It’s a funny quirk of 21st century economics that public companies can be profitable, but just not profitable enough, and few sectors feel the need to reinvent themselves into super-profit machines more than telecommunications carriers.
In the modern day, it is an exceptional listed company that is happy to function as a data-passing business with a small percentage of profit on top without any of the bells and whistles that promise to be either the next big thing or the savior of the industry.
Thanks to being in Sydney, my primary examples will be Australian-based, but it is symptomatic of trends happening around the world.
A couple of years ago, faced with the prospect of much of its wholesale business disappearing thanks to the National Broadband Network (NBN), Telstra decided it would be moving beyond being a telecommunications company, and would now be a technology firm.
“This sentiment is behind the evolution of Telstra’s brand. Telstra is evolving from a telco to a techco — to be a world-class technology company empowering people to connect,” then-Telstra CMO Joe Pollard said in 2016.
“Our brand needs to reflect this, and demonstrate there are better ways for everyone to thrive in this connected world.”
Telstra was fresh off landing former Nokia CEO Stephen Elop, who was tasked with handling the strategy shift.
Fast forward two years, Elop is no longer at the company and Telstra’s technology plays have been hit and miss.
In the U.S., Verizon aimed to be a media player via the acquisitions of AOL and Yahoo. Those purchases combined to create Oath, but haven’t diversified Verizon’s revenue stream. Verizon will live and die with its wireless business. AT&T acquired Time Warner to break into media, but the wireless business carries the day. Resisting being a dumb pipe company gets expensive.
The most spectacular miss could end up being the AU$220 million contract signed in 2016 to construct and run the Australian National Cancer Screening Register for five years, which an audit committee called out for serious underperformance by Telstra Health and said the government should consider killing the contract or imposing penalties on Telstra.
Also see: What is 5G? Everything you need to know about the new wireless revolution | 5G technology: A business leader’s guide (Tech Pro Research) | All 5G stories | CNET: 5G is almost a reality. Here’s what it’ll really feel like
Being able to build and run IT infrastructure for a government that has a track record of handling IT badly should have been a slam dunk, but it was not to be.
At the same time, Australian telcos have been seeking to boost their offerings by including free data from music and video streaming services, and making moves into sporting rights, but Optus found out what can happen when you undershoot the demand for World Cup games.
To understand why telcos are trying anything that could make money, Telstra detailed the extent to which the NBN is carving out its revenue, at the same time as the previous rivers of gold from SMS and other fees begin to dry up and half a billion dollars annually with them.
“The NBN will have reduced Telstra’s net profit after tax by close to a half when fully rolled out. Not a few percent, half,” chair John Mullen said last week.
“To give some scale to that impact, what we are losing through this policy of half our business is approximately equivalent to a company the size of Qantas.”
Pivoting a company the size of a national telco might sound good on paper, but as reality shows, it is quite the challenge.
It is worth noting that even as these searches for revenue replacement have continued, Australian telcos remain quite good at this bit-passing business.
Also: Ericsson: 5G a ‘commercial reality’ as networks sales rise | Edge Computing: The 2 things tech leaders should know | Verizon launches first commercial 5G network, paving way for smart city growth (TechRepublic) | Trump’s FCC bets big on 5G: Here’s how it will change the US economy forever (TechRepublic) | FCC approves faster and cheaper 5G small cell deployments
The next big thing that telcos are banking on is the coming rollout of 5G, but with the Internet of Things (IoT) touted to be one of the major use cases, the future from a telco perspective looks a lot like the past — shunting bits. The tiny low-powered sensors themselves are not going to need much value-add from a telco on an individual level, just a good signal and some software networking higher up the stack.
Despite the need to create the next telco entertainment corp or telco everything-as-a-service arm, the telcos that will survive the shift and intense competition we are seeing will be the ones that are best at providing good networks at reasonable prices.
Dumb pipes might not be sexy as the Silicon Valley darlings, but they will be fundamental in a connected future.
