By James Robinson, Lead Analyst, GSMA Intelligence
On 8-9 October, stakeholders from across the digital landscape gathered in Moscow for the GSMA’s Mobile 360 – Eurasia 2019. Back for its second year, the well-attended event centered on the opportunities and challenges facing the mobile sector in the Commonwealth of Independent States (CIS) region and examined how investments in 5G and emerging technologies will guide the evolution of the digital economy.
The CIS has a highly unique subscriber penetration rate of 81%, while greater use of data-intensive services and demand for higher speeds are driving 4G adoption. Further, the mobile industry is a major supporter of the region’s economy, adding $101 billion to GDP in 2018.
In his opening keynote, GSMA Director General Mats Granryd underlined this contribution and described how the combination of 5G, the Internet of Things (IoT), artificial intelligence (AI) and Big Data will accelerate the expansion of the digital economy and help to realize regional growth ambitions.
This message is reinforced in GSMA Intelligence’s latest Mobile Economy Russia & CIS 2019. According to the report, Russia and Belarus are set to lead the CIS in the commercialization of 5G, with services becoming available in 2020. The region’s other 10 markets are all expected to launch 5G networks by 2025. At this point, the CIS will be home to around 54 million 5G connections, representing an adoption rate of 13%.
However, speakers, including Huawei Deputy Chairman Ken Hu, highlighted spectrum availability (particularly C-band and mmWave) and infrastructure access as two major barriers to the development of 5G in the CIS. Next-generation connectivity has the potential to underpin a range of innovative solutions for businesses and consumers, but policymakers must work with industry to spur rollout and to harness the power of 5G across verticals.
Across the CIS, consumers are becoming increasingly engaged with digital retail; the Russian e-commerce market alone is estimated to be worth RUB1,040 billion ($16 billion) in 2018. Operators are therefore seeking to invest or formalize partnerships in this space, particularly as smartphone and mobile broadband adoption rates grow.
China’s Alibaba has now partnered with MegaFon, the Russian Direct Investment Fund (RDIF) and Mail.Ru to launch AliExpress Russia, putting it in direct competition with domestic giant Yandex. Looking ahead, joint ventures could become the pillars of Russian e-commerce as players look to gain scale, drive down pain points (e.g. fulfilment costs) and improve delivery times.
The fin-tech sector is also enjoying growth, with several CIS mobile operators having already moved into digital banking and top-up services. There is a clear opportunity to diversify the revenue mix: Beeline’s 2018 fin-tech revenue in Russia was up 94% year-on-year, driven by digital insurance, remittances, and its credit card.
With Russia a mature digital banking market, Beeline outlined how challenger banks can partner with operators to help build digital infrastructure and access a large customer base. The digitization of financial services will continue in the CIS as the penetration of internet-enabled devices grows, consumer preferences and regulation evolve, and the adoption of mobile broadband increases.
The final session of the second day was a panel discussion on AI. Three experts from the telecoms and healthcare sectors and the wider data science community overviewed current applications of AI technologies and debated predictions for the year ahead.
While there are differences in peoples’ definitions of AI, there is clear potential for business transformation and new consumer use cases. For operators, AI is being employed to improve efficiency and reduced costs, which is important as they look to reconcile forthcoming 5G Capex with stagnating revenue growth. Meanwhile, Botkin.AI is utilizing AI’s image recognition abilities to provide services for hospitals’ oncology departments.
There was a consensus among the panel that AI will become increasingly more advanced, reusable and widespread in 2020, supporting the development of nascent applications. On the ‘future of work’ issue, the panel did not feel that AI will be the trigger for significant job losses. Instead, MegaFon considered that its engineers will use AI’s capabilities for better network management (e.g. in the diagnosis and repair of faults).
Moreover, any policymaker looking to establish a regulatory framework for AI should collaborate closely with the public and private sectors. And with the CIS still at a relatively early stage with AI, hastily introducing strict rules could hamper innovation. As applications of AI multiply and the technology matures, the region must take the appropriate action that mitigates risks but also ensures continued investment and international competitiveness.