10 reasons why MNOs are in difficult times now
Some timee ago I wrote an article with 10 signs showing that Telecom World is not doing well. This time I would like to focus on reasons why MNOs are passing difficult times.
- Lack of vision: OTTs like Facebook, Youtube, Skype, WhatsApp, Instagram started from zero budget, zero customers and zero experience. They managed to build empires without charging a single cent on customer, even from day one. Why couldn’t MNO do that or develop something similar? MNOs were sitting on mountains of cash, had huge number of customers and had experience in handling major businesses. I would simply put it as lack of vision.
- Greed: When 3G started somewhere in 2003-2004 there was an operator in Europe charging 1 euro/minute of video call. After 12 months the very same operator was upset that video calls didn’t start up properly and income was not the expected one. By the same year rates like 5 euro/minute in roaming were common. People quickly tried to find out alternatives to high cost which happened to be Skype. The rest is history.
- Not being able to see the future coming: Even from 3G HSPA+ deployment, MNOs kept installed microwave links instead of deploying fiber on each of their cellular site. They were simply not able to see the need of fiber in the future.
- Loosing connection with their customers. MNOs have completely lost contact with their customers. They only call them when the contract is about to expire to offer them a new/better deal that will make them sign/subscribe again for another 2 years.
- Completely lost customer’s fidelity: Average churn rate is around 2%. MNOs have not solved customer complaints (Coverage, capacity or other QoS/QoE problems) in over15 years. It still exists coverage holes (indoor especially) and capacity issues. How hard could it be to solve them and what could have been more important than this? Hence customers switch provider easily those days. This did not happen 10-15 years ago when being customer of a brand name was a kind of a pride. Today it means nothing.
- MNOs have spent more money on marketing than on engineering. They keep advertising their networks as being the best in newspapers and media instead of spending that advertising budget into engineering to actually make their network better. Completely forgotten the principle of Dr. Oetker: ”Qualitat is das beste rezepte”
- MNOs have engineering positions under dimensioned: an engineer on operator side has to know hundred of parameters from Huawei. Then the same for Ericsson. Then the same from Nokia. Then features from all 3 vendors. Then he has to know 2G and 3G and 4G as well. Then he has to deal with core networks, transmission and sites roll-out department. If you want to know how his life is consider a person with 3 screens on his desktop with over 20 programs/applications opened and keep moving around all of them, copying information from one to another and deciding what is to be done next. Let alone meetings. emails , handling daily customer complaints and dealing with new sites, sector split, antenna change, transmission reconfiguration etc. He is a one-man-show aka orchestra-man of everything that happens in his geographical area.
- Sometime lack of experience: there is an operator in Europe that few years ago had all its 4G cells with cellradius at 2km and downtilt at 0,1 and 2 degrees. As a consequence there was pollution everywhere ( RSRQ degraded everywhere and Average DL Throughput in 4G was just 4-5 Mbpsec) and many customers could not make calls ( say a user is at 3 km away and camped on a cell that has cellradius=2km; that user’s mobile cannot pass RACH stage as eNodeB will not accept rach coming from a distance higher than 2km). I tried to explain them that this should be fixed asap but I did not get much audience. They claimed that are interested in coverage and quality comes later. They did not understand that not having enough downtilt keeps half of the beam of antenna shooting to the stars instead of laying it completely on the ground. The very same operator was very much concerned about parameters but had his entire RF coverage made by amateurs that didn't understood that footprint, neighbors, interference and capacity solves 95% of any operator's problems. I have reasons to believe that things did not change much from that time for that operator. But this is another story and it is not my concern anymore.
- Proliferation of wifi: as bad as it may sound wifi actually helped cellular MNOs a lot. Without wifi there would have been congestion everywhere in the evening due to indoor location of population. But in the same time footprint of wifi grew bigger and bigger. Today 75% of mobile data, as a volume, happens via a wifi connection and only 25% over a cellular connection. This is not good for MNO because one day every customer will think this way: “I have wifi at home, I have wifi at work, I have wifi in all malls/ restaurants/bars etc. why am I paying post paid subscription to a MNO? I will switch to pre-pay because I don’t need cellular so much so it’s no need to pay more”. Some smart operators like AT&T already deployed WiFi to offload their congestion and boost customer’s experience but not many have done it this way.
