Data will be the next oil, according to self-proclaimed futurist Gerd Leonhard. Given the major drive from countries across the Gulf to reduce their economic dependency on oil, Leonhard certainly knows how to make a statement. He is also most certainly not afraid to tell telecoms operators how it is.
“Telcos need to realise that it is no longer about selling infrastructure. As when you do that, you are eventually only competing on one level of a multi-layered system,” he says.
The system is much more interdependent now, he continues, as exemplified by Facebook’s $19 billion acquisition of WhatsApp.
“They are building a new ecosystem that does not require telecoms to make it work, other than for the throughput,” Leonhard adds. “Telecoms is becoming commoditised like water or electricity. This is not a good business model in the long run, as operators will end up paying for infrastructure without participating in the important revenue streams.”
The “splinternet”
A leading expert on topics such as Big Data, privacy and social media, Leonhard’s speech today promises to bring together discussion on the latest issues facing the industry, mixed with his bold visions of the future.
One of the topics very much on his mind at the moment is the future of the internet. Last year’s NSA revelations are likely to have major repercussions for the future of internet governance, he says.
Leonhard warns of the emergence of the “Splinternet” – a term he amusingly uses to define the potential future break-up of the global internet.
“The European Union and India are proposing to keep traffic within their own networks because of the NSA scandal,” he explains. “Building your own version [of the internet] will not work, as this is a global system.”
He warns that if countries do not have an open internet model, then they are effectively using government control to create their own version of the internet.
“That is not good for innovation,” he says.
The Internet of Things has also captured Leonhard’s imagination. The billions of devices set to come online will lead to a “smarter planet”, he says. It will also provide telecoms with fresh opportunities in areas such as sustainability, energy and logistics.
“This is big for telecoms, as every time a device is connected, they should have their fingers in the pie,” says Leonhard.
In the long run, he also sees Artificial Intelligence (AI) transforming the landscape of the job market.
“Anything that is repetitive work will eventually be done by robots, which will have a huge impact on jobs and education,” he suggests.
Leonhard believes the mentality of a telecoms operator has to entirely transform over the coming years. Traditionally, telcos have not viewed the services that run over their networks as part of their key business.
“That is not going to work as all the value is moving up the food chain. The value isn’t that you can make a phone call or get data, because everyone can get data,” he says.
The good news, he says, will be for operators in the Middle East and Africa, which he believes have a good window of opportunity left to become more involved with OTT services.
The subscriber growth these regions are experiencing will be short-lived, and in three to five years’ time, end users will be using their devices for entirely different purposes.
“In developing countries – particularly in Africa and parts of the Middle East – there are lots of young people and clearly there is great opportunity,” he says. “But you cannot wait for third parties to come in and glue them on to your model. You have to be more proactive.”
In sharp contrast, he says, there is a huge problem in European markets, where operators have become “incredibly complacent from making money on high telecoms connection fees” and which are heavily regulated.
Leonhard clearly has an eye for buzzwords, identifying the new trend towards “telemedia”. The telecoms market, he suggests, is increasingly converging with media, which has been demonstrated in many parts of the world where telecoms are becoming lifestyle providers.
This includes branching out into new areas, such as education and social media, which enables operators to “engage with the entire ecosystem”.
Brazil, he says, is a good example of a market where telecoms operators have effectively aligned themselves as lifestyle providers, tapping into a range of services, including mobile banking, ehealth and digital education.
Tapping into billion-dollar opportunities
Digital education, in fact, is precisely the type of opportunity telecoms operators should be focussing on.
“Digitising education is going to happen, as certainly as we will have self-driving cars. In developing countries, they won’t print books as it is not economical. In five years’ time, for example, it will be standard for a student in Nigeria to have a $5 tablet as a learning tool,” says Leonhard.
“Digital education is a $1 trillion opportunity and it is there for telcos. They just don’t know anything about it,” he adds.
He warns that if telecoms fail to engage in these areas, startups will continue to get a head-start with consumers and push them further down the food chain.
“It is paramount that [telecoms companies] understand this. There is a huge amount outside of their current scope, which they don’t know much about – because it’s not technical,” he says.
Just as telecoms converges with the media world, OTT players are meanwhile aligning themselves ever closer to telecoms.
Leonhard again references Facebook’s recent acquisition of WhatsApp. Shortly after the deal was announced, the social media giant revealed it would be launching a free voice call service through WhatsApp.
“Facebook is becoming a telecoms player. It bought WhatsApp for messaging and its next stage is phone calls,” he says.
Telecoms operators are therefore under greater pressure than ever before to react and extend beyond their traditional business models.
And Leonhard offers one final stark warning to the industry as a whole: “I have spoken to telecoms for the last ten years about this and their complacency is only surpassed by their lack of information or inspiration. Telecoms is always looking for proof of a business plan and that’s not how it works.”
