• Executives from major telco operators discussed pressing issues at an industry event in London
• Top thinkers from Vodafone UK, BT and Orange complained about the ‘tough’ situation they’re in
• After years of heavy investments into sunsetting legacy assets and rolling out fibre and 5G, they believe they need time to monetise these efforts

LONDON – FutureNet World 2024 – High-level executives from Vodafone UK, BT and Orange took to the stage here to complain, not for the first time, that the current investment climate is making it ‘tough’ for network operators to get a decent return on their hefty spending on 5G and fibre access networks. 

The opening keynote panel, ‘Redefining the telco: How far have we really got?’,  focused on the current state of play for telco network operators: The significant fiscal pain point that is currently torturing telcos was first highlighted by Andrea Donà, Vodafone UK’s chief network officer (pictured above, second from right).

He noted that it is essential for operators to “unburden” themselves from legacy networks and technologies before they can add new capabilities and functionalities.

Donà described this situation as “tough” because “you’ve got all the legacy you need to address and then in the current investment climate we’re in, it’s a constant battle between spending money – because you have to spend money to address the legacy – and at the same time, keep ahead of the game in terms of new capability.

“It’s difficult in this current climate. I would love to have a lot more money to be able to address the legacy [issue] a lot quicker, so that I can unburden myself and then drive the new capability,” the Vodafone UK executive explained.

On top of this, he added, telco players are “constantly battling” against factors such as inflation, energy costs and interest rate hikes. This is why, he pointed out, operators need to inject a new business model that takes them beyond connectivity and helps them to innovate so they can unlock new value and revenue streams.

“If you don’t inject those new business models, you’re not going to survive. That’s the real challenge not only for operators but for the whole industry,” he warned.

Howard Watson, group CTO and chief security and networks officer at BT (pictured above, second from left), concurred that the telcos are currently “in a period of toughness” that could be likened to the ‘Roaring Twenties’ of investment.

“We’re almost halfway through the decade. The first half of the decade has been – certainly here in the UK – about investing to refresh the access network, whether that’s FTTC [fibre-to-the-cabinet] moving to FTTP [fibre-to-the-premises], or 4G moving to 5G. And the good news is we’re well beyond halfway through both of those transformations,” Watson explained. “The challenge, of course, is that they are expensive – we are spending £5bn a year at BT right now doing that.” 

He noted that the telco sector goes through cycles of heavy investment, followed by periods of monetising that investment. “The problem is that much of the investment community has forgotten that piece. So, with today’s desire… for immediate returns, it’s getting harder to find investors who are patient,” he added.

To alleviate this, BT’s networks head stressed that the industry needs a period of time to allow it to monetise the investments made so far. “It will come good, provided we as the technologists have some discipline with how fast we want to refresh this stuff…. [so] let’s not rush 6G too soon. Let’s make it 2032, not 2028,” suggested Watson.

He was bullish about the “real light at the end of the tunnel” that he expects to see in the second half of the decade which, according to his vision, will be when telcos see “the payback [of] this investment phase, particularly on the fixed side – we’re building fibre for the next 50 years, not just for the next 10 years.”

Another silver lining, he added, is that “now we have the opportunity to start using that investment… we can launch new services at lightning speed, much quicker than we ever used to. It used to take us 18 months, we should be able to do that in [a matter of] weeks now.”

To make all of this happen, though, he urged the industry to “have that discipline” as it heads towards “the latter part of the investment cycle”.

The feeling that the telco environment is ‘tough’ was shared by Laurent Leboucher, group CTO and SVP at Orange Innovation Networks (pictured above, middle). Rather than dwelling on the reasons behind this unsettling situation, the Orange executive explained a number of ways for operators to turn the tables.

“The first one is network automation – to increase our internal efficiency, which is absolutely necessary if we really want to unleash new network-as-a-service opportunities and so on. It’s challenging… and to some extent, I would say that it is even the easiest part,” Leboucher noted.

The second focus, he pointed out, is on new monetisation opportunities. “Here, the key question is how we can address them at scale, which means working backwards with very concrete use cases to make sure that we are really getting developer traction… not only alone, directly, but with partners”.

Going into specifics on how to work backwards, the Orange executive explained that this approach is taken by the likes of Amazon and is about primarily focusing on all the use cases and then ensuring that “you’re bringing the capabilities and not the other way around. I think it’s part of the mindset where telcos need to change.”

Looking more closely at how to monetise 5G, Leboucher noted that Orange believes it needs to become a platform. “Becoming a platform is a bit like behaving in the ecosystem like the big cloud hyperscalers – they managed to create a very powerful ecosystem… we need to change the way we create and expose those capabilities, those assets, the network,” he explained.

The last area, which is “very challenging”, according to Leboucher, is creating a smarter network and coming up with ways to “leverage data and more and more GenAI [generative AI] in the way we operate the network”.

He suggested that the industry is “at a turning point” and “at a time where we can unleash these capabilities, but we shouldn’t be naive – it’s hard.”

- Yanitsa Boyadzhieva, Deputy Editor, TelecomTV