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Monday, August 22, 2016

TelcoFuturism: Initial thoughts on Blockchain

An area I'm currently researching, as part of my ongoing analysis of telecoms/futurism intersections is Blockchain. (See here for an intro to what I mean by telcofuturism)

For the uninitiated, Blockchain (abbreviated here to BC) is the technology underpinning Bitcoin and other cryptocurrencies. It's a way to create distributed, secure, unchangeable, peer-to-peer databases for "trust" and transactions/applications which require it. It removes the need for central coordination and storage to prove that you own/bought/sold/transferred things, and stops the "double-spend" problem of digital copying of things like e-money. This is potentially great for finance, where a lot of cumbersome back-office processes could be made hugely more efficient.

When more extensive definitions of "trust" are considered (eg authentication of documents or relationships), it potentially has the ability to dis-intermediate all sorts of other existing businesses and even government functions, beyond just banking and digital money. There are tons of books, conferences and think-pieces about BC, from everyone from FinTech disruptors to governments to major IT and auditing companies. It's definitely a "thing" at the moment.

However, it is debatable whether some of the more far-fetched concepts presented are truly visionary - or sci-fi hype peddled by people who are less-than-objective wishful thinkers. It could become as important and ubiquitous as electricity, semiconductors or the Internet - or else it could just be an interesting platform for diverse applications, but not really a global "game-changer". 

An historian from the year 2100 might point to Blockchain as the most pivotal enabler of the restructuring of global business and society - or else it might be a minor footnote to the much-larger impact of other innovations around AI, CRISPR gene-editing and nanotechnology.

I'm trying to look at Blockchain through the lens of telecoms, networks, communications and cloud platforms. I can't really comment on the full impact on banking or manufacturing or property markets.... but I think I have an idea of the practicalities for telcos to deploy blockchains, and also the realities of networks as they might apply to other use-cases.

I haven't yet reached firm conclusions about the most important use-cases for blockchains in telcos & other communications infrastructure, or the probable timelines, but I'm starting to develop some initial hypotheses. There's some good arguments about BC's use in billing systems, IoT/network registration and control, vertical-market services in finance and healthcare, and perhaps integral network/OSS functions. I can also see it dovetailing with eSIM, cloud/PaaS platforms and numerous other niches in telcos, enterprise comms/UC domains and beyond.

I'm cautiously positive about the technology, rather being than a full-on religious convert and evangelist, as some Blockchain advocates seem to be. I don't buy into the notion that it's going to magically remove all intermediaries from all areas of human interaction, and lead to some anti-capitalist utopia/dystopia (delete according to taste) where middlemen no longer have roles to play.

I see a few major problem areas and "gotchas" emerging, that lie between the vision and possible reality, especially in the medium term:
  • Often, blockchain is suggested as the "missing piece of the puzzle", after which a new low-friction process, or entire new industry can be born. Yet in many cases, it isn't transaction cost, or cumbersome trust arrangements that are the "gating factor" stopping deployment adoption today. There are other practicalities involved too - perhaps regulation, business model, customer preferences and loyalties, or 100 other factors. For instance, the idea that everything to do with IoT just needs a sprinkling of Blockchain pixie-dust, for trillions of dollars of value to be released, on interoperable open-source style platforms, is pure hyperbole. It might be desirable - even necessary - but it's certainly not sufficient for many things to take off.
  • A fair amount of envisaged blockchain use-cases require perfect, ubiquitous connectivity. That might be OK for banks and fintech companies using multiple data-centres and redundant fibre links, but it doesn't work well for mobile/wireless which is not going to be ubiquitous any time soon (if ever). Unless the applications have some way of dealing with "offline mode", or patchy/intermittent connections, that's a major obstacle.
  • Some blockchain architectures have significant time-lags involved, due to processing for verification and permanent storage/encryption ("mining" etc.) That's fine for things which operate on a scale of minutes/hours/days - say transfers of property deeds - but not ideal for network operations that involve subs-second decisions. As we move towards 5G and "millisecond latency" critical applications, this becomes even more imperative.
  • Blockchain applications will need to "play nicely" with all sorts of other technology trends, such as distributed clouds, telecoms NFV/SDN architectures, third-party PaaS, integration with legacy systems, security gateways, policy-managed networks (can they spot, block or prioritise BC data flows?), AI and machine learning creating unpredictable or novel transactions/interactions and plenty more.
  • Many suggested blockchain use-cases ignore what might be termed "immovable obstacles". It's all very well having a BC-based wireless mesh network, but if it's ignored by the companies owning big chunks of licenced spectrum, and creating non-BC back-office functions, it's a bit of a waste of time. The same thing applies to regulations, taxation and assorted other slow-moving areas of bureaucracy. It's all very well suggesting that your house can act as an autonomous business, renting out the WiFi to passers-by all by itself when you're out, and using the payments to pay the utility bill - but that my well cause consternation among people who tax and regulate such things. Other ideas - such as micropayments for IoT sensors selling weather data by themselves - sound great until people realise that the billing systems only support 2 decimal places, or ask the user to click "OK" or answer a captcha. There are many, many devils in the detail.
  • A lot of the rhetoric seems to suggest that everyone wants a completely peer-to-peer, decentralised, no-intermediary, no-brand economy. However the evidence seems to suggest that humans actually quite like intermediaries for many things and are prepared to pay for them - Apple running an appstore, curators for a museum, editors and brand for a news service and so on. Add in the clear need for designers as the new uber-class of intermediaries, and the over-riding importance of UX in any situation, and the "fully automated world" seems even less plausible.
None of this means that blockchain based services are a bad idea, or irrelevant to telcos and network/software vendors. There are, undoubtedly, many important and possibly huge opportunities in blockchain-based telcofuturism.

