Until recently, connectivity – that is voice, SMS and data communication services – was the main commodity offered by telcos. The disruption in CSPs market that started by the OTTs and content providers, seems to be softened with their partial entry into the CSPs' value chain. The rise of Cloud and IoT brought new solutions both for the B2C and B2B market, however, no killer application has emerged.
5G is opening a new chapter in the telecommunications industry, unlocking a huge potential for growth. Numerous use cases spring up, in all industries, for services beyond connectivity, offering new experiences and allowing for efficiencies through automation and cost reduction.
Some CSPs may remain faith to connectivity, advancing it to best-in-class or adding value on it, with network security, for example. However, most large operators are developing their strategies on becoming platform or end-to-end solutions providers. The big revenue will come from applications.
In order for CSPs to take advantage of this new potential at its full, they need to abandon the connectivity-provider mentality. They need to dig deep into enterprise sector, understand their needs, and create solutions that best serve their business. In order to do so, they need to acquire new skills and build new mindsets. They need to transform.
Many operators are on their way to transformation, following the strategy most fitting their vision. For example, Vodafone is creating a pan-European R&D unit, called Vodafone Technology, “as a key strand in” their “strategic goal of becoming a digital enabler, offering products and services, built on and around core connectivity offer”, according to Johan Wibergh, Vodafone Group CTO1. On the other hand, Telia, have focused on building values and skills as part of a purpose driven strategy. This strategy includes a customer-centric approach, inspiring customers beyond connectivity. It also includes a culture of creating trust for them, through multiple digital initiatives, such as a secure network, quality services to government and municipalities, help for the elderly and keeping the children safe on-line2.
5G will drive up to €2.0 trillion in new economic gross output (sales) over the period from 2021 to 2025, felt by every major industry3.
The automation enabled by technologies as such, is of paramount importance in delivering attractive use cases both for consumers and enterprises. Autonomous driving, remote surgery, virtual reality sporting events and cloud gaming are only some of the exceptional experiences to be created. Costs can be optimized, from the network level – by using software defined applications, to the customer level – with advanced self-service applications, and from logistics – by building intelligent inventories to production facilities – with the help of robots and connected workers.
In majority, CSPs lack the innovation and speed required, in order to take advantage of the potentials above4. The traditional Telco model is based mostly on Core and Access network technology, skills and mentality. The beyond connectivity model requires specialized SW skills and use case oriented mentality, capitalizing on modern technologies like cloud, AI, ML and IoT. On the other hand, most enterprises would consider purchasing additional services, in the form of end-to-end solutions from their CSPs, in order NOT having to do with multiple partners, themselves5.
The transformation may take place in the business layer, the operational and the technology layer.
Business-wise, there are multiple models that CSPs may choose to operate6 (Figure 2). These models constitute CSPs’ choices from pure connectivity provider to end-to-end solution provider. CSPs may offer value added connectivity, e.g. network slicing. They may select to address the needs of individuals, enriching their offers with third-party solutions e.g. OTTs, or act as wholesalers focusing on specific industry vertical(s) e.g. insurance. They may target specific customer segments, and offer end-to-end business solutions in cooperation with their partners. CSPs have a broad range of thinking regarding opportunities per industry also, according to a TM Forum survey7. And while for most of them, the path to revenue beyond connectivity lies in the enterprise sector, particularly as 5G and IoT mature8, some CSPs, will still find the consumer market attractive, allowing for an ARPU increase of 20%9.
A few operators have already gone through stunning transformations. However, it seems that in majority, CSPs are focusing on building agile infrastructures capable of managing the multiple of use cases to come up. Like in the case of Vodafone, who "aims at developing a true platform business", believing that "growth beyond connectivity will come from developing new business and revenue models with partners", according to Coleman Deegen, CEO of Vodafone Spain10.
Nonetheless, there are remarkable cases of CSPs advancing in specific verticals, like in the case of KDDI. With the help of smart glasses, real-time video transmission systems and digital ledgers, they remotely collect information from sensors and analyze them in order to send the appropriate instructions back, building the Smart Factory11 of today. On the consumers' side, BT has merited their sports fans, with unique experiences, based on augmented reality, through the Matchday Experience12 before getting into a joint venture with Warner Bros. Discovery13.
Operational-wise, many CSPs have formed brand new departments to offer the new 'digital' services, both product-wise and experience-wise. New roles such as CIOs have been assigned, strengthening the importance of 'soft' technologies in the new structure. Agile and responsive teams, with clearly defined roles have already started experimenting with flexible and modular infrastructures and architectures e.g. cloud and microservices, delivering new digital solutions e.g. smart IoT. CSPs need to think like a SW company14, in order to handle, efficiently, the experience expectations of their customers - B2C or B2B - as well as the innovative, quality and secure solutions they are planning to offer.
A digital culture15 needs to be built in order to align organizational, leadership and individual goals. Silos have to be broken down, employees need to be encouraged and trust has to be developed. New organizational values are required, so that daily operations, behaviors and mindsets are integrated with the company's ESG16 commitments and actions.
Technology-wise, the tools as well as the synergies that will make this change happen, may be selected.
Network and business platforms are moved to the cloud in order to cover the engaging experiences required by the consumers of the future, either they are individuals or enterprises. In order to deliver a cloud game onto the users' screen, multiple partners cooperate, including for example, the cloud game provider, the device provider, the application provider and the 5G network provider. The cloud game provider may use a dedicated network slice, which will configure themselves, through on-line self-service tools. Partners' on-boarding, on-line enterprise product catalogues, and real-time configuration, quoting and pricing will be used to deliver the services created (Figure 4).
Some CSPs have already partnered with the hyperscalers of their choice, either to build their network services in the cloud - as in the case of AWS and DISH17, or even to operate their network through the hyperscalers - as in the case of AT&T and Microsoft18, even if hyperscalers themselves are building their strategies towards specific verticals as in the case of Microsoft and Tampnet19.
Likewise, CSPs have made their choices towards their business platforms, e.g. BSS, using local or global transformation strategies, e.g. Telefonica20.
AI has a leading role in driving efficiency, competitiveness, and customer value, helping enterprises transform their operations, customer relationships and business models. Combined with cloud or edge, IoT and 5G, it can enable numerous applications that can supercharge all business sectors, achieving faster, more reliable and cost effective operations. For example, the committed performance of the game quality or the network slice, will be achieved through real-time optimization of the network, using machine learning, preferably at the edge. Similarly, in a smart power plant, where analysis of data sets becomes extremely demanding, the edge offers the convenience required, for analysis and decision-making near the sensors.
With regard to all cases above, as well as many more, pricing becomes extremely important for monetizing the services set, and ultimately releasing the revenue expected. New charging models and settlement capabilities will be used for the ecosystem of partners. For example, charging for the cloud gaming company, per game or for the amount of time spent playing may be used. Network slicing charging may be based on spectrum and energy efficiencies. The billions of devices of the smart power plant, that may carry different ARPU, must be efficiently handled with differentiated and value-based charging. Low latency charging, distributed on the edge, will minimize IoT network traffic and reduce related costs.
Intracom Telecom is a trustworthy partner of many telcos, utilities and enterprises around the globe, working with them side-by-side, understanding their needs, and offering solutions to their problems. Intracom Telecom portfolio is based on state-of-the art products and solutions using tools and methodologies, providing the automation, flexibility and agility required by modern organizations.
Selective offerings, designed to support services beyond connectivity include: