Is network traffic growth dwindling to a trickle?
“Network capacities are sufficient, and with data usage expected to plateau in the coming years, further capacity expansion is not needed. We have reached the end of history for communications.”
– Willian Webb, The End of Telecoms History
William Webb has pedigree when it comes to foreseeing telecoms trends.
Webb wrote The 5G Myth in 2016, warning that 5G would be a flop.
In the book, he argued that the wireless standard’s features would create limited interest and fail to grow revenues for mobile operators.
The next seven years saw the telcos promoting 5G and its capabilities. Now, they admit their considerable investments in 5G have delivered underwhelming returns.
His latest book, The End of Telecoms History, argues that telecoms has reached a maturity that satisfies the link speeds needed and that traffic growth is slowing.
“There will be no end of new applications,” says Webb. “But they won’t result in material growth in data requirements or in data speeds.”
What then remains for the telcos is filling in the gaps to provide connectivity everywhere.
Traffic growth slowdown
Earlier this year, AT&T’s CEO, John Stankey, mentioned that its traffic had grown 30 per cent year over year, the third consecutive year of such growth for the telco. The 30 per cent annual figure is the typical traffic growth rate that has been reported for years.
“My take is that we are at about 20 per cent a year annual growth rate worldwide, and it’s falling consistently by about 5 per cent a year,” says Webb.
In 2022, yearly traffic growth was 30 per cent; last year, it was 25 per cent. These are the average growth rates, notes Webb, and there are enormous differences worldwide.
“I was just looking at some data and Greece grew 45 per cent whereas Bahrain declined 10 per cent,” says Webb. “Clearly, there will be big differences between operators.”
He also cites mobile data growth numbers from systems vendor Ericsson. In North America, the growth between 2022 and 2024 was 24 per cent, 17 per cent, and 26 per cent.
“So it is fluctuating around the 20 per cent mark,” says Webb.
Other developments
What about trends like the ever-greater use of digital technologies experienced by many industries, including telecoms? Or the advent of artificial intelligence (AI), which is leading to significant data centre builds, and how AI is expected to change traffic?
“If you look at all non-personal data use, such as the Internet of Things and so on, traffic levels are tiny,” says Webb. There are exceptions, such as security cameras generating video streams. “I don’t see that trend materially changing overall data rates,” says Webb.
He also doesn’t see AI meaningfully growing overall traffic. AI is useful for improving the running of networks but not changing the amount of wireless traffic. “If anything, it might reduce it because you can be more intelligent about what you need to send,” he says.
While Webb admits that AI data centre builds will require extra fixed networking capacity, as will sharing workloads over distributed data centres in a metropolitan area, he argues that this represents a tiny part of the overall network.
He does not see any new devices emerging that will replace the smartphone, dramatically changing how we consume and interact with data.
5G and 6G
Webb also has doubts about the emerging 6G wireless standard. The academic community is busy developing new capabilities for the next wireless standard. “The problem with that is that academics are generally not grounded in the reality of what will make money in the future,” says Webb. Instead, developers should challenge academics to develop the technologies needed for their applications to succeed.
Webbs sees two 6G camps emerging. The first camp wants 6G to address all the shortfalls of 5G using terahertz frequencies and delivering hundreds of gigabits speeds.
“Let’s max out on everything, and then surely, something wonderful must happen,” says Webb. “This strikes me as not learning the lessons of 5G.”
The second camp, including several telcos, does not want to spend any money on 6G but instead wants the technology, in the form of software updates, to address high operational costs and the difficulties in running different network types.
“In this case, 6G improves the operator’s economics rather than improve the end-user offering, which I think makes sense,” says Webb.
“We may end up in a situation where 6G has all this wondrous stuff, and the operators turn around and say they are not interested,” says Webb. “I see a significant risk for 6G, that it just isn’t ever really deployed anywhere.”
Webb’s career in telecoms spans 35 years. His PhD addressed modulation schemes for radio communications. He spent seven years at the UK regulator Ofcom addressing radio spectrum strategy, and he has also been President of the IET, the UK’s equivalent of the IEEE. Webb also co-founded an IoT startup that Huawei bought. For the last 15 years, he has been a consultant covering telecom strategy and technology.
Outlook
The dwindling growth in traffic will impact the telecom industry.
Webb believes the telcos’ revenues will remain the same resulting in somewhat profitable businesses. “They’re making more profit than utilities but less than technology companies,” says Webb.