But at the same time there is a lot of hype. Outside of financial services, we're still mostly at the napkin-diagram/Powerpoint/very-early prototype stage of telecom/BC use-cases. I'm hoping to get some more clarity over the next few weeks - and will try to assemble a realistic timeline that blends vision and pragmatism for comms and network applications.

Please get in touch with me if you'd like to discuss Telecoms + Blockchain combinations. I can be reached via information AT disruptive-analysis DOT com, or via Twitter or LinkedIn.

Wednesday, August 03, 2016

NEW: eSIM Status and Forecast report published

Beyond M2M: eSIM Status & Forecasts
Overcoming practical & economic issues for mid-term consumer-market eSIM adoption


Disruptive Analysis has published a 36-page report on the emerging technology of eSIM and SIM remote-provisioning. The focus is on the use-cases, practicalities, drivers and obstacles for bringing eSIM-based devices to market, alongside suitable mobile data plans or subscriptions.

The report addresses both the motivations (lower costs, higher revenues, better experience) and problems (business-case, user journey, regulation, transition) that will be experienced by operators (MNOs) and device vendors (OEMs).

Forecasts are given for annual shipments of eSIM-enabled devices (phones, wearables, M2M, tablets), and for the installed base that will be a target for after-market eSIM provisioning.

Key findings:
  • There are numerous use-cases for “remote provisioning” of SIMs with mobile operator “profiles”, especially where the SIM hardware is built-into devices
  • eSIM adoption will have a slow start. 2016-17 consumer deployment will mostly be early concepts, allowing MNOs and OEMs to gain practical eSIM experience and refine implementation and processes. eSIM phones will emerge very gradually.
  • Adoption should ramp up in 2019-2021 as cost, industry value-chain and user-experience problems are progressively solved.
  • Apple and Samsung are unlikely to use eSIM to become MVNOs / carriers. Neither will they aggressively push eSIM into their flagship products.
  • For many M2M/IoT devices, the eSIM decision is secondary to justifying the extra cost, space and power needs of the cellular radio itself. 
  • eSIM is "necessary but not sufficient" to drive adoption of cellular M2M. It is unlikely to change the competitive dynamics vs. LPWAN technologies like SigFox or LoRa.
  • There remain unanswered questions about regulation, customer-support and business model for eSIM. Although some projected cost-savings are attractive for operators, it is unclear that it will help OEMs generate extra revenues/loyalty. 
  • There will other approaches to remote provisioning beyond GSMA's vision of eSIM. Some OEMs may adopt proprietary versions, while standards-body ETSI is intending to develop specifications which go beyond just mobile use of chip-cards 
  • By 2021, 630m mobile & IoT devices will ship with embedded SIMs annually, driven mostly by smartphones, although vehicles and tablets show growth earlier.
  • By end-2021, the installed base of eSIM-enabled devices will exceed 1 billion 
  • While significant, this only represents around 10% of total cellular connections
In a nutshell: eSIM is an important evolution for some use-cases, but it is neither an outright "game-changer" nor a major risk to traditional cellular business models.


To purchase the report, see below



Report Contents

Executive Summary
Introduction & Outline
   The Potential
   What is eSIM / eUICC?
   New uses for eSIM & other programmable-SIM technologies
   A device-centric view of SIM provisioning             
   A growing variety of “SIM evolution” options
The Practicalities             
   Economics and demand
   SIM/eSIM irrelevant if radio module costs too high          
   Operational issues          
   User experience              
   Retail and channel management              
   Maintenance and lifecycle-management               
   Security               
   Transition issues: the need for hybrid SIM + eSIM devices             
   Regulatory considerations           
   Ecological considerations: fit with other telecoms trends
The Phones        
   Low-end vs. high-end phones
   Apple-specific considerations
   Conclusions and Forecasts          
   Forecasts            
About Disruptive Analysis            

Figure 1: Understanding the definition & semantics of “eSIM”     
Figure 2: Advantages of “programmability” vs. “embeddability” varies by device 
Figure 3: SIM evolution – multiple variants are emerging, not just GSMA eSIM     
Figure 4: SIM evolution – costs and key stakeholders       
Figure 5: Few handsets’ gross margins can sustain extra BoM cost from eSIM       
Table 6: Forecast eSIM shipments, by device category, 2016-2021             
Figure 7: eSIM shipments, by device category, 2016-2021             
Figure 8: eSIM device shipments, hybrid SIM/eSIM vs. eSIM-only
Table 9: eSIM active installed base, by device category, 2016-2021           
Figure 10: eSIM installed base, by device category, 2016-2021     
Figure 11: Overall SIM & eSIM active installed base, end-2021     
 

Ordering & payment


The report (delivered as a PDF) costs:
  • US$900 for a 1-3 user licence
  • US$1500 for a corporate-wide licence + a free 1-hour conference-call discussion
  • (plus VAT in UK/EU as appropriate)

Payment is via credit-card and Paypal (see below), or where a purchase-order and invoicing details are submitted by email to information at disruptive-analysis dot com. The report will be emailed to you within 24 hours of receipt of payment.

[Note: Sometimes Paypal's credit-card transaction process is a little variable, especially with corporate cards. Please drop me an email if you have problems]

eSIM Report, 1-3 users




eSIM Report, Corporate