are questioning whether or not to go to 5G, and confess privately that they are considering going directly to 6G because they are not sure that there will be a massive demand for services in 5G and it is not clear how they will be able to make their revenues profitable, leaning towards waiting and taking advantage of the moment to amortize past investments.

2. At the same time, and almost simultaneously, we read another piece of news that comes from one of the world’s largest hyperscalers and that is going to balance the balance a little in our favor. The subsidiary of the technology giant Amazon Web Services (AWS) will invest 15,700 million euros in Spain over the next ten years. This project is surely the largest investment in technology made in southern Europe and the largest in Spain. The project aims to build what will be the largest network of data centers in southern Europe, to offer cloud services and become a reliable alternative to its direct competitors, Google and Azure.

3. Another of the great news of this year has undoubtedly been the announcement by O2 Telefónica in Germany to migrate one million 5G subscribers to the Amazon Web Services public cloud. Although this is a pilot test, it is a very important milestone, as it will be the first time that a Mobile Operator chooses to migrate subscribers from its network and take them to an external network in the cloud. The objective, according to the operator, is none other than to check how it works and draw up a roadmap that will allow it to move between 30% and 40% of its customer base between 2025 and 2026. The large Mobile Operators are beginning to consider the operation of their 5G services on two different networks, tilting the service from one to the other.

4. While all this is happening, the GSMA presented the “GSMA Open Gateway: State of the Market, H1 2024” report. This initiative aims to collaborate between operators to harness the power of global mobile networks, offering access to developers and cloud service providers so that they can access enhanced network capabilities and can optimize and deploy services and applications more quickly – quality on demand, carrier billing, etc. Facilitate new use cases, including combating digital fraud, simplifying user authentication, solving quality of service problems, edge computing… Since 2023, 49 Mobile Operators, representing 65% of the global market, have participated in this initiative.

5. On the other hand, the Spanish government, concerned about the increasing weight of 5G technology in the operation of services, applications and processes, especially in everything related to the management and operation of critical infrastructures, recently approved a decree law that includes the National 5G Network and Services Security Scheme (ENS5G). pioneering in Europe, which includes the measures and requirements that mobile operators must comply with to ensure the integrity, confidentiality and availability of fifth-generation communications networks and services, as well as the implementation of advanced security measures, contingency and recovery plans for security incidents, control systems and risk assessment, audits…, urging operators, suppliers and corporate users in 5G to carry out the implementation and certification process according to ENS5G.

6. We should not end without mentioning the German government’s controversial decision to ban the use of equipment from the Chinese companies Huawei and ZTE in its 5G network, and the mandate to replace 5G transport and access networks that are already deployed and operational in the next 5 years. This decision has generated a deep division of opinions. The argument that operators should have control over their own networks and limit the participation of high-risk suppliers in their 5G networks has been opposed by others within the government itself and by the mobile operators themselves, who have finally accepted the decision. The need to operate with trusted 5G technology suppliers wins the game and puts the country in a very delicate decision against the second largest economic power in the world.

6 keys to understanding what has happened in the Telco market in the first half of 2024

Mario Mendiguren

Shall we call you?