He also expects there will be more mergers, an obvious reaction to a market flattening out. The aim is to improve profitability.
Given his regulatory background, is that likely? Regulators shun consolidation as they want to keep competition high. He expects it to happen indirectly, with telcos increasingly sharing networks. Each market will offer three or four brands for consumers per market but fewer networks; operators merging in all but name.
Will there even be a need for telecom consultants? “I have to say, as I’ve made these predictions, I’ve been thinking what am I needed for now?” says Webb, laughing.
If he is right, the industry will be going through a period of change.
But if the focus becomes extending connectivity everywhere, there is work to be done in understanding and addressing the regulatory considerations, and also how best to transition the industry.
“I do suspect that just as the rest of the industry is effectively more a utility, it will need fewer and fewer consultants,” he says.
Europe's first glimpse of a live US baseball game
It is rare to visit a museum dedicated to telecoms, never mind one set in beautiful grounds. Nor does it often happen that the visit coincides with an important anniversary for the site.
La Cité des Télécoms, a museum set in 11 hectares of land in Pleumeur-Bodou, Brittany, France, is where the first TV live feed was sent by satellite from the US to Europe.
The Telstar 1 communications satellite was launched 60 years ago, on July 10, 1962. The first transmission that included part of a live Chicago baseball game almost immediately followed.
By then, a vast horn radio antenna had been constructed and was awaiting the satellite’s first signals. The Radôme houses the antenna, an inflated dome-shaped skin to protect it from the weather. The antenna is built using 276 tonnes of steel and sits on 4,000 m3 of concrete. Just the bolts holding together the structure weigh 10 tonnes. It is also the largest inflated unsupported dome in the world.
The antenna continued to receive satellite transmissions till 1985. The location was then classed as a site of national historical importance. The huge horn antenna is unique since the twin antenna in the US has been dismantled.
The Cité des Télécoms museum was opened in 1991 and the site is a corporate foundation supported by Orange.
History of telecoms
A visitor to the museum is guided through a history of telecoms.
The tour begins with key figures of telecom such as Samuel Morse, Guglielmo Marconi, Lee de Forest and Thomas Edison. Lesser known inventors are also included, like Claude Chappe, who developed a semaphore system that eventually covered all of France.
The tour moves on to the advent of long-distance transmission of messages using telegraphy. Here, a variety of exquisitely polished wooden telegraphy systems are exhibited. Also included are rooms that explain the development of undersea cables and the advent of optical fibre.
In the optical section, an exhibit allows a user to point a laser at different angles to show how internal reflection of an optical fibre always guides the incident light to the receiver.
Four video displays expertly explain to the general public what is single-mode fibre, optical amplification, wavelength-division multiplexing, forward error correction, and digital signal processing.
The digital age
Radio waves and mobile communications follow before the digital world is introduced, starting with George Boole and an interactive display covering Boolean algebra. Other luminaries introduced include Norbert Wiener and Claude Shannon.
There are also an impressive collection of iconic computing and communications devices, including an IBM PC, the Apple II, an early MacBook, generations of mobile phones, and the French’s effort to computerise the country, the Minitel system, which was launced in 1982 and was only closed down in 2012.
The tour ends with interactive exhibits and displays covering the Web, Bitcoin and 5G.
The Radôme
The visit’s highlight is the Radôme.
On entering, you arrive in a recreated office containing 1960s engineering paraphernalia – a technical drawing board, slide rules, fountain pens, and handwritten documents. A guy (in a video) looks up and explains what is happening in the lead-up to the first transmission.
You then enter the antenna control centre and feel the tension and uncertainty as to whether the antenna will successfully receive the Telstra transmission. From there, you enter the vast dome housing the antenna.
TV displays take you through the countdown to the first successful transmission. Then a video display projected onto the vast ceiling gives a whistle-stop tour of the progress made since 1962: images sent from the moon landing in 1969, live World Cup football matches in 1970 through to telecom developments of the 1980s, 1990s, and 2000s.
The video ends with a glimpse of how telecoms may look in future.
Future of telecoms
The Radôme video is the closest the Cité des Télécoms museum comes to predicting the future and more would have been welcome.
But perhaps this is wise since, when you exit the Radome, a display bordering a circular lawn shows each key year’s telecom highlight from 1987 to 2012.
In 1987, the first optical cable linked Corsica to mainland Europe. The following year the first transatlantic optical cable (TAT-8) was deployed, while Bell Labs demonstrated ADSL in 1989.
