Telcos are looking at over-the-top (OTT) providers as an opportunity, rather than a threat, according to new research by Heavy Reading, commissioned by IT services and software provider Comarch.
In fact, the research, which surveyed 119 communications services providers, 49 percent of which are tier one operators, found that:
- 42 percent of telcos are choosing to partner with OTT providers such as Netflix and Whatsapp by bundling services from partners;
- 24 percent decided to compete with these providers, by developing apps of their own;
- 18 percent chose to diversify by transforming into multiplatform providers for OTTs; and
- 14 percent preferred to specialize, by focusing on customer quality of service (QoS) issues to maintain a competitive position.
Telco top (and bottom) priorities
Respondents identified investment in business intelligence and analytics as their main priority over the next 12 months, while systems supporting customer service and operations were also high on the list.
“Telco data is some of the richest in the world, with users carrying a phone wherever they go and using it for everything from making calls to banking and shopping. The wealth of information that can be gleaned from this data is invaluable for telcos. It’s no surprise that telcos are prioritizing their investment in business intelligence and analytics,” said Małgorzata Siwiec, Marketing Director, Comarch.
Telcos are also looking to save on costs by increasing their focus on process automation and network virtualization. The research found that they are less concerned with investing in DevOps as part of their digital transformation process.
In fact, 11 percent of respondents admitted to having no DevOps function at all. Of those that have adopted DevOps, 39 percent reported that it only covers parts of the organization, with other parts resisting implementation.
“The greatest irony of the smartphone age is that the companies that enable the connectivity of mobile computing still have a high level of manual processes in their operations and are generally regarded by consumers as a pain when it comes to ordering services or resolving problems (which in turn often arise due to human error in manual processes).” said James Crawshaw, Senior Analyst, Heavy Reading (which was commissioned to carry out the research).
“The good news is that telcos are no worse than most established industries when it comes to embracing automation and digitalization. Rather than compare a telco with an advertising business (Google, Facebook, etc.) it would be fairer to compare them with your local electric utility, airline, bank or supermarket chain. In that context, telcos are actually fairly digitally savvy”.
Mixed plans on big data
Respondents to the survey were divided on how to handle the data they collected:
- 28 percent plan to use the data to develop marketing and advertising campaigns;
- 26 percent are using the data to understand their customers and don’t plan to monetize it;
- 20 percent will use the data to roll-out location-based services; and
- 11 percent plan to sell reports on user behavior to third parties, the same number will sell anonymized user data to third parties.
In the long-term, telcos intend to use their data to develop a greater range of self-service apps and provide more personalized offers to customers.
Digital transformation and network evolution have some overlap, in that innovations such as virtualization are seen as potential enablers of greater agility for operators. The research investigated when companies thought they would have at least 50 percent of their operations/services moved to the cloud:
- One third said this would take place within the next three years;
- 37 percent said it would happen in the next three to five years;
- 5 percent admitted it would take more than 10 years;
When it comes to implementing network functions virtualization and software-defined networking (NFV/SDN), unsurprisingly the most commonly cited challenge (35 percent) is integration with legacy tools. This is followed by culture (23 percent) as network engineering, operations and suppliers have to redesign and rethink deployment for the cloud.
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