CBNL: John Naylon's 2016 Trends

Wireless innovations can safeguard MNOs against economic shifts and enable the next wave of LTE in 2016, according to CNBL’s Dr. John Naylon...

Local economic dynamics play an important, but sometimes understated, role in the planning of large network investments in emerging markets. We have seen during 2015 that fluctuations in commodity prices, such as oil, can significantly impact economies that are reliant on extractive industries. When prices decline, local currencies often weaken against the dollar, the major currency for technology purchases. Because end users pay the operator in local currency, the net effect of this is that the dollarized ARPU decreases commensurately, and so a given network may no longer show a positive ROI. This can deter investment altogether, but also represents an opportunity for operators who are able to exploit new, more cost effective technology to out-compete others in this difficult environment.

Emerging market operators have often led the industry in innovative network strategies. This is perhaps best exemplified by the way that mobile network subscribers outnumber fixed line subscribers in so many emerging markets. In 2016, it looks ever more vital for all operators, both mobile and fixed, to adopt efficient new technology that can safeguard against macroeconomic shifts and allow long term investment to be sustained.

Perhaps surprisingly, given the maturity of telecoms in general, the difference in cost of ownership between differing technologies that fulfil the same purpose can be very significant. For example, in the backhaul domain, licensed point-to-multipoint microwave technology has played a vital role in building a more attractive business case for mobile networks in low ARPU markets. Given the right conditions, there can be up to 50% total cost of ownership savings deploying this technology versus the nearest carrier-grade alternative. Along with reducing the business risk in times of economic uncertainty, technologies such as this hold the potential for facilitating more growth and greater profitability in stable conditions.

2016 will also see the continued adoption of LTE in many new markets, such as Vietnam and Thailand. According to the GSMA, investing in LTE can increase GDP, bolster economies and strengthen network revenues. However, in order to benefit from these gains, operators must invest in the network infrastructure that can support the increased data demands of LTE. While wireless backhaul using unlicensed spectrum may have worked for less data intensive applications in these markets, LTE’s bandwidth requires a fresh approach if operators are to deliver the quality of service expected. Although offering attractive cost qualities, networks using unlicensed spectrum are suffering from severe congestion. This is likely to see a switch to licensed spectrum and utilization of more modern and equally cost effective technologies.

In summary, 2016 will see a push from operators across emerging nations to improve the business case and performance of their networks. This will not only safeguard against economic risks, but enable them to deploy the next generation services than can increase their competitiveness and revenues. From our own experience of working across 45 markets and with seven of the world’s top ten largest operators, we are seeing growing adoption of more advanced wireless infrastructure and all indicators show this will continue in 2016.

Dr. John Naylon is the CTO and founder of CBNL.