In this episode of The 5G Factor, our series that focuses on all things 5G, the IoT, and the ecosystem as a whole, I’m joined by my colleague and fellow analyst, Steven Dickens, for a look at the top 5G developments and what’s going on that caught our eye, including the latest 5G sustainability and ESG.
Our discussion centered on:
Sustainability Takes Center Stage in Major CSP Decision Making. Communication service providers (or CSPs) are now better positioned to fulfill their sustainability missions, including ESG objectives, by actively managing a diverse range of ESG matters, including providing equitable access to connectivity. From our view, integral to fulfilling sustainability goals is the ongoing commitment by CSPs to prioritize responsible business practices that promote accountability, transparency, and ethical conduct including broader adoption of cloud native and digital capabilties. For example, Capgemini’s Research Institute Report—Networks on Cloud: A Clear Advantage—claims that almost half of telecom networks’ capacity will be totally cloud-native in the next three to five years as 5G-driven sustainability progress requires digital operations platforms that support cloud-enabled agility and flexibility.
CSP 5G Sustainability Fulfillment Aligns with Global Guidelines. By meeting ESG reporting requirements, such as embedded in the Global Reporting Initiative (GRI) and Sustainability Accounting Standards (SASB), CSPs can burnish and equally important market the sustainability credentials of their 5G network builds. We see Vodafone, for instance, is committed to supporting the delivery of the UN Sustainable Development Goals (SDGs) across its sustainability initiatives. Specifically, Vodafone’s Planet pillar targets reducing environmental impact by reaching net zero emission across its entire value chain, aiding customers in reducing their own carbon emissions by 350 million tons by 2030, and driving action to reduce device waste and progressing against its own target to reuse, resell, or recycle 100% of network waste.
Top CSPs in Advancing 5G Sustainability. We examine why we find that Vodafone, Orange, T-Mobile, and Telefonica are excelling at advancing the 5G sustainability cause. For example, since 2020 Vodafone estimates saving customers 22.7 million tons of carbon emissions with its IoT service offer, including logistics & fleet management and smart metering that has proven central in delivering these savings. Orange’s sustainability strategy is purpose aligned with UN SDGs with a focus on sustainable and inclusive economic development and 36.3% of the Orange Group’s electricity originates from renewable sources, including sites using solar energy. Telefónica’s sustainability and ESG objectives have multi-regional impact including emphasis on energy transition to renewables, reduction of CO2 emissions at every level of economic activity with a special focus on the most polluting industries. T-Mobile has also led Green America’s Wireless Scorecard three years consecutively and has attained Renewable Energy 100 recognition as verified by the Climate Group.
Watch The 5G Factor show here:
Or Listen to the full audio here:
If you’ve not yet subscribed to The 5G Factor, hit the ‘subscribe’ button while you’re there and you won’t miss an episode.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Transcript:
Ron Westfall: Hello and welcome everyone to the 5G Factor. I’m Ron Westfall, research director here at The Futurum Group. And I’m joined here today by my distinguished colleague, Steven Dickens, our VP and practice lead for all things cloud. And today, we’re going to dive into our show called the 5G Factor, which is all about the 5G ecosystem and the IoT and major developments that have caught our eyes. Steven, welcome back to the 5G Factor. How have you been bearing up between episodes?
Steven Dickens: It’s been good, Ron. And you always say the nicest things when you welcome me to the show. You’re always such a gentleman. But now looking forward to another episode here. We’ve got a packed docket of things to talk about, so I’ll let you get us straight into it.
