Telecommunications is an industry that is driven by technology disruptions, guided by worldwide standards (ETSI, TM Forum, 3GPP etc.), controlled by regulations and extremely sensitive to demographics. It is also very capital-intensive.
There has been a lot of talk recently about how telecommunication network operators need to have a digital strategy in order to prepare for future disruption of their business models and technologies.
With very few case studies available of true digital service providers (DSP), as opposed to just communications service providers, a lot will depend on how a network operator:
- leverages new technologies for operations
- transforms to become more agile
- lowers its cost of ownership in assets
- creates synergies through strategic partnerships
I want to look at how network operators can achieve this.
Consumer/business: As telecommunications has evolved from fixed-line to wireless and from 2G to 4G (LTE), the voice market is saturating globally with more and more revenue hopes being pinned on digital services and content.
Research indicates that the IoT market in India alone is projected to grow at a CAGR of over 28 percent between 2015 and 2020 and the number of mobile connected devices will reach figures of 9.2 billion and 11.6 billion respectively.
This opens doors to redefine the way customers and businesses interact with network operators in a completely new way. A converged view of the customer and their needs, rather than the view of just the services offered to each customer, will act as a key differentiator for network operators. This goes beyond just customer intelligence and mining. The more the network operators get innovative here, the better the results of their digital initiatives will be.
Business: In the customer section, the business meant the businesses that interact with network operators. In this section, business means the business of the network operator.
As communications service providers embark on the journey to become digital services providers in the true sense, business models and services need to evolve to enable the transformation to genuine end-to-end IoT service providers. Maximum value will be derived through a move towards becoming an agile business, which can easily adapt to the changing scenarios and changing definitions of the customers.
According to the NGMN 5G White Paper (NGMN, 2014) , The Fifth Generation Of Mobile Technology (5G) is positioned to address the demands and business contexts of 2020 and beyond. It is expected to enable a fully mobile and connected society and to empower socio-economic transformations in countless ways, many of which are unimagined today, including those for productivity, sustainability and wellbeing. The demands of a fully mobile and connected society are characterized by the tremendous growth in connectivity and density/volume of traffic, the required multi-layer densification in enabling this, and the broad range of use cases and business models expected.
Lots of legacy business (2G) will see retirement paving the way for new business models triggered by improved parameters (4G, 5G).
IT/operations: Business agility goes nowhere with tightly coupled legacy IT and operations.
The 5GIC is the UK’s research center dedicated to the next generation of mobile communications. According to its research studies, 5G is expected to be standardized by 2020 and will be commercially deployed a few years later. Although 5G will introduce new technologies, much will be an evolution of 4G LTE-Advanced and WiFi, both of which are developing to offer ever greater peak and average user data rates and new and innovative services.
According to the network and software architecture being proposed by the standardizing organizations, it is evident that they are considering the role of current evolving technologies and their use to devise optimal 5G architecture. 5G architecture will be based on LTE Advanced architecture and LTE evolution will need to take into account SDN (software defined networking), NFV (network functions virtualization), XaaS (everything as a service), satellite communications, network slicing, self-optimizing networks, backhaul systems, fog computing, mobile edge computing, blockchain etc.
Digital transformation is more about writing a new story for LTE with easy upgrade to 5G, rather than simplifying existing landscapes or just having an end-to-end architecture.
Some of the key principles for new-generation architectures will be:
- Agile LTE platforms
- Services operations centers rather than network operations centers
- Business process optimization and automation
- Services orchestration
- Network orchestration
- Network function abstractions
- Software-controlled software
- Converged platform
Networks: As mentioned, telecommunications is a capital-intensive business with investments in the passive (network) infrastructure as well as the active (spectrum) infrastructure. The lower the cost of ownership, the lesser the exit barriers and higher the network agility of the digital operators will be. Lots of Chief Operating Officers will move from the low capex outlook to a low cost of ownership outlook.
Many network operators are in the process of reducing the cost of ownership by means of exploring new ways of networking. A key differentiator will be to work towards a network that is shared, sliced, orchestrated, intelligent, self-optimizing and offers easy extension to the 5G network requirements.
Again legacy infrastructure for 2G will retire and 2G/3G spectrum will see a lot of spectrum refarming for optimal use of telecommunications’ most expensive resource.
Strategic sourcing/partnerships: Clearly in order to evolve as a digital services provider, the telecommunications operator cannot walk the journey alone. The best way forward will be to make key strategic partnerships and achieve innovation using their partners’ capabilities as well.
Recently we heard about the partnership between Bharti Airtel and Nokia on 5G, and Tata Communications is working in partnership with HPE for the roll-out of the LoRA network for IoT.
This is just the tip of the iceberg and much will be achieved by creating digital strategic partnerships. However, the key differentiator for network operators will be to identify the right partners offering top-notch capabilities for LTE with a clear compatibility vision for 5G.
In conclusion, a good digital transformation strategy will answer the following questions in detail:
- What are the key dimensions to begin the transformation? What are the critical success factors in this transformation journey?
- What are the new business models for telecom operators that could evolve in this context?
- What is the ideal LTE Advanced architecture and roadmap for network providers to gear up for adoption of 5G?
- What will be the fate of legacy communications channels like 2G and 3G?