Four trends to watch at Mobile World Congress 2017

February 27, 2017

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While new products and devices are the star of the show, it’s the business models that will determine who wins and loses.

With more than 100,000 people descending on Barcelona, Mobile World Congress (MWC) is billed as “the world’s largest gathering for the mobile industry.” Devices and new products remain the foundation of the show, but each year we find a greater focus on underlying—and rapidly evolving—business models.

As we saw last year, conversations that take place behind the eye-catching displays can be quite different from the glamour and glitz of the show floor.

Industry walls continue to come down, so it will be interesting to see where new entrants find their places inside the mobile ecosystem.

I expect several key themes from MWC 2016 to remain very much in focus this year. Mobile device innovation was hard to find a year ago, and that could remain the case in Barcelona, in part due to the ongoing products-to-services shift and commoditization of devices. With that in mind, here are a few areas likely be hot topics at this year’s MWC.

5G business models and proofs-of-concept

Next-generation 5G technology promises download speeds at least 10 times faster than current networks. Behind this promise, however, we’ve seen apprehension to quickly invest at scale in 5G networks, not only by US carriers, but also among Western European, Japanese, and Korean operators. The hesitancy is understandable, in part because these companies poured as much as tens of billions of dollars to upgrade their mobile networks from 3G to 4G just a few short years ago.

The business case for 4G was based on attracting new customers and capturing higher revenue from each one. Indeed, enhanced speed did attract new consumers, but the anticipated increase in revenue did not materialize, and the average revenue per user (ARPU) for nearly every US mobile network operator actually declined during the 4G transition.

Despite the clear consumer and enterprise advantages of this next-generation technology, we could see delays in the rollout of 5G by up to a decade.

IoT as a profit generator

The Internet of Things (IoT) is transforming—and disrupting—the way we live. Much of this movement has centered in and around the home. There remain tremendous opportunities and potential for connected products to make our lives easier, safer, and less stressful.

Likewise, manufacturers and industrial product companies continue to make strides in connecting their products and appliances to the IoT. But succeeding in this era demands much more than technology connectivity. The industrial IoT is a business disruption that requires new capabilities and a fresh mindset. With the right strategy, it could provide incredible opportunities to both consumers and companies.

I expect to hear a lot of chatter at MWC focused on using the IoT as a lever for profitability, and how capturing the full benefits could involve combining IoT with rapidly advancing artificial intelligence technologies.

Small cell-based approaches for densifying networks

Core to both 5G and IoT is the need for massively large numbers of small cell sites to dramatically increase network density. This is especially important to enable lower power usage for IoT devices and to allow for the expanded use of high-frequency spectrum bands ranging from 6 GHz to even 70 GHz or higher.

Small cell technology is evolving quickly, and the Mobile World Congress is sure to be choc-full of demonstrations featuring ever-smaller radio units, remote radio heads, camouflaged equipment, and sophisticated, self-organizing networks that speed the deployment of small cells.

In many communities, however, widespread deployment of small cells continues to be held up by antiquated, localized regulatory regimes, costly permitting processes, and widespread objections to the addition of medium-height poles required to support small cell deployments. I expect debate regarding how to overcome these obstacles to take place across the halls of the MWC.

The impact of used devices

Companies involved in the secondhand mobile device market have been watching a perfect storm develop as operators abandon device subsidies and watch their primary services become commoditized. Consequently, the supply of used devices will likely continue skyrocketing, largely due to a rapidly growing installed base of high-end smartphones and now-common installment payment plans in many markets. Last year, exhibitors at the MWC showed new models for collecting, testing, refurbishing, and certifying used devices. I asked at the time whether mobile phones could be the next certified pre-owned cars, and it definitely appears that could be the case. With these factors in mind, I expect the secondhand device market to have an increased presence at the MWC this year.

Competitive pressure is rising in the global wireless industry. Operators are fighting for subscribers in oversaturated markets, while companies in adjacent industries enter the arena. And at the same time, we have seen a lack of breakthrough in mobile device innovation. Leading up to MWC, key questions revolve around how to drive continued growth, what devices and services will be needed to satisfy customers in the future, and how companies can partner more effectively across the mobile ecosystem. That said, this will be my ninth consecutive year attending MWC, and each year there have been surprises along the way.

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Contacts

Chris Curran

Principal and Chief Technologist, PwC US Tel: +1 (214) 754 5055 Email

Vicki Huff Eckert

Global New Business & Innovation Leader Tel: +1 (650) 387 4956 Email

Mark McCaffery

US Technology, Media and Telecommunications (TMT) Leader Tel: +1 (408) 817 4199 Email