Ron Westfall: Right on. And many thanks, Steven. And yes, let’s dive right in. A major issue I’m seeing for the global 5G market is sustainability and how the 5G ecosystem players are advancing sustainability as well as their environmental, social and governance goals. Also, as we commonly see it as ESG. Now, from my viewpoint, communication service providers, or CSPs, are now better positioned to fulfill their sustainability goals and missions, and that includes naturally those ESG objectives. And that is through actively managing a diverse range of ESG matters, including providing equitable access to connectivity. Obviously, bridging the digital divide is a huge objective for all of society. And integral to fulfilling these sustainability goals is the ongoing commitment by CSPs to prioritize responsible business practices that promote accountability, transparency, and ethical conduct, and meeting these sustainability goals. Now, so for 2023 and beyond, I see mobile operator 5G sustainability initiatives hitting their full stride. And the potential of the 5G standalone networks that are expanding can deliver even more of the network wide and ecosystem support needed to innovate 5G networks and spur 5G driven sustainability.
I also find that mobile operators, their executive teams and their decision makers are expanding oversight on the execution and fulfilling these sustainability goals. And that includes a promotion of cross-functional collaboration between technical and sales and marketing units. Now the top 5G sustainability market shapers I see include energy management, and that is the administering of power consumption and its impact on the sustainability goals. Energy management frequently requires automated management techniques, so automation is definitely going to play a major role in all this. And the goal here is to minimize output of energy requirements while also assuring service level agreements, or SLA, compliant, which is all important. This is how the operators definitely monetize 5G services. And that’s, again, particularly related to mission-critical 5G enterprise applications. Plus, I see AI enabled energy management platforms that are designed to decrease mobile operator energy consumption and costs by up to 30%.
And this is important, without diminishing network performance becoming increasingly deployed throughout the highly distributed 5G infrastructure, is again 5G standalone. Such decreases can approach fivefold savings over legacy pre-AI systems that also require scheduled shutdowns. And that obviously costs the operators money. We need to get away from that. For example, T-Mobile is committed to reducing its energy consumption by 95% per petabyte of data traffic by 2030, and that’s from a 2019 baseline, so that’s very impressive. And from my view, T-Mobile’s identification of sustainable and responsible supply as well as greenhouse gas reduction, energy and natural resource management, and also waste and recycling improvements as well as product lifecycle management aligns with the top most sustainability goals of the mobile ecosystem. In essence, all these things really have to come together to advance 5G sustainability. And so now, Steve, what do you see out there that are the top market shapers in terms of 5G sustainability landscape? What do you see the mobile operators out there doing that is of note?
Steven Dickens: Ron, you’ve made some really good points there. I think we’ve seen the macro environment impacting on ESG pledges. And we’re hearing a bit less about that from many vendors in lots of different industries. But I think Telco’s staying the course here. I believe the 5G driven sustainability progress requires digital operations platforms that support the cloud enabled agility and flexibility. This includes distributing data workloads across cloud environments according to the requirements of those CSPs as well as using DevOps frameworks to assure more flexibility and energy management.
One of the things that stood out for me recently was a recent Capgemini research institute report. And I’m looking here at my notes to make sure I get the title of it right. We’ll put that down in the show notes. The report was Networks on Cloud: A Clear Advantage. And that report claims that over half of telecom’s network capacity will be totally cloud native within the next three to five years. Pretty aggressive timeline, but I certainly subscribe to that sort of findings. The report also indicates that operators will spend roughly in the region of 206 million annually on that cloud transformation over the next five years.
We’ve seen a big focus from some of the hyperscalers and some of the cloud native vendors on the Telco market to try and capture some of that spend. But really, the way I’d summarize this is organizations are getting in early on a shift to cloud native and they’re most likely to realize value in the terms of economics and environmental sustainability. It not only hits their goals, but it hits their FinOps goals as well. And Telco Cloud is set to yield that sustainability benefits just from lower facility emissions, if nothing else. It’s reduced physical hardware, footprints, less power usage, auto-scaling of network on demand. One of the key characteristics of the cloud is the ability to spin it up and down, managing mobile towers, power consumption, and bringing AI and machine learning not only to the infrastructure, but to the operations. Plus, as we see mobile operators transition to 5G standalone networks, they’re deploying a 5G core, a 5G ram, a 5G mobile edge computing, and 5G transport domain technologies. And I think all of those are going to be critical to network wide 5G sustainability targets as we look forward.
