Telecom Service Providers Need To Embark On A Transformation Journey
Businesses expect changes every year, but few industries are confronting the sheer number of changes network operators are facing today. As a result, these changes are bound to dominate telecom trends in 2020.
Operators have known for a decade or more that the internet and over-the-top (OTT) services could disinter mediate telecom service providers from new revenue opportunities. But, worse than that, while new services increase network traffic, stiff competition prevents operators from charging for services on a usage-based model, rather than flatrate pricing. Consumers want a lot of what new technology promises, but operators seem to have problems getting a piece of it.
The most important truth in 2019 telecom trends for operators to face has been that transformation - a significant technology shift to accommodate significant market changes – is not going to happen this year. Most CTOs had been hoping for three things to happen: widespread impact of NFV, rapid adoption of new 5G mobile services and increased revenue from IoT connections. It is obvious to the CFOs of those same organizations that none of these will come about as expected. Instead, operators have to plan for a buyer-side revolution and focus on technologies that best support the buyer influences most likely to develop this year.
“From shifting customer expectations to new technologies such as 5G and IoT, the world around the telecom industry is evolving”
From being communication service providers to becoming digital service providers
From shifting customer expectations to new technologies such as 5G and IoT, the world around the telecom industry is evolving. Customer experience and digital transformation lie at the intersection of technology, corporate culture, and organizational change. Although technology and data help us understand customers and create personalized experiences, taking advantage of these capabilities presents a harder challenge. For established organizations, the keys to creating great customer experiences are culture, incentives, mindset, and process. In other words, getting everyone - from frontline employees to senior managers - on the same page.
Given these challenges, the telecom service providers need to embark on a transformation journey from being communication service providers to becoming digital service providers. The digital transformation focus should address the important areas around enhancing the customer experience, increasing revenues, reducing operational cost, and launch digital services with an accelerated time to market.
Digital transformation has to be addressed across four dimensions:
• Network Transformation
• Business transformation
• Operations transformation
• Experience transformation
Let us look into each of these areas: Network Transformation
Service providers need to deploy SDN and NFV to create new services and business models, to increase service agility and flexibility and to increase network efficiency and to reduce CapEx. The network is breaking free from hardware. The new software based network will give customers access to faster more, flexible products, and services.
Data traffic on telecom operators has been growing significantly and of late has been primarily driven by video. Service providers have traditionally kept up with growing demand by using more and more sophisticated complex Routers, Switches and other gear. But this just is not feasible for much longer. It is too slow, too inefficient and too expensive. There is a better way. It’s a model developed in the IT world, where you emulate the functions of those complex pieces of hardware with software, and run that software on standard, off-theshelf hardware. You can add capacity faster and push out upgrades at the speed of the internet. That’s the model Next-generation networks, powered by technologies including software-defined networking (SDN) and network function virtualization