Features and Analysis

Why cloud seems to be the only feasible option for telco digitalization

All telco operators are talking about going digital, with a few pioneers like KPN and Telefonica already ahead in the race. The traditional telco business model is suffering from low revenue and high cost of customer servicing, so telcos are looking to increase their margins by offering new and innovative products and delightful customer experiences.

However, going digital is not that simple. It involves high investment in terms of a new or a revamped platform, investing in customer handling processes, strategizing, possibly redefining the network architecture, acquiring future-ready solutions etc. On top of that operators also need to manage the timelines to make sure they are on track and ready to service the customer before it is too late or something new crops up.

Managing the scope

Moreover, one of the biggest questions is: since the telecom and media space is continuously evolving, where do you restrict the scope? I.e. where do you aim when you have a moving goal post? Big telcos which are going for current transformation have made this decision after much pondering and in most cases we see that their last transformation program happened around 5-8 years back. But will it be the same case for them in future?

Have you heard about the Kurzweil’s law of accelerating returns? It states that:

“An analysis of the history of technology shows that technological change is exponential, contrary to [the]common-sense ‘intuitive linear’ view. So we won’t experience 100 years of progress in the 21st century — it will be more like 20,000 years of progress (at today’s rate). When people think of a future period, they intuitively assume that the current rate of progress will continue for future periods. However, careful consideration of the pace of technology shows that the rate of progress is not constant, but it is human nature to adapt to the changing pace, so the intuitive view is that the pace will continue at the current rate.“

So even talking hypothetically, how will we address these things in the future? Will we always be a step behind in coping with the market demands?

In a typical telco ecosystem, there are three major players:

  • End user
  • Service provider
  • Solution vendors

All three of them have defined roles and responsibilities and are considered to be experts in their own field. However, most of the service providers have a fully fledged ICT platform (in premise) procured from the solution vendors, to offer their services to end users. The solution vendors provide solutions and act more like a facilitator in the whole ecosystem. The in-premise solution is typically preferred by service providers due to many issues and guidelines mandated by most of the licensing and regulating authorities.

Moreover, it is costly to run and manage (OpEx and CapEx) end-to-end privately owned infrastructure. On the other hand, a few service providers opt for a solution-as-a-service from a third party, generally from the original solution provider over the cloud environment. Solution-as-a-service is a concept of being able to call up re-usable, fine-grained software components across a network. There are many benefits of having a cloud model, such as:

  • Low barriers to entry, with services typically being available to or targeting consumers and small businesses.
  • Little or no capital expenditure as infrastructure is owned by the provider.
  • Massive scalability, though this is not an absolute requirement and many of the offerings have yet to achieve large scale.
  • Multitenancy enables resources (and costs) to be shared among many users.
  • Device independence enables users to access systems regardless of what device they are using (e.g. PC, mobile etc.).
  • Location independence allows users remote access to systems.

Moreover, the benefits from a business perspective which I found most convincing in the current scenario are:

  1. It’s in auto-mode. No need to think about future upgrades (software/hardware/ features/functions)
  2. Improved TTM (Time to Market) without going into change requests and product limitation
  3. Your TCO (Total Cost of Ownership) is reduced because you are saving both OPEX and CAPEX
  4. No need to worry about partner products and tie-ups as the solution providers usually come with a list of pre-configured partners
  5. You do not lose control over your customers

So effectively it’s all managed like a project where you have shared your risks with other competent stakeholders and you just need to do what you are supposed to do – sell in the market.

Cloud offerings available in the market are at three levels;

Software as a Service (SaaS):  A software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted

Platform as a Service (PaaS): Provides a platform allowing customers to develop, run, and manage applications without the complexity of building and maintaining the infrastructure typically associated with developing and launching an app

Infrastructure as a Service (IaaS): Provides shared computer processing resources and data to computers and other devices on demand. It is a model for enabling ubiquitous, on-demand access to a shared pool of configurable computing resources (e.g. computer networks, servers, storage, applications and services)



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About The Author

Senior Consultant, Digital Telecom & Revenue Management, Huawei Technologies Ltd

Chaitanya has 18 Years of Telecom experience in Business Consulting, Telco Operations & Solutions. He has core expertise in Digital BSS, Revenue Assurance & Fraud Management and is fascinated by the future of Digital Telcos, working on digital enabling solutions & roadmap, digital maturity assessment, and digital RA modelling.

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