Ron Westfall: I love that example that you cited, Steve, the Capgemini report. I think it definitely brings out a very important point, is that the cloud is going to play a huge role, hybrid cloud, as well as all the cloud distributed implementations that are going to be needed to make this happen. And with that in mind, Steve, what are you seeing in terms of the top 5G sustainability criterion? That is what do you see having the most priority across the mobile operator and 5G network decision makers out there?
Steven Dickens: Seeing meeting ESG reporting requirements is embedded in the global reporting initiative. We’re seeing that, it’s the GRI. And then another report and set of standards we’re seeing is sustainability accounting standards, SASB. CSPs can burnish and equally importantly market those sustainability credentials of their 5G builds as they look to win enterprises and the end users and consumers. One near and dear to my heart is Vodafone. I think they’re the fifth or sixth-largest company in my home country, so hold them dear to my heart. Vodafone’s committed to supporting the delivery of the UN sustainable development goals, or SDGs, across its sustainability initiatives. Specifically, Vodafone’s focused on its planet pillar targets, which were reducing environmental impact by reaching net-zero emissions across its entire value chain, aiding customers in reducing their own carbon emissions by 350 million tons by 2030, and driving action to reduce device waste, and progressing against its own target to reuse, resell or recycle 100% of network waste.
I think those are just critical. As we look at where everything’s going with climate change, where the market’s going, I think there’s a bold and sort of stick with what I know from Vodafone. We’re also seeing organizations and CSPs gain sustainability progress through encouraging individual units and corporate functions to integrate relevant 5G goals into their strategic sustainability and business planning while holding themselves accountable. This takes on paramount importance as 5G supports more concurrent connections and greater data throughput than the prior generations. That’s just going to result in more energy demands to scale much larger traffic loads and processing more intricate tasks with the … You look at that as the backdrop, it’s absolutely crucial that some of the CSPs, the vendors and everybody in this ecosystem focuses on their ESG goals.
Ron Westfall: Excellent point, Steven. And I endorse the shout-out to Vodafone, obviously a home country fave. And I see them definitely executing on their plan. And that’s why I think they definitely merit that attention. And in addition, I believe to help optimize 5G sustainability outcomes, the CSPs need to show commitment toward investing in clean renewable energy sources, such as solar and wind. And I believe through a specific pledge to use clean energy, I believe that CSPs can accelerate the fulfillment of their sustainability goals while also stimulating the energy efficiency of their 5G builds. And we already touched on 5G standalone as being essential, really, to advancing 5G sustainability. Now, for example, I’m going to turn back to T-Mobile because they were the first operator in the US to attain Renewable Energy 100 recognition as verified by The Climate Group. And T-Mobile achieved this because it’s quite simply invested in energy, renewable energy as a priority. And that included agreements with multiple virtual power plants and other initiatives that came together to allow them to attain that recognition.
That, I think, is important. Also, notably, for example, 36.3% of the Orange Group’s electricity originates from renewable sources. Orange, I think, definitely also gets a shout-out here. And they’re doing this by including sites using solar energy and also expanding the use of digital tools to protect biodiversity and achieving a 12.1 decrease in CO2 emissions across the scope one and two emission ranges. And we’ll touch more on what the scopes mean. And those scopes have been set forth by the 2001 Greenhouse Gas Protocol. And this is something that is driving a lot of this in terms of specifically carbon dioxide emission reductions, or CO2, and hitting them as part of an integral plan, a strategic plan to achieve the sustainability objectives. And so now, Steven, let’s drill down on another aspect of 5G sustainability, and that is the priorities and the strategies that we’re seeing out there. And so from your perspective, what are you seeing out there that is topping the priority list of the key players out there?
