MWC The Show for Operators

Attendance this year reached 101,000 well above last year’s 85,000, but a bit shy of the pre-pandemic level of 110,000. The show was very crowded the first two days, but there was a noticeable tail-off by day three. Nonetheless, a healthy level.

This comes despite some noticeable absences. Early on we were warned that many companies would have reduced participation. Some of this can be blamed on the pandemic, with many companies still holding back from hosting big booths at trade shows. For example, neither NXP nor Infineon rented show floor space this year. By far, the bigger reason for the biggest attendance head wind comes down to carrier spending. After all, MWC is a show focused on selling things to wireless operators, and operators are not in a spending mood right now. To be clear, the show was busy, but it was also apparent that when it came down to attendance decisions many entities made the marginal decision to send fewer people or not attend. This was most notable among the financial community. Almost none of the couple dozen fund managers we regularly see at the show turned up this year. The sell-side also had a reduced presence. Which then led to many companies not hosting meetings at all. As we get into below, apparently Qualcomm did not even send its investor relations team.

So there was a cascade of reasons for people to not attend this year. And despite this, over 100,000 people did show up. The show is in good shape, and we suspect many more will attend next year.

The 5G Malaise

The root of the slowdown in carrier spending is that in many senses 5G has run its course. Most operators, in most countries have already deployed 5G gear and are in no hurry to do much more. As the old saying goes, the operators seem to only make money on even-numbered ‘Gs’, and 5G keeps the pattern going. The not-so-new standard has done nothing to help operators grow revenue – no obvious appeal for consumers, few new services. The hope was that 5G would at least give the operators ways to reduce costs by simplifying their networks. The problem is that to really make that happen requires some significant upfront investments and painful re-tooling of the plumbing of their networks. In many cases, the operators are seeing the cost per bit of running traffic on their network not exactly increasing, but they are definitely not declining much either.

Originally, this year we had expected the industry to instead attempt to shift the focus to 6G. That did not happen because instead of talking 6G, everyone wanted to talk about AI. We will come back to that topic at the bottom of this note, but all you really need to know is that AI is not poised to revolutionize telecom anytime soon, it will bring plenty of ‘under the hood’ improvements, just no exciting ones.

6G was not going to be a good topic anyway. It is nowhere near ready. Most people we spoke to agreed that work on the standard will really begin in earnest next year. The 3GPP, the group that runs the standards process, scheduled a working conference in March 2025, and that is likely to be the starting gun for the technical work required.

With that start date, a likely target for completion of the standard is probably 2028, at the earliest, which likely means no deployments until 2029 or 2030.

This is just fine for the operators. As noted, they are in no hurry to incur more capex. On the other hand, this is not good news for the vendors. Companies like Ericsson, Nokia and Qualcomm have come to rely on new standards to boost growth. Their revenue will not go to zero for the next five years, but winter is coming.

Further complicating matters, no one really seems to have any big ideas for what 6G could include. Until recently, most people talking about 6G tended to focus on new spectrum bands that could be used. And these included some pretty crazy ideas. Terahertz band, for example, which seemed to attract a lot of attention a few years ago, will offer incredible data rates, so long as users are in the same room as the base station and there are no other people blocking the signal. Those kinds of ideas hold the most appeal for the deep technical crowd whose goal is to design cool things. The more…let’s call them ‘commercially minded’ are starting to think about more… let’s call them practical solutions. But as we have noted in the past there are no easy answers for boosting wireless performance for 6G. Expect lots of small tweaks, only arriving by the end of the decade.

And of course, a lot could still happen to delay the standard. Not least is everyone’s favorite spoiler – geopolitics. The 3GPP has been reviewing its voting policies recently. In part, this was spurred by a certain large handset vendor who tried to game the process by signing up legions of its employees to the voting bodies. Another factor, was a certain country all of whose representatives, no matter what company they worked for, tended to vote in a bloc, ensuring leadership positions for members from that country. No reason to be coy – we are talking about Apple and China respectively. Our guess is that the engineering work on 6G will progress fairly steadily despite all this, but we could still end up with delays in the later stages if the politics get unsettled at the upper layers of the 3GPP.