Facebook recently announced that it has joined with various information technology and communications corporations to share information about designing cellular networks with the stated goal of making it easier and less expensive for telecommunications companies to connect people in places that don’t have cellular service. Here, Mintel thought leaders in the technology and telecommunications arenas share insight on Telecom Infra Project (TIP) and what it means for the future of telecom. 

Emily-Groch-circleEmily Groch, Director of Insights, Telecom

Some telecommunications providers are wary of Facebook’s role in the Telecom Infra Project, and their concerns aren’t unfounded. Facebook is one of the tech giants increasing the strain on wireless networks, and it has pushed a number of apps that replace services like voice calling and texting (e.g. WhatsApp, Facebook Messenger), driving revenue away from wireless providers. Plus, Facebook has already faced its share of controversy with Free Basics, its program that seeks to provide access to some Internet sites and services free to areas with limited or no online access. Not only is Facebook one of those “select services,” but the company also controls which services are offered and which ones are excluded. India has already responded by blocking the program.

At some point, however, the potential benefits of TIP for both telecom providers and consumers outweigh the concerns around what Facebook is going to get out of it. TIP seeks to proactively share knowledge and ideas about improving cellular networks in order to accelerate the evolution of wireless networks and reduce the cost of bringing connectivity to underserved areas. Ultimately, this gets more people online, and enables carriers to scale their networks more efficiently in all places. Presumably, cost savings would be passed on to consumers.

We all know that emerging technologies such as 4K video and virtual reality will put more demands on networks than ever before, and carriers will have to be ready. The potential of the program to accelerate the readiness of networks to support these technologies could mean that telcos choosing not to participate get left behind.

 

Bryant-HarlandBryant Harland, Technology and Media Analyst

Facebook’s announcement of the Telecom Infra Project, which promises to share and publish information regarding cellular infrastructure design, at the Mobile World Congress comes with the backing of a strong legacy in open hardware.

TIP shares many similarities with another Facebook-driven project: The Open Compute Project (OCP). Open Compute began in 2011 by publishing design specifications and sharing information related to data center operation. The benefits? It allows companies to modify those designs and make them best-fit for what they’re actually doing with the hardware instead of buying unnecessary components. As Business Insider’s Julie Bort noted in June 2015, OCP has created considerable value, saving Facebook $2 billion since it started and reducing data center electric costs by as much as 20% for other companies. Now, Facebook hopes to bring the same success to the cellular industry.

Particularly in the US, the cellular service market is heavily saturated; according to Mintel’s Mobile Network Providers US 2016 report, 95% of US adults subscribe to cellular service. Furthermore, the majority are currently happy with their service in regard to factors like internet speed. This naturally places greater pressure on carriers to be ever-more price competitive; monthly average revenue per user (ARPU) fell from $50.65 in 2005 to $46.64 in 2014.

At the same time, the cellular market faces pressures that consumers are not likely to be conscious of. The amount of cellular data US consumers use is on the rise. According to Cisco’s February 2016 Visual Networking Index Global Mobile Data Traffic Forecast Update, global mobile data traffic increase 74% in 2015.

Despite rapidly growing data consumption, cellular carrier will be expected to maintain ever-lower prices while preparing for the future of wireless networks, including improvements like 5G. 

Cost reduction is a critical part of projects like OCP and TIP because they enable companies to drastically reduce unnecessary hardware investments and run more efficiently. But there are opportunities the stretch beyond keeping operating costs low. TIP is built around the value of open source philosophy – the idea that bringing together many different brands with different objectives can lead to faster innovation.

Emily Groch is Mintel Comperemedia’s Director of Insights, Telecommunications. She provides omni-channel marketing analysis and competitive insights to wireless, TV, internet, over-the-top, and home security service providers across the US and Canada.

Bryant Harland is a Technology and Media Analyst at Mintel. He brings almost a decade of experience working in the tech arena, most recently as a Senior Technology Writer with Brafton News.

Travel and Tourism Market

Mintel’s global team of industry experts knows its way round the travel and tourism market. We know the numbers, the destinations, the innovations. The products putting others in the shade.

Read More
© 2016 Mintel Group Ltd. | Privacy Policy | Legal | Cookie Use