Steven Dickens: Well, I think you mentioned it there. I think the CSPs have got to think broader than just within the confines of their organization. They’ve got to think about sustainable supply chains more broadly. Those operators and CSPs have got to put more emphasis on ensuring their wide and diverse network of suppliers abide by sustainable supply chain practices. It’s not enough for them just to keep themselves accountable. They’ve got to keep their entire supply chain accountable. And this includes the expectation of sharing the value-based commitment to fulfilling sustainability programs as well as abiding by supplier codes of conduct that governs supplier conduct in areas, such as reducing greenhouse gases and some of those emissions, water use, responsibly sourcing materials. In some parts of the world, protecting human rights. And mutually assured customer care. I think all of those are kind of bold and things we should be holding these organizations to account on. We see the best operators kind of not only doing that to themselves, but also everybody else in their supply chain.
Ron Westfall: I believe those are excellent examples, Steven. And for my part, let’s turn back to the scope one through three emissions and what they mean, as promised. Now, for my part, I see that the operators focusing more on scope one through three greenhouse gas reduction definitely is essential. Now, through the commitment to these reductions, I believe CSPs are able to validate their sustainability strategies. And that includes certainly countering overall climate degradation. Again, getting that strategic broad perspective into place, but also by making these cuts across scope one, two, and three. And specifically, scope one is the direct emissions that are generated from the CSP facilities themselves. They have the most control over that aspect. And that’s one that’s a good starting point for them to demonstrate their progress overall. And scope two is the indirect emissions from purchased electricity that is required to power all the mobile operator facilities.
I invoke the T-Mobile example. That’s how an operator can proceed. That is definitely making agreements with, for example, virtual power plants, but also investigating, exploring ways to leverage renewable energy across the entire organization. And that naturally will impact the scope three aspect, which is the indirect emissions that are generated both upstream and downstream activities. And that includes the products that the mobile operators sell and the services they use. And that includes, for example, organizational travel.
And this one will be the most challenging one to attain, but already it’s being addressed. And that’s the important thing because I think one thing that we’re seeing with the operators re-invoked is that they’re looking at this as an ecosystem wide responsibility. Yes, they’re going to do their part, but they’re also going to encourage and lobby their partners and other players that are integral to supply chains and so forth to also play a role and to up their game, if you will, to fulfilling the sustainability goals. And so as a result, we see that the Greenhouse Gas Protocol organization is going to play a key role in how all this progresses. And to round out now, Steve, what do you see the operators doing that are actually excelling and advancing 5G sustainability goals? I think we touched on it already, you already invoked a few examples, but who do you see out there, Steven, that is standing out in terms of really kicking it in terms of 5G sustainability fulfillment?
Steven Dickens: Well, obviously, given the accent, I’m proud to see Vodafone leading from the front here. I think their approach to ESG as an integral part of the company’s overall sustainability strategy falls into three pillars. You’ve got planet, inclusion for all, and digital society. Now, those sound like the sort of comments, but I think Vodafone’s living its promise. For example, since 2020, Vodafone estimates savings for customers, and let me check my numbers here, 22.7 million tons of carbon emissions with its IoT service offering.
Ron Westfall: Wow.
Steven Dickens: Which is in the logistics and fleet management and smart metering space. I think those are just impressive numbers. Walking the walk. I think you’ll have seen me talking about edge from my practice and some of the stuff that’s going on in that space. I expect that Vodafone’s IoT and edge services augmented with 5G build and then the increasing deployment of AI and ML will enable organizations to just monitor those operational processes, identify waste, focus on the cause of that waste, and then just improve the overall cost landscape. And that’s something you can’t ignore here. Whilst these claims are sort of good from an ESG point of view and are loftier than just cost, you’ve still got to justify these examples and get them through in a tough macro climate. Whilst it’s good that they’re playing into wider and loftier ESG goals, they’ve also got to make sense from a cost point of view. And I think some of those cost savings we’re going to see there being driven by Vodafone makes sense.
I also like what you were saying about Orange. Its sustainability strategies aligned with where the United Nations’ going. There’s a focus on sustainable and inclusive economic development. And you’ve got to have that balance. In combination with the mobile infrastructure that they’re focusing on with AI enabled 5G and 4G network advancement, I see some good things ahead from Orange, stressing their technical and application innovation. They’re benefiting from international trade and more efficient use of resources. They’ve identified six of those UN sustainability goals, numbers nine, 10, 12, 13, 16 and 17. We’ll maybe put a link to those in the show notes if anybody wants to dig in and go the details. But I think they fully align with what the organization’s doing more holistically.
