Insight

5G and Connecting Billions of 'Unbanked'

With 5G now, it potentially allows the device, both from a storage and a compute perspective, to be dumb. If all the computing and the storage could be done in the cloud, the only thing you have is a really fast connection.

What happens when we start to establish the next generation of connected users? What is the UMTS of connectivity across platforms and devices in a 5G world? One of the standards of UMTS is it creates interoperability on a massive scale. If all of a sudden, we could have all of our devices connected, what are the formats that could enable that? I think that’s an interesting shift in the way that people are going to start to behave.

What is also a fascinating opportunity is bringing the next 1 billion or 2 billion people who are unconnected into the ecosystem of the world. How do you actually bring the unbanked to be banked? If you’re going to try and sell them a 256 GB iPhone, chances are that’s not going to happen for another decade, maybe even two. But if you can give them a really cheap device, but that has a 5G connection -- with all the effort and the investment happening on the network side -- then I think there’s something in it.

I’ll give you an example: Reliance Jio in India. Jio is one of the newest telecom operators in India and they essentially have garnered 300 million subscribers from no base. They did it by offering cheap, low prices for connectivity on 3G. So you now have a whole generation of people in India that have never had any kind of personal experience with television or content that was personal. Television in most homes in India was like going to the cinema. In many small towns and villages, it was a communal experience because you had one television set and occasionally it wasn’t just the family, it was the neighborhood that would consume content on that. That notion of American personal television never made it there at all.

So, take every single one of these people being connected to a smaller-format screen that essentially acts as a television. What does that actually do? What it does is it displaces PewDiePie – he was the biggest YouTuber for years. The No. 1 channel on YouTube now is a company called T-Series. T-Series is an old company that was almost on its deathbed because it was an old Bollywood music label format that was gradually dying out. It had no relevance. They reinvented themselves by making snackable pieces of content that were 16 minutes long for YouTube. Suddenly they now own the largest audience on YouTube because of this whole generation we’re talking about, enabled by Jio – for them, YouTube is television. That’s what television is, except it comes on a mobile device that’s connected by a really cheap data plan and is personal because T-Series is what they want to watch.

It’s pretty incredible to think about how profound that shift is.

Platform Business Models

Netflix, Airbnb and Uber are technology platform businesses that can continue to integrate technology to become mobility service providers. Today, Uber is doing it for cars. You can see the evolution of a business model that, at its core, is grounded in being a platform business.

I think businesses have to do more than financial engineering in this new world. Their new business models have to be connected to what they offer at their core in terms of some form of differentiating technology beyond just entirely a model. For me, the platform effect becomes key.

Uber, at its core, created an ecosystem which was based spatially around a person. Wherever you were, things could come to you. From people going to food, food could come to people. From people having to find cars, cars could come to people. From people having to interact with multiple service providers for trains, planes, buses in their vicinity, those could all now start to get connected. It’s not perfect but it’s essentially digitally enabled the physical world around you and created an interface for you to engage with it. 

The Power of Voice

The ever-increasing sophistication of voice is completely underused now. People were not designed to stare into screens while walking around. It’s very hard when you’re walking in an airport, and there are people whizzing by you in these buggies, to stare at a screen and keep walking. Typically, what I do in those types of situations is talk – either to an actual person or, equally functional, with a machine.

How are people actually going to use voice? Voice in terms of functionality and communication, but also in terms of consumption. How you consume information starts to become very critical in that context. One example are speed-reading apps. Spreeder is one of the apps that started early. How do you listen to stuff at speed to consume information?

One of the things people ask me about is how I read a lot of books. One of the ways is by essentially downloading the books into an app that’s speaking the book to me really fast in my ear as I’m walking somewhere. If I have five minutes of downtime, that’s three chapters of a book that I just read, that I wouldn’t be able to unless I was sitting somewhere staring at a screen.

I trained myself to listen really fast so I can consume auditory information at a ridiculous speed – sometimes six times the speech rate of a normal conversation. To most people, it sounds like a squeaky voice, but I’ve been listening to it for so long.

Why Are All These Happening Now?

Why is this exponential transformative situation going on at this point in time? What are the related threads across all of the above?

Consumer behavior is changing. What’s driving change right now at a particularly rapid pace is that consumers today are able to transfer their experience context from one area to another. What if my bank looked like Uber? Or Airbnb? The context transference idea is relatively new. People are moving across category at an alarming rate. What’s the economic moat for a bank, as Warren Buffett famously coined? Is trust the biggest driver? I’d argue it’s moving from trust to convenience, which is even more important. If Venmo is allowing me to make payments, I might keep my savings account in my bank because that’s my comfort level, but for all my transactional interactions I will use Venmo. Banks used to get all their money from the transactions. No bank wants to just be the safety deposit box for customers.

Similarly, no hotel wants to be just a clean place for a shower and a bed. That wouldn’t bring about the billions of dollars in value that exists in a brand like Marriott. There’s a convenience architecture. When I stayed in hotels on a recent trip, I didn’t order room service. I ordered Uber Eats. Some hotels don’t offer room service anymore, and they no longer need to run a kitchen. I can also just watch movies on Netflix on my iPad. So if you’re a hotel, what are you besides a clean bed and a shower?

Second, business models are able to be funded, given the search for growth. We have a surplus of liquidity in the market. There’s a lot of dumb money in addition to smart money trying to find a home. Look at the macroeconomics – the only thing delivering returns are investments in equities, newer businesses. In the rally in the Nasdaq and the Dow over the last 10 years since the financial crisis, the top five or six companies are all tech companies. They are businesses enabling new business models. That’s a phenomenon. Growth comes by enabling different ways to think about the business. If you say, this is what it takes to create value, the market starts to move there.

Lastly, as described earlier, the computing power and technological ability to create and deliver on expectations is evolving rapidly. Even in something as prosaic as the automotive space, where the car is becoming about software. Not hardware. You can download a new car.

These three factors are in turn enabling the platform companies, and they’re powered by technology like voice, and they’re enabled by connectivity like 5G. They all come at the same time. Together, they are making the exponential difference.