Telcos have faced a tough couple of decades. They’ve been derided for being too slow, too cumbersome, not enough like the Internet giants. They’ve watched companies that came from nothing become mega-corporations overnight, while their own revenues have fallen and costs risen or remained static. And they’ve often been largely invisible, unless something goes wrong.
However, the new WEF reports gives them their dues, noting, “The telecommunications industry is at the forefront of [digital] transformation, both as an industry witnessing large-scale change in its market environment and as a key driver of worldwide digitization. Investment by the telecommunications industry in technology and interoperability has underpinned an immense shift in information and capital flows through the global economy, while providing the building blocks for the emergence of entirely new business models across industries. In parallel, access to a globally connected network has empowered millions of people around the world, by giving them access to real-time information, marketplaces and social programs that will have long-term implications for quality of life.”
The report finds, for example, that technologies such as drones, satellites and balloons are extending affordable internet access in regions with low population densities and that for telecom operators, these innovations can overcome significant cost barriers in reaching remote areas across developed and developing markets. The research estimates that the potential value to society of the extending connectivity initiative is $400 billion over the next decade, or almost half of the sector's potential overall societal impact.
But, it says, “Concerted public-private action will be needed to capture this value fairly and at scale. Considerations include affordability, regulations that ensure fair competition, digital skills, cultural acceptance and accountable institutions.”
Unlocking value
WEF also notes that while the telecommunications industry is a key enabler of digital transformation across industries, the value of digitalization has so far “eluded telecommunications operators”. It pinpoints four key themes as central to capturing it:
Networks of the future: Virtualization and an abstraction of the physical hardware layer promise to fundamentally change the basis of future service differentiation by creating self-optimizing and secure zero-touch networks.
Beyond the pipe: The increased digital transformation of consumers’ lives and businesses presents the telecom industry with important opportunities to extend revenue streams beyond connectivity, through integrated internet of things (IoT) solutions, consumer and enterprise digital services, and reimagined models of digital communication leveraging advances in natural human interfaces and augmented reality/virtual reality.
Redefining customer engagement: To win the race for customer loyalty and mindshare, telecom industry players will need to increasingly deploy features and tools that deliver “delightful digital experiences”. This is especially important as customers now expect the high-quality digital experiences they receive in one industry to be matched by companies in other sectors.
Bridging the gap on innovation: The need for rapid innovation, greater convergence and new services means that telcos must fill capability gaps using new innovation models and “revamped talent strategies for a digital workforce”.
This echoes TM Forum’s Deputy CEO, Nik Willetts' comments recently on his vision for the 2020 communications service provider and how to get there.
He describes the ‘2020 CSP (communications service provider)’ as, “a company that can provide the underlying infrastructure and a rich set of capabilities that meet customers’ expectations and powers many of the ecosystems we are looking at today, [such as smart city, smart health, etc.]”
Willetts adds, “Simply put, we [TM Forum] are taking businesses on a journey from being a traditional business of the 20th century to a 21st century software-defined business that is underpinned and has IT at the very core of how it operates.”
The platform is where the profit is
The WEF report also notes the growing opportunity for communications service providers in the platform economy.
Gregg Rowley, Chief Strategy Officer, Saudi Telecom Company, is quoted as saying, “The platform layer is just getting going. This is the piece in the middle and this is where the big change will occur – whatever service people use needs specific functionalities that are becoming more and more uniform – billing, customer service – this is not something that people need to build but just use an existing platform that they can plug into."
Communications service providers are uniquely placed to turn their networks and operational and business support systems ‘inside out’ to offer customers access to all kinds of services.
TM Forum is developing a platform architecture for the communications sector called the Digital Platform Reference Architecture (DPRA) to help operators expose their rich and vast networking capabilities as platform providers. Find out more in our brand new free ebook.
TM Forum is also developing a new Digital Maturity Model & Metrics that will help communications service providers to understand where they are in this complex transformation journey and to map out the next steps. It will also enable them to benchmark themselves against others in the industry and to find the right practical tools in TM Forum’s rich asset library.