For Orange specifically, that SDG 13, specifically the one around climate action, is really affirming its environmental commitment, focusing on energy and transport efficiency programs. I think we’re going to see autonomous vehicles starting to become more prevalent. The ability to augment those and provide 5G is going to be huge. And the other piece for me was the switching of renewable energy as well as integrating recycle driven … What’s been commonly called as this circular economy into operations. And then also, from eco design, mobile recycling, that waste recovery, I think they’re just all positives. I think good to see a couple of European operators. Maybe not as big a fan of the French as I am of the British, for obvious reasons that our listeners will pick up from this accent. But all joking aside, good to see a couple of European operators leading from the front. And I wonder whether that’s because of stricter regulations in the EU and in Europe in general. I wonder whether that’s a factor here, but maybe you know more about the space than I do, Ron.
Ron Westfall: Well, Steve and I … Those are excellent examples. I agree with them wholeheartedly, and I think bring out an excellent point. I believe within the EU, yes, they are kind of pace setting it, if you will. What are the sustainability programs, the sustainability initiatives that will work best? And that was certainly a major takeaway from Mobile World Congress, Barcelona. It was quite evident that the European community, including naturally the European operators, are arguably further along, but I think there are other operators in parts of the world that are definitely on pace as well and also gleaning some valuable takeaways with what’s going on in the EU community. And to reinforce the EU theme, I would like to bring in a new operator that we haven’t talked about in the episode yet, and that is Telefónica. And the reason why I’m doing that is because Telefónica, like Vodafone and like Orange, operates in multiple countries. Specifically, they operate in 12 of them. And they offer their services and digital solutions in more than 170 countries when you add their strategic partner agreements.
Clearly, this is going to have an impact globally on what Telefónica does. And thankfully, they are. As we could see, Telefónica’s sustainability and ESG objectives will have multi-regional impact, not just within the EU, but they also are definitely on the bandwagon in prioritizing using renewables, reducing CO2 emissions. And that’s across every level of economic activity. That is the scope three emissions that we touched on. And what I think is interesting is that they’re really focusing on the most polluting industries. They’re not taking the low hanging fruit to tackle their mission. They’re actually going to start with the hardest industries to make a difference in. I think we understand what they are. They tend to be what we call heavy industries. Mining, some of the energy extraction energies. And so it all matters. And having a difference there is going to help the entire ecosystem. And certainly, there is a role for Telefónica and the other operators to play here in terms of, for example, making 4G, 5G accessible to remote locations to help with that part of the energy goals. Plus-
Steven Dickens: Ron, the interesting thing for me on Telefónica is whilst they’re obviously based out of Spain, they’ve got a huge presence in Latin America, so some of those heavy industries. Maybe Europe’s leading ahead on some of the SGPs. But the interesting thing for me is maybe we need to see that in Latin America as well. And I think Telefónica’s leadership here is going to translate over to the Latin American region, which is good to see.
Ron Westfall: All right. Definitely. In fact, Latin America is a huge source for critical battery elements, for example, lithium and so forth. And so yes, this is all coming together. And one thing that is going to be an increasingly important role is battery life, but it’s not just on smartphones and smart devices, but EVs and even power stations. And I think that will just be tremendous that we arrive at the point where batteries can definitely offload existing facilities that require a lot of energy to distribute throughout the community. And so yes, this is all coming together. This is all interrelated. And that’s an excellent example about how Latin America will play a key role in all of this. And also, I see Telefónica is also emphasizing raising social awareness. We just touched on that. And that includes basically, again, using a circular economy, raising community awareness of resource efficiency.
