The Metaverse: A Huge Network and Connectivity Challenge
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The metaverse becomes a virtual reincarnation of the consumer society in digital format. And eventually it dissolves the limitations of a two-dimensional virtual world. Even with the latest augmented reality technologies and high-quality visual effects, our screens still remain flat. And people only communicate with their eyes. However, the metaverse adds hands to a person, perhaps a body, and also movements that can reflect thoughts. This means that “behavior” in this environment becomes more natural.
On the other hand, technological limitations reduce the current metaverse to an extremely poor reflection of the real world. But that said, in this era of COVID-19-induced lockdowns, fears and worries, people certainly have become more dependent and receptive to distance communication, including early exploration of the metaverse. For companies that act quickly and are ahead of the adoption curve, this means excellent opportunities to create new revenue streams.
One of the big questions is whether there will be one global metaverse universe or several? At the moment there are several versions of the metaverse and they are all quite simple. As such, different formats will fight for dominance in this new technological revolution. In 1980 VHS beats Betamax† Then there were CDs and DVDs, and MPEG/MP3. Each time, the format battle was simply the battle between competing companies. We see the same with smartphones, for example with iOS and Android. The metaverse will be no different.
The move from Facebook to the Meta rebrand and the metaverse is a signal of how big this space is going to get. But Facebook certainly won’t dominate it. Competitors will appear soon. As we are in the very early stages of metaverse development, there is an opportunity for telephone companies/telecommunication services (telcos) to reclaim lost opportunities and get deeper into the network side and delivery of metaverse services, as well as some of their capital investment at 5G. And some are already moving in this direction.
But strictly speaking, 5G and the metaverse are not connected in any way. In the age of converged and heterogeneous networks, there is no difference at which point the customer is connected and which transport information is transferred from point to point. 5G is just one of the technologies that is developing quite slowly worldwide. And it’s just one element in a broader connectivity solution. Other elements are the cost reduction of fixed channels, the creation of mesh networks, and so on.
That said, we will definitely see the arrival of 6Geven 10G, as digital advancements like the metaverse tend to accelerate changes in technology formats. That said, the speed at which new technologies will emerge in, say, telcos, is partly a response to the growing need for traffic consumption and the growth of data-intensive content, including augmented reality and virtual reality, where the metavers.
But there is also a reverse loop. When infrastructure is improved, it becomes possible to develop new products and new ways of using technologies. This goes beyond virtual content; for example, self-driving cars and the idea of developing roads that facilitate this were not possible when we used 3G networks.
Today there is a gap between the hype of the metaverse and its reality. Looking at today’s technologies and the construction of new infrastructure that will power and create a feature-rich metaverse that accurately simulates real life, the situation isn’t particularly promising. There are also other factors such as consumers not ready to pay more for the price of access for data-intensive traffic required by the metaverse.
Further, governments do not invest in private companies, so operations such as private telcos are hampered by the fact that capital investment in new infrastructure does not provide a quick return on investment. There is very little direct income growth and it can take decades for, say, telcos to see a substantial return.
Still, the metaverse is the next major connectivity and network infrastructure challenge in the evolution of the Internet. In a world where the graphics must be displayed on the screen in direct response to where someone focuses through their headset, things have to move an order of magnitude faster, requiring a millisecond of single or low double digit latency. This will require massive capacity expansions and fundamental shifts in the way networks are designed and implemented, which in turn will mean massive industry-wide collaboration of technology companies, mobile network operators, policy makers and everyone in between.
As we’ve seen, by looking at telcos in general, we’re a long way from getting close — that’s why Meta (Facebook) has invested in everything from submarine cables and satellites to autonomous internet-beaming drones. While we may see the metaverse as applications, it is actually infrastructure.
Early Day Partners
We saw Meta partner with telecommunications giant Telefónica to build something they call the Metaverse Innovation Hub in Madrid. The goal is to accelerate network and device readiness through various pilot and test initiatives. As well as giving local startups and developers access to a 5G lab, where they can run a metaverse end-to-end testbed on Meta and Telefónica’s network infrastructure and equipment.
That said, many companies that can influence metaverse development are just not there yet. Telefónica is big, has deep pockets and needs to invest in the future. Others make moves too. China Mobile, Verizon and SK Telecom moved quickly to build platforms based on combining the digital world with real-life environments while seeking to recoup 5G investments, but it is still in its infancy.
But it is impossible to recover 5G investment through traffic costs alone. Consumers are no longer willing to pay for traffic. In addition, regulators generally do not support price increases for basic services and Internet access is now a basic need. Telco operators absolutely need to look for new business models and business streams to recoup their investment in 5G. Perhaps alliances with e-commerce companies can help. After all, Facebook, Amazon and eBay now pay nothing for their consumers to access their marketplaces. This could potentially change as virtual reality becomes the new reality.
New income reality
The built metaverse infrastructure must generate income from new business flows. That is, ROI should not result from shifting some of the income from the old to the new infrastructure, but rather from creating a new consumption pattern. A simple example is building a road for self-driving cars where users pay for traveling on the road.
For example, a metaverse might have a paid registration in which users sign up for a membership. In this case, revenue is generated for the investor in the infrastructure, and not for the content owner in the metaverse. The compensation for guaranteed data rates, for example in a business conference, should also go to the owner of the infrastructure, and not to the operator of the communication platform. There are also many other examples.
The question for telcos is whether they will try to regain control of both consumers and services accessing the metaverse network. And this, of course, depends on how early they are in the market and what fundamental work they could invest in to help develop the metaverse.
Vlad Dobrynin is a Founder & CEO at people†
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