The telecoms evolution: how the operator becomes the digital telco

As the profit and differentiation available from mobile services such as voice, messaging, and data decreases, operators need to look to what mobile analyst Chetan Sharma has termed the fourth wave[i] in order to open up additional lines of business and create additional revenue streams. Embracing the cloud for delivering new services, for example, would be the first step for an MNO on the evolutionary trail to becoming a digital telecom, where less emphasis is placed on owning network infrastructure and more emphasis is placed on providing new digital services to a broad range of customers. In this article, we look at what new technologies operators such as MNOs should be looking at to become this provider of digital lifestyle solutions; the internal barriers they may struggle with; and how the cloud platform can enable them to take advantage of these new technologies while lessening minimum risk.

 

The evolution of 5G

The first new technology to consider is 5G as it will be the foundation that supports and extends the transport layer, enabling the new technologies. Uptake of 4G with its increased services and data was incredibly fast, but there is a broadening gap between 4G-based services and those services that will benefit from 5G. Given the anticipated demand for these services, it's not surprising that research and development of 5G is well underway. In the near to mid-term, this will be the key technology enabler for operators.

 

Operators need to consider which new technologies have already emerged that take advantage of the IP network provided by 4G, while simultaneously evaluating which new technologies will be enabled by the 5G networks of the future. At the moment, there are already new IP-based technologies, such as Voice Over WiFi (VoWiFi), that enable operators to begin their evolution towards becoming a digital telecom.

 

VoWiFi, also known as WiFi Calling, has already been launched by some MNOs, providing consumers with better indoor coverage, improved geographical coverage, and lower international roaming charges. Collectively, these advantages should result in increased customer satisfaction and reduced churn. WiFi Calling and other technologies, such as Voice Over Data and Video over LTE, can be deployed by operators through the cloud, allowing them to create new revenue streams while limiting upfront CAPEX investment, minimising risk, and reducing time to market. More about the cloud later.

 

Emerging technologies can change the telco landscape

In the future but still mid-term, there are many other emerging technologies that could impact the shape of the current-day telco.

 

Mobile Edge Computing (MEC) will enable cloud-computing capabilities and an IT service environment at the edge of the mobile network. This new technology will enable MNOs to add value through optimised applications, which should result in new applications and services getting to customers quicker and MNOs delivering an improved user experience.

 

In-memory computing, a technology focused on processing data in-memory (like in RAM rather than on disk storage), could enable cloud-based apps with extensive computational power to process data in real-time so businesses can report and make business decisions faster. This kind of speed—combined with the above MEC—could see applications appearing to run instantaneously.

 

As mobile phone use increases and begins to do everything for us, even our banking, biometric technology has begun to be used to enhance the security and efficiency of mobile identity and mobile payments.

 

Meanwhile, the consumption of mobile video continues to increase and there are new predictive content delivery solutions coming online, such as the announcement earlier this year from Akamai, to solve the challenge of HD-quality video distribution. Their solution is designed to optimise secure content delivery and on-device caching in a bid to meet the consumer expectation that videos play instantly, without buffering and regardless of where the consumer happens to be at the time.

 

Achieving accurate indoor location-based services (LBS) has been challenging, but imagine having the accuracy of a resolution within a meter. The technology to achieve such high location accuracy will incorporate multiple technologies, such as iBeacons or Ultra Wide Band (UWB) technology, but MNOs will likely have a role at least from a location continuity and content delivery perspective.

 

These new technologies represent possible new revenue streams for MNOs. As new services develop, MNOs should position themselves to deliver not just the new services, but be creative in finding ways to create vertical solutions for consumers. There are already emerging examples of these verticals; for instance, enterprise Unified Communications (UC) vendors are making a play to extend the reach of their platform to mobile. Another area is mHealth, in which medicine and public health can be practiced on supported mobile devices. As the field of mHealth develops, it holds the dual promise of delivering healthcare to wider segments of the population while also reducing the pace of increasing healthcare costs.

 

The transformation from the old monolithic operator only interested in selling connectivity to the new digitally-focused operator has definitely begun. The ability to deliver these new digital services from third-party cloud platforms is an efficient, affordable way for operators to remain competitive while limiting their overall financial risk.

 

The cloud as an enabler for operators

Cloud technology is one of the key technologies enabling MNOs to shift away from their traditional roots of monolithic communication providers and move towards becoming agile organizations with multiple service lines.

 

A strategy of delivering core services through a public cloud has several benefits for MNOs—the most obvious may be the CAPEX savings realized by not needing to invest in new hardware infrastructure. And since there’s minimal hardware or software in the MNO’s network to operate and maintain, technical resources that would have been dedicated to managing the new platform can instead focus on other revenue-generating activities. In essence, the technical management of the service is switched from tracking Key Performance Indicators (KPIs) to monitoring adherence to Service Level Agreements (SLAs).

 

Delivering a new service via a third-party, secure cloud platform is also an excellent hedge strategy against a new service that fails to deliver on all of its potential. If that situation occurs, it may benefit the MNO not to be encumbered by a large physical platform residing in their network for a service that didn’t meet forecast adoption. In a sense, the risk of launching a new service is mitigated since the CAPEX exposure is minimised.

 

The greatest benefit of delivering new services via a cloud platform may not be the CAPEX savings or even the mitigation of risk; rather, it may be the agility it provides the MNO to offer new services before the competition. In a digital world now characterised by new services appearing with increasing frequency, a service provider that is able to be first, or early-to-market, will enjoy a distinct competitive advantage.

 

Changing mindsets to realize the full potential

 

The technology exists to enable operators to become digital service providers, but there may be issues unrelated to the technology that could be problematic for them. In an era of new digital services, the “five nines” Quality of Service (QoS) so ingrained in the DNA of operators is becoming a secondary factor to Customer Experience (CX). 

 

The new digital customer is far more interested in trying the latest things first, even if they are not perfect. This attitude is contrary to everything operators have traditionally done to ensure the highest QoS. However, in order to develop sustainable, long-term business strategies in the new digital world, operators face the challenge of accepting a paradigm shift in which it’s acceptable that a service is “good enough.” Operators that sacrifice expedient delivery of new services for the sake of five nines reliability will struggle to be first, or even early-to-market, and may never capitalise on the opportunities that this new digital world presents. 

 [i] Operator's Dilemma (And Opportunity): The 4th Wave (2012) C. Sharma, http://www.chetansharma.com/OperatorsDilemmaFourthWave.htm