And so Telefónica is doing three things in that area that are important that I see. One is managing risks. And that is, again, through proactive environmental advocacy. Secondly, emphasizing decarbonization and the circularity of its use of renewable energy. We can’t say that enough times. That’s again another key operator getting onto this momentum or advancing it. And again, that’s going to be important in terms of reducing CO2 emissions. And then I think that the third one is something that I’ll bring in now, it’s the digitalization of services. That includes more 5G IoT access, that includes leveraging cloud resources, but also our friend AI and enabling AI to drive more of this automation, driving smarter analytics throughout the entire network and operations and so forth. And to round out, I’ll again mention that T-Mobile is also, I think, making a push that is being validated by third parties.
And that, I think, is also going to be important. For example, they’ve led Green America’s wireless scorecard three years consecutively, and they’ve also received a top rate in the CDP climate change questionnaire. I think all the operators are going to need that third party validation. It’s not just them blowing their own smoke or blowing their own horn, so to speak. But as such, I think T-Mobile is setting an example, certainly for North America, but for operators in general. And I think, again, it’s important to note that they’re looking to reduce their combined scope one and scope two greenhouse emissions 95%, touched on that earlier, but also their scope three emissions 15%.
That, I think, is a very key challenge. And at least they’re setting it out there. And they’re looking to do this by 2025, so that’s just around the corner. And they’re doing this from a 2016 base. We’re definitely going to be on top of that because that one is on the horizon. And we’re going to certainly encourage T-Mobile to obviously attain the goal, but also the partners out there and the ecosystem out there. And so with that, that’s a wrap for today’s 5G Factor show. Steven, it certainly was great to have you back on and-
Steven Dickens: Always a pleasure, Ron. Always a pleasure to come and help you out on these shows.
Ron Westfall: Wonderful. And with that, to our viewing audience and our listening audience, as always, thank you for spending time with us. And we look forward to seeing you again on our next show. Good 5G day, everyone.
Other insights from The Futurum Group:
T-Mobile Q2 2023: Breakthrough Growth in Customers and Profitability
Author Information
Ron is an experienced, customer-focused research expert and analyst, with over 20 years of experience in the digital and IT transformation markets, working with businesses to drive consistent revenue and sales growth.
He is a recognized authority at tracking the evolution of and identifying the key disruptive trends within the service enablement ecosystem, including a wide range of topics across software and services, infrastructure, 5G communications, Internet of Things (IoT), Artificial Intelligence (AI), analytics, security, cloud computing, revenue management, and regulatory issues.
Prior to his work with The Futurum Group, Ron worked with GlobalData Technology creating syndicated and custom research across a wide variety of technical fields. His work with Current Analysis focused on the broadband and service provider infrastructure markets.
Ron holds a Master of Arts in Public Policy from University of Nevada — Las Vegas and a Bachelor of Arts in political science/government from William and Mary.
Regarded as a luminary at the intersection of technology and business transformation, Steven Dickens is the Vice President and Practice Leader for Hybrid Cloud, Infrastructure, and Operations at The Futurum Group. With a distinguished track record as a Forbes contributor and a ranking among the Top 10 Analysts by ARInsights, Steven's unique vantage point enables him to chart the nexus between emergent technologies and disruptive innovation, offering unparalleled insights for global enterprises.
Steven's expertise spans a broad spectrum of technologies that drive modern enterprises. Notable among these are open source, hybrid cloud, mission-critical infrastructure, cryptocurrencies, blockchain, and FinTech innovation. His work is foundational in aligning the strategic imperatives of C-suite executives with the practical needs of end users and technology practitioners, serving as a catalyst for optimizing the return on technology investments.
Over the years, Steven has been an integral part of industry behemoths including Broadcom, Hewlett Packard Enterprise (HPE), and IBM. His exceptional ability to pioneer multi-hundred-million-dollar products and to lead global sales teams with revenues in the same echelon has consistently demonstrated his capability for high-impact leadership.
Steven serves as a thought leader in various technology consortiums. He was a founding board member and former Chairperson of the Open Mainframe Project, under the aegis of the Linux Foundation. His role as a Board Advisor continues to shape the advocacy for open source implementations of mainframe technologies.