The circular lawn display continues. In 1992, SMS was first sent, followed by the GSM standard in 1993. France Telecom’s national network became digital in 1995. And so it goes, from the iPhone in 2007 to the launch of 4G in Marseille in 2012.
There the display stops. There is no mention of Google, data centres, AI and machine learning, network functions virtualization, open RAN or 6G.
A day out in Brittany
The Radôme and the colossal antenna are a must-see, while the museum does an excellent job of demystifying telecoms. The museum is located in the Pink Granite Coast, a prime tourist attraction in Brittany.
Perhaps the museum’s key takeaway is how quickly digitisation and the technologies it has spawned have changed our world.
What lies ahead is anyone’s guess.
Telecoms' innovation problem and its wider cost
Imagine how useful 3D video calls would have been this last year.
The technologies needed – a light field display and digital compression techniques to send the vast data generated across a network – do exist but practical holographic systems for communication remain years off.
But this is just the sort of application that telcos should be pursuing to benefit their businesses.
A call for innovation
“Innovation in our industry has always been problematic,” says Don Clarke, formerly of BT and CableLabs and co-author of a recent position paper outlining why telecoms needs to be more innovative.
Entitled Accelerating Innovation in the Telecommunications Arena, the paper’s co-authors include representatives from communications service providers (CSPs), Telefonica and Deutsche Telekom.
In an era of accelerating and disruptive change, CSPs are proving to be an impediment, argues the paper.
The CSPs’ networking infrastructure has its own inertia; the networks are complex, vast in scale and costly. The operators also require a solid business case before undertaking expensive network upgrades.
Such inertia is costly, not only for the CSPs but for the many industries that depend on connectivity.
But if the telecom operators are to boost innovation, practices must change. This is what the position paper looks to tackle.
NFV White Paper
Clarke was one of the authors of the original Network Functions Virtualisation (NFV) White Paper, published by ETSI in 2012.
The paper set out a blueprint as to how the telecom industry could adopt IT practices and move away from specialist telecom platforms running custom software. Such proprietary platforms made the CSPs beholden to systems vendors when it came to service upgrades.
The NFV paper also highlighted a need to attract new innovative players to telecoms.
“I see that paper as a catalyst,” says Clarke. “The ripple effect it has had has been enormous; everywhere you look, you see its influence.”
Clarke cites how the Linux Foundation has re-engineered its open-source activities around networking while Amazon Web Services now offers a cloud-native 5G core. Certain application programming interfaces (APIs) cited by Amazon as part of its 5G core originated in the NFV paper, says Clarke.
Software-based networking would have happened without the ETSI NFV white paper, stresses Clarke, but its backing by leading CSPs spurred the industry.
However, building a software-based network is hard, as the subsequent experiences of the CSPs have shown.
“You need to be a master of cloud technology, and telcos are not,” says Clarke. “But guess what? Riding to the rescue are the cloud operators; they are going to do what the telcos set out to do.”
For example, as well as hosting a 5G core, AWS is active at the network edge including its Internet of Things (IoT) Greengrass service. Microsoft, having acquired telecom vendors Metaswitch and Affirmed Networks, has launched ‘Azure for Operators’ to offer 5G, cloud and edge services. Meanwhile, Google has signed agreements with several leading CSPs to advance 5G mobile edge computing services.
“They [the hyperscalers] are creating the infrastructure within a cloud environment that will be carrier-grade and cloud-native, and they are competitive,” says Clarke.
The new ecosystem
The position paper describes the telecommunications ecosystem in three layers (see diagram).
The CSPs are examples of the physical infrastructure providers (bottom layer) that have fixed and wireless infrastructure providing connectivity. The physical infrastructure layer is where the telcos have their value – their ‘centre of gravity’ – and this won’t change, says Clarke.
The infrastructure layer also includes the access network which is the CSPs’ crown jewels.
“The telcos will always defend and upgrade that asset,” says Clarke, adding that the CSPs have never cut access R&D budgets. Access is the part of the network that accounts for the bulk of their spending. “Innovation in access is happening all the time but it is never fast enough.”
The middle, digital network layer is where the nodes responsible for switching and routing reside, as do the NFV and software-defined networking (SDN) functions. It is here where innovation is needed most.
Clarke points out that the middle and upper layers are blurring; they are shown separately in the diagram for historical reasons since the CSPs own the big switching centres and the fibre that connect them.