- Competition: this is the major cause of MNO decline. 10-15 years ago average ARPU in Europe was 40-50 euro. It decreased year after year and there’s no sign it will ever stop. In every country there are at least 4 MNOs. Being a MNO is not a very profitable business anymore. At least not how it used to be. On top of this came the MVNO. Look how Iliad/Free disrupted the MNOs business in France and Italy. And this is just the beginning. I have a subscription in my country for 50 GB of traffic per month for only 2 euro/month with national coverage and unlimited voice calls plus international minutes. Don't know what more I should expect from a cellular operator !? This is the tough environment that MNOs have to survive today. Being a MNO is not anymore a lucrative business as it used to be.
Very interesting, thanks for sharing. #1 is very powerful, I think. OTTs had no experience, no cash, and they didn't charge the customers.
Transmission Planner and Technical Lead at Vodafone
6ygreat article, again! each of the points would be an opening of long discussions, but i am focusing your 3rd point about access backhaul. MNOs are companies, so they have to take into account their shareholders, and not to spend all the money for new and expensive technologies. we know, that the best solution if all the RRUs directiy connected to the fiber network, and the rest of the nw elements are centralized. the reality is, that fiber is expensive and in most of the counties the landline operators have a strong lobby to keep it at this level. the microwave radios allows to connect the sites at lower price, and my opinion is, that this technology keeps the pace with the RAN modernization, and will provide a complementer solution beside fiber access.
Technical Manager at Agileto
6yHi Dan, I liked very much the points 7 & 8 mentioned above concerning engineering, actually how hard the management is pushing now the engineers to know "everything" and to be "everywhere". These facts lead the engineers staff to concentrate many times to the last/new developments and parameters optimisation while the basic things like you mentioned above (ex: good coverage footprint) are forgotten. Although the technology evolved 2G->3G->4G, the people should not forget one basic principle: If you don't achieve a good coverage footprint for each cell on a network - doesn't matter which technology belongs to - then you may try 'millions' of parameters changes and you will not get the expected results. As example, cases like "lack of coverage" or "pillot pollution" should be mainly corrected by antennas changes (azimuth/tilts) and not by parameter changes. This is a kind of optimisation that should be still performed on complex analysis by "humans" fact that is in full contradiction will the new trend of "automatic optimization" performed by software due to the "cost reduction" target that is now in demand everywhere... If I would make a comparison with the car evolution process it is not enough to concentrate only on design and comfort (upper layers) as far as the engine (low layer) is not improved, too. Sooner or later the MNO's management staff will probably understand that but I am afraid not to be too late that time when many good engineers have already switched to other domains in the meantime.
Simplifying your capital raise through blockchains and web3 | Digital Transformation of Finance | Consulting & Coaching in regulated crypto
6yDan, all valuable and fair points. I would add to your list the point of "Outsourcing the knowhow that is vital for a successful business". Your Facebooks, Googles, Youtubes, WhatsApps etc. are very much engineering driven-organisation that understand how to further develop their solutions and systems (with Facebook even setting future data centre standards) and control the development themselves. Most of the operators - apart maybe from the really big ones - have surrendered their own destiny into the hands of their suppliers and "outsourcing partners". It is not uncommon to find operators that do not even know what is going on in their own networks because all of this is outsourced and managed through some "high level business KPIs". On the other hand, these organisations often have little or no competencies in areas that are visible to the end-user and can potentially provide a more consumer-orientated service. Devices, content portals/appications and even billing/customer care systems come to mind. Maybe the impending cloudification of the network in 5G will help operators reclaim some lost ground.
RAN Principal Engineer at 2degrees
6yI have worked for several operators in different countries. Unfortunately, not many MNO’s value opinions coming from technical people. It is not uncommon to see non-technical people making critical technical decisions (based on ideas given in a vendor’s or 3rd party company’s sales presentation).