ZDNet’s Monday Morning Opener
The Monday Morning Opener is our opening salvo for the week in tech. Since we run a global site, this editorial publishes on Monday at 8:00am AEST in Sydney, Australia, which is 6:00pm Eastern Time on Sunday in the US. It is written by a member of ZDNet’s global editorial board, which is comprised of our lead editors across Asia, Australia, Europe, and North America.
Previously on Monday Morning Opener:
2022 Ford F-150 Lightning gives new electric pickup its EV name
The all-electric Ford F-150 may still be a ways out from hitting dealership forecourts, but we now know what it’ll be called: the 2022 Ford F-150 Lightning. The plug-in pickup will be unveiled officially on May 19, though Ford hasn’t been able to resist confirming the badge that the new EV will wear.
It’s not the first time that a Ford truck has borne the Lightning name, mind. Back in 1993 the automaker launched the SVT F-150 Lightning, a performance pickup intended to take on Chevrolet’s 454SS.
That, though, had a V8 under its hood, whereas the new F-150 Lightning will take a very different approach. It’ll be fully electric, with Ford promising more horsepower and torque than any other F-150 currently on sale. It’ll also have sky-high towing and payload ratings, the automaker says, and accelerate faster than even the speediest current F-150.
“Every so often, a new vehicle comes along that disrupts the status quo and changes the game … Model T, Mustang, Prius, Model 3. Now comes the F-150 Lightning,” Jim Farley, Ford President and CEO, said today. “America’s favorite vehicle for nearly half a century is going digital and fully electric. F-150 Lightning can power your home during an outage; it’s even quicker than the original F-150 Lightning performance truck; and it will constantly improve through over-the-air updates.”
This isn’t the first time Ford has opted to use a familiar name with a new, electric twist, of course. The automaker risked frustrating fans when it opted to brand the its all-electric crossover, the Mustang Mach-E, with a name more commonly associated with gas-burning two door coupes and convertibles. Even now, years after that announcement, arguments about whether the Mach-E is a “real” Mustang continue.
Meanwhile, GMC took a similar strategy with its high-profile electric SUV. It resurrected the Hummer brand – probably best known for its profligate gas engines – for the all-electric reboot, keeping the burly styling but pairing it with up to three electric motors.
Ford hasn’t said exactly what configuration it has planned for the 2022 F-150 Lightning. The expectation, however, is that there’ll be a dual-motor arrangement for the electric pickup, for all-wheel drive. Battery size and range haven’t been discussed publicly, either, though given electric truck rivals are talking 300+ miles on a charge – and Chevrolet is promising 400+ miles from its upcoming electric Silverado – it seems likely that Ford will aim for something similar.
Part of the F-150 Lightning’s charm, however, will be how functional it is when it’s standing still. Though the current F-150 can act as a generator for worksite equipment, camping, and other situations, the electric pickup will be able to do that without a gas engine running.
Ford plans to begin production of the 2022 F-150 Lightning in spring 2022, at the new Ford Rouge Electric Vehicle Center. Deliveries are expected in mid-2022.
Harley-Davidson sparks LiveWire as a standalone electric motorcycle brand
Harley-Davidson will spin out its LiveWire electric motorcycle into a standalone brand, with a whole range of EVs planned. Announced in production form back in 2018 – though dating all the way back to a 2014 concept – the original Harley-Davidson LiveWire bypassed the clutch and the familiar rumble in favor of a battery and zero emissions, though when preorders opened the following year it was with an eye-watering price tag.
0-60 mph in under 3.5 seconds and instantaneous torque – plus around 110 miles of range – would set you back about $30k, the iconic bike company conceded. The LiveWire was to be the first of a series of Harley-Davidson electric models, as it tried to expand its footprint beyond its traditional audience.
Now, it’s shaking that strategy up a little. LiveWire won’t just be a bike, but a whole brand of its own, initially focused on urban use. It’ll have dedicated showrooms in select markets – initially in California – but also support digital from the outset. Select existing dealers from the Harley-Davidson network will be involved, but you won’t necessarily be able to go into any current dealership and find LiveWire product there.
Of course, though it may be its own entity, LiveWire will get to piggy-back on a lot of Harley’s existing setup. “With a dedicated focus on EV, LiveWire plans to develop the technology of the future and to invest in the capabilities needed to lead the transformation of motorcycling,” the company said today. “LiveWire expects to benefit from Harley-Davidson’s engineering expertise, manufacturing footprint, supply chain infrastructure, and global logistics capabilities.”
Developments by, and for, LiveWire may well find there way into future Harley-Davidson models, for example. Indeed, it sounds like there’ll even be electric Harleys in the future, as LiveWire tech goes full circle to help bring its originator up to speed.
Harley-Davidson has faced challenges in recent years, as it tries to modernize and embrace things like electrification while keeping a grip on its traditional audience and branding. The company launched its “Rewire” plan for restructuring in 2020, trimming select models in some regions, and generally aiming to cut costs. Key, though, is attracting a new, younger audience of riders with Harley conceding a few years back that its appeal among millennials was lagging significantly behind.
We’d already seen the first fruits of that expansion strategy late last year. In November 2020, the company unveiled its Series 1 Cycle e-bike line-up, the first models from its new brand for electric bicycles. Come July 8, meanwhile, we’ll see the first LiveWire branded motorcycle revealed. There, the big question will be whether Harley’s hewn-off nameplate can compete with existing electric bikes on factors like range and price.
Sleeker Pony.ai self-driving SUV hints at more road-ready autonomous cars
Autonomous car headgear keeps getting smaller, with Pony.ai revealing its latest self-driving car design and its much sleeker, Luminar-powered scanning hub. Far from the “upturned trashcan” aesthetic many still associate with the bulky LIDAR sensors atop driverless vehicles, the new version adds less than 4-inches of height to Pony.ai’s modified Lexus SUVs.
That’s a considerable difference from the vehicles the company has been using so far. The existing SUVs have a large, roof-rack style block on top, and then a sensor turret rises from that. It’s for good reason, mind: that allows the LIDAR sensors to have a full, 360-degree field of vision around the car.
For effective volume production, though, not to mention aesthetics and practicality, the system needed to be smaller. That’s just what Pony.ai says it has achieved now, tapping Luminar’s slimline Iris LIDAR sensor along with other tech for a much reduced profile roofline. It’ll be just 10 cm high, though still deliver 360-degrees of visibility for the various sensors inside.
The new design will be used in the company’s “automotive-grade production autonomous fleets,” it says, from 2023. Currently, it operates robotaxi services in three cities in China – Guangzhou, Shanghai, and Beijing – and two in California, Irvine and Fremont. Its fleet of 200+ vehicles have collectively provided more than 220,000 robotaxi rides, Pony.ai says, with over 3.1 million miles of driving across a total operational coverage area almost 330 square miles in size.
Luminar is gaining a higher profile in LIDAR circles, including attention from not only autonomous vehicle startups like Pony.ai but established automakers too. Volvo invested in the company back in 2018, then two years later confirmed that Luminar LIDAR would be a key component in its upcoming SPA 2 platform. Expected to go into production from 2022, it’ll be used initially not for full autonomous driving, but for advanced driver assistance.
Indeed, that’s one of the key aspects of Luminar’s tech, and LIDAR in general: exactly what can be achieved with it depends on the software, the legislative environment, and the ambitions – and risk profile – of the company using it. Volvo’s system, dubbed Highway Pilot, will be a Level 3 system designed to take over on select highways and operate without human supervision. However it’ll hand control back over to the human driver outside of that domain.
Pony.ai’s approach, in contrast, is to relegate the driver to passenger status at all times. The company has been working with backer Toyota – which most recently invested $400 million in February 2020 – and the two developed the AV pilots in China together.
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