But the hyperscalers – with their data centres, fibre backbones, and NFV and SDN expertise – play in the middle layer too even if they are predominantly known as digital service providers, the uppermost layer.
The position paper’s goal is to address how CSPs can better address the upper two network layers while also attracting smaller players and start-ups to fuel innovation across all three.
Paper proposal
The paper identifies several key issues that curtail innovation in telecoms.
One is the difficulty for start-ups and small companies to play a role in telecoms and build a business.
Just how difficult it can be is highlighted by the closure of SDN-controller specialist, Lumina Networks, which was already engaged with two leading CSPs.
In a Telecom TV panel discussion about innovation in telecoms, that accompanied the paper’s publication, Andrew Coward, the then CEO of Lumina Networks, pointed out how start-ups require not just financial backing but assistance from the CSPs due to their limited resources compared to the established systems vendors.
It is hard for a start-up to respond to an operator’s request-for-proposals that can be thousands of pages long. And when they do, will the CSPs’ procurement departments consider them due to their size?
Coward argues that a portion of the CSP’ capital expenditure should be committed to start-ups. That, in turn, would instill greater venture capital confidence in telecoms.
The CSPs also have ‘organisational inertia’ in contrast to the hyperscalers, says Clarke.
“Big companies tend towards monocultures and that works very well if you are not doing anything from one year to the next,” he says.
The hyperscalers’ edge is their intellectual capital and they work continually to produce new capabilities. “They consume innovative brains far faster and with more reward than telcos do, and have the inverse mindset of the telcos,” says Clarke.
The goals of the innovation initiative are to get CSPs and the hyperscalers – the key digital service providers – to work more closely.
“The digital service providers need to articulate the importance of telecoms to their future business model instead of working around it,” says Clarke.
Clarke hopes the digital service providers will step up and help the telecom industry be more dynamic given the future of their businesses depend on the infrastructure improving.
In turn, the CSPs need to stand up and articulate their value. This will attract investors and encourage start-ups to become engaged. It will also force the telcos to be more innovative and overcome some of the procurement barriers, he says.
Ultimately, new types of collaboration need to emerge that will address the issue of innovation.
Next steps
Work has advanced since the paper was published in June and additional players have joined the initiative, to be detailed soon.
“This is the beginning of what we hope will be a much more interesting dialogue, because of the diversity of players we have in the room,” says Clarke. “It is time to wake up, not only because of the need for innovation in our industry but because we are an innovation retardant everywhere else.”
Further information:
Telecom TV’s panel discussion: Part 2, click here
Tom Nolle’s response to the Accelerating Innovation in the Telecommunications Arena paper, click here
Silicon Photonics: Fueling the Next Information Revolution
New book to be published in December 2016
Silicon Photonics: Fueling the Next Information Revolution is the title of the book Daryl Inniss and I have just completed.
We started writing the book at the end of 2014. We felt the timing was right for a silicon photonics synthesis book that assesses the significant changes taking place in the datacom, telecom, and semiconductor industries, and explains the market opportunities that will result and the role silicon photonics will play.
Silicon photonics is coming to market at a time of momentous change. Internet content providers are driving new requirements as they scale their data centres. The chip industry is grappling with the end of Moore’s law. And the telecom community faces its own challenges as the bandwidth-carrying capacity of fibre starts to be approached.
Silicon photonics will be a key technology for a post–Moore’s law era, and it will be the chip industry, not the photonics industry, that will drive optics
Each of these changes – the data center, the end of Moore’s law, and a looming capacity crunch – is significant in its own right. But collectively they signify a need for new thinking regarding chips, optics, and systems. Such requirements will also give rise to new business opportunities and industry change. Silicon photonics is arriving at an opportune time.
Despite this, the optical industry still questions the significance of silicon photonics while, for the chip industry, optics remains a science peripheral to their daily concerns. This too will change.
The book discusses how silicon photonics is set to influence both industries. For the optical industry, the technology will allow designs to be tackled in new ways. For the chip industry, silicon photonics may be a peripheral if interesting technology, but it will impact chip design.
The focus of the book is the telecom and datacom industries; these are and will remain the primary markets for silicon photonics for the next decade at least. But we also note other developments where silicon photonics can play an important role.
Silicon photonics will be a key technology for a post–Moore’s law era, and it will be the chip industry, not the photonics industry, that will drive optics.
The book is being published by Elsevier’s Morgan Kaufman and will be available from mid-December. To see the contents of the book, click here.