Massive data, capacity and speed: Navigating the tech revolution with Telefonica CEO at Rakuten Optimism

CEOs of Telefónica S.A and Rakuten Group explain the role of telecoms in a historic technological revolution.

We are now experiencing the deepest technological revolution in history, according to José María Álvarez-Pallete, Chairman and CEO of leading telecoms group Telefónica. In an interview with Rakuten Group Chairman and CEO Mickey Mikitani at Rakuten Optimism 2022, the company’s annual business conference, Álvarez-Pallete said the impact of this revolution would be four times that of the industrial revolution that changed the world during the nineteenth century.

At the heart of this societal transformation is connectivity. “It all flows through a network,” Álvarez-Pallete explained. “This is a profound change of every single aspect of human lives… and this is just a starting point, because with the new deployment of 5G standalone and fiber, we are really opening the Pandora’s Box of a massive amount of data, a massive amount of capacity, a massive amount of speed and certainly almost zero latency.”

Mickey Mikitani and José María Álvarez-Pallete López discuss innovation in telecom at Rakuten Optimism 2022.
Mickey Mikitani and José María Álvarez-Pallete discuss innovation in the telecom industry at Rakuten Optimism 2022.

Telefónica is working with Rakuten Symphony to introduce Open RAN in the highly versatile 5G standalone networks (5G networks with a dedicated cloud-native core). Open RAN enables the hardware and software employed in the radio network to be sourced from multiple vendors, giving the operator a high degree of flexibility.

In August 2022, Virgin Media O2, which is partly owned by Telefónica, announced their joint multi-vendor Open RAN deployment is entering the field phase, commencing with the activation of the first live sites in Virgin Media O2’s commercial network.

Liquid networks: Open RAN opens the door to greater flexibility and capacity

Noting that Rakuten is at the forefront of the shift to Open RAN, Álvarez-Pallete described the deployment of the technology as a very strategic move. He explained that this new architecture will enable Telefónica to have “a liquid network which implies a high degree of flexibility increasing capacity in a very dynamic way.” By working together, Telefónica and Rakuten can bring scale to the Open RAN ecosystem, which will reduce costs for suppliers, he added.

“The things that you are doing through Symphony, through the stack that you are building, is the way going forward”

José María Álvarez-Pallete, Chairman and CEO, Telefónica S.A.

The rollout of fiber and 5G networks could also dramatically improve energy efficiency. Álvarez-Pallete noted that a fiber network consumes 15% of the energy of a copper network (per bit transferred), while 5G is 90% more efficient than 4G per unit of traffic.

José María Álvarez-Pallete López at Rakuten Optimism 2022.
José María Álvarez-Pallete at Rakuten Optimism 2022.

These networks will also enable business customers and final consumers to become more efficient, further saving energy. On average, advanced connectivity could cut their users’ emissions by 35%, he estimated.

Giving customers the ability to run their own networks

Álvarez-Pallete and Mikitani went on to discuss how traditional mobile networks are morphing into massive “decentralized and capillarized computers” that will greatly expand what telcos can provide to their customers. Álvarez-Pallete explained how 5G standalone technology will enable Telefónica to offer the network-as-a-service: “You are basically giving every single customer the ability to run their own [virtualized] network… this is a game changer.”

Businesses will be able to access these capabilities via an abstraction layer made up of application programming interfaces (APIs). If operators across the telecom sector use standard APIs, developers could easily harness telco capabilities and features, such as billing, signaling and geolocation across networks. There is the potential to open “a new interface from our sector into society, into developers, into innovation,” Álvarez-Pallete added. “This is the next wave…if we are able to do that, this is another world.”

Rakuten Symphony – a harbinger of things to come

Mickey Mikitani, Rakuten Group Chairman and CEO at Rakuten Optimism 2022.
Mickey Mikitani, Rakuten Group Chairman and CEO at Rakuten Optimism 2022.

One of the reasons that Telefónica is working with Rakuten Symphony is to make its networks more accessible to developers. “The things that you are doing through Symphony, through the stack that you are building, is the way going forward,” Álvarez-Pallete told Mikitani. He said the telecom industry’s future is “about stacks. It’s about APIs. It’s about global standards. It’s about the community of developers. So, the closer we can be to that world, the better. And what you have with Symphony is already there… it’s really powerful. It’s at the forefront of what the sector is going to do.”

The two business leaders also discussed the importance of protecting people’s rights in the new digital era, such as the right to privacy, freedom of information, and a right to the truth. Álvarez-Pallete made the case for a digital bill of rights, that would set out the rights and obligations of people and machines in this new world. He stressed the need to put people first and ensure no one is left behind.

While noting that widespread adoption of “web 3.0” technologies, such as blockchains, will test the business models of the major tech platforms, Álvarez-Pallete suggested the ongoing technological revolution will also take the telecom industry into unchartered territory. Telefónica is trying to adapt rapidly. “It’s like the Benjamin Button movie,” Álvarez-Pallete concluded. “We might have been born old for this world, but we are getting younger day by day.”

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