This site uses cookies. Browsing the site, you agree to the use of cookies. If you need more information, please visit the Cookies Policy page

Русский

English

Enter / Registration

Cryptocurrencies: 9505 / Markets: 114717

Market Cap: $ 3 663 340 658 986 / 24h Vol: $ 222 537 540 211 / BTC Dominance: 58.861607907734%

Н News

Without High Switching Costs, Telecom Looks Vulnerable to DeWi

As big telcos grapple with a debt burden supercharged by COVID, the prospect of at-scale 5G this decade is becoming more of a meme than an inevitability. While it’s likely a shock to customers who already see a 5G icon on their phones and assume they have full service, the 5G buildout is in its nascency.This op-ed is part of CoinDesk's new DePIN Vertical, covering the emerging industry of decentralized physical infrastructure.It will take another $250bn+ for telcos to build 5G themselves, a prospect causing little excitement in corporate boardrooms given the dearth of use cases today that require it. As a result, mobile network infrastructure providers are suffering. Ericsson shocked financial analysts this past quarter when it reported sales down almost 20% from the year before. The capital intensity, and coordination complexity of building a telecom network just isn’t worth the effort to a centralized company.But the rate of technological progress isn’t slowing down: skyrocketing demands for cloud compute require an exponentially increasing supply of bandwidth. Where will this step function improvement come from?Decentralized Wireless (DeWi) networks offer an efficient way of bridging the two outcomes by outsourcing the work required to build 5G networks. The secret ingredient in DeWi is community-driven collaboration: any person can deploy a device that provides others with bandwidth and be sure they will be paid for the service provision. By incentivizing people to monetize their internet connections, DeWi networks turn their communities into their supply chain.The secret ingredient in DeWi is community-driven collaborationKey to DeWi’s success is the commoditization of telecom hardware: while complex towers and boxes used to do the heavy lifting, now software does all the work. WiFi offload has emerged as a key component supercharging 5G, as the majority of mobile use occurs indoors.While still nascent, this model of building telecom networks has seen promising developments. DePIN networks like Helium have created meaningful supply side footprints, supporting thousands of hotspots. By combining their footprint of hotspots with T-Mobile’s nationwide cellular network, Helium launched Helium Mobile to sell cheap phone plans directly to customers. The experiment is still early, with ~100,000 subscribers and 10,000 suppliers on the network, and many are skeptical it may ever work as free phones and two-year exclusive contracts present meaningful switching costs.While demand has proved far slower to emerge than investors expected, the skeptical view ignores changing context that is rapidly reducing the barriers to entry.For decades, big telecom companies have kept customers locked into long-term contracts and made it difficult to switch providers. But that's changing. The physical SIM card, once a key part of this strategy, is becoming obsolete. Apple’s new iPhone 14 supports multiple eSIMs, which are digital versions of SIM cards, meaning one can now switch carriers with a few taps on the phone instead of visiting a store.This shift drastically reduces switching costs and levels the playing field, allowing smaller companies to compete with the telecom giants. What used to take days to switch providers now only takes minutes. This challenge has been reinforced by regulators, who aim to limit the ability of telcos to lock customers into exclusive contracts.The last vestige of the high switching cost model, customer lock-in, is under attack by the FCC today. The FCC Chair is advocating for a policy that would stop carriers from blocking phones from using other eSIMs after six months. This change means that after six months, anybody can switch carriers easily without any restrictions, regardless of the original terms and price promotions associated with the contract.This policy could shake up the telecom industry, ending the profitable strategy of bundling free phones with long-term contracts. As a result, the industry should expect intense price competition since carriers can no longer rely on package deals to keep customers and will have to compete on selling commoditized bandwidth.Read more: Max Thake - DePIN: It's Time for Crypto to Get RealThe battle for per-unit bandwidth is one that DeWi has an unfair advantage in: the community deployment model adopted by protocols like Helium will always cost more than the equivalent centralized incumbent, with some scale. The three biggest cost buckets suffered by incumbent carriers are: spectrum costs, capital expenditures on hardware, and tower maintenance fees.The secret sauce of DeWi is outsourcing all three of these costs to people willing to host internet-providing routers themselves, obviating the need to spend money on real estate and towers. By paying them in tokens, DeWi networks allow community members to participate in the upside, and incentivizes viral growth.While companies like Helium compete on telco turf of contracted phone plans today, tomorrow they will be competing to provide on-demand bandwidth. This is a battle in which community-driven networks have an unfair advantage. Because they don’t have immense startup costs from day one, they don’t rely on long-term customer lock-in to create profit.The same transformation in customer behavior is afoot across cloud services, as providers like AWS are being forced to move from contract software-as-a-service (SAAS) models to pay-as-you-go infrastructure-as-a-service (IAAS) models. There, too, DePIN networks are solving some of the world’s biggest problems by crowdsourcing supply. As the acceleration towards IAAS continues, expect DePIN projects like Helium to continue accruing mind share because of their flexible, cheap service offering.Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.Edited by Benjamin Schiller.

Source

Н News

Without High Switching Costs, Telecom Looks Vulnerable to DeWi

Similar news

Hodl or take profits? Bitcoin bear market cycle started at $126k

Elon Musk: ‘You can’t fake energy.’ Has Bitcoin finally gone green enough for Tesla?

Bitcoin risks falling under $100,000 as Trump confirms US-China tradewar

Why is Bitcoin trading below $110,000? Everything that happened in crypto today

Can Bitcoin hold the line as $1.8B in realized profits hits the market?

XRP Tries to Reclaim $2.50 as Ripple Broadens Payment Rails in Africa

Н News

Without High Switching Costs, Telecom Looks Vulnerable to DeWi

Similar news

Hodl or take profits? Bitcoin bear market cycle started at $126k

Elon Musk: ‘You can’t fake energy.’ Has Bitcoin finally gone green enough for Tesla?

Bitcoin risks falling under $100,000 as Trump confirms US-China tradewar

Why is Bitcoin trading below $110,000? Everything that happened in crypto today

Can Bitcoin hold the line as $1.8B in realized profits hits the market?

XRP Tries to Reclaim $2.50 as Ripple Broadens Payment Rails in Africa

Stay in touch