Why AT&T Could Become The Next Big Travel Industry Gatekeeper

The big telcos will become a more visible part of the travel value chain, as “edge” technologies develop in lockstep with 5G networks.
— Luke Bujarski

February 21st, 2018

The Short

Enterprise demand for faster network speeds is mounting, as cutting-edge technologies come into view. The telcos now have a vested interest in accelerating adoption in things like driverless car tech, IoT, and mixed reality. The faster that happens, the faster they get paid. This impetus will push them further up the travel & urban mobility value chain, as the telco business model skews toward delivering 5G connectivity to the likes of Google and Uber.

Edge Technologies Coming Online

The likes of AT&T, Verizon, TMobile and other network operators will eventually become a more visible component of the broader travel industry value chain. That’s because all of those far-field edge technologies that we keep hearing about are finally starting to come online.

This latest string of advanced computing includes IoT, artificial intelligence, smart cities, connected cars, augmented, and virtual reality. But these technologies are gas guzzlers when it comes to data and network bandwidth. As a result, the telcos are stepping up to bring automation to our next beach getaway (perhaps not next).

It’s all about the 5G 

More and more, these giants are moving away from pure telephony and person-to-person networking and into machine coms, as use cases and the business model for 5G networks start to come into view. 5G technology has existed for years now, but the impetus to invest has lagged.

 Source: TBR Research

Source: TBR Research

Operators have struggled to understand how to make money on 5G. In the past, faster network speeds meant more data-plan subscribers. Now existing networks are good enough for most of the current mainstream consumer apps. With 5G, more revenues will need to come from the enterprise clients. The likes of Google, Uber and other platforms will pay more to run their more sophisticated edge apps on their networks. Build it and they will come.

Business model comes into view

Our sense is that the telcos have recently cracked the code and are now blazing ahead to push through with 5G. AT&T recently announced that its nationwide rollout is moving forward with Atlanta, Dallas, and Waco (TX) as their first 5G U.S. markets. Verizon has similar plans. Once on the ground, operators can start building closer business relationships with the likes of Uber, Google, Apple and others looking to power the next digital economy.

Operators and Product Innovators

It’s also in their interest to move things along with the applications - not just the networks. AT&T recently announced plans to launch an edge-tech test zone in Silicon Valley. “In the heart of where innovation lives and breathes, the AT&T Foundry in Palo Alto will work closely with developers, startups and other companies to test low-latency, next-gen cloud applications.”

Changing of the Guard

5G and edge technologies will dramatically impact how, where, and why we travel. Much of the stuff of science fiction will ultimately run on these networks. Want flying cars? Think 5G. Want VR and AR? Think 5G. Want personal assistants telling you where to go? Think 5G. Our sense is that the telcos and travel cos will start warming up to each other as these apps come online. Network innovation and product innovation will go hand-in-hand. How this will affect consumer market share will depend on how fast edge tech evolves.

P.S. Check out God Speed, our new article series dedicated to understanding travel in the context of 5G.

P.S.S. check out our latest analysis on Magic Leap, the promising (and well-funded) new player in augmented reality & spatial computing. Travel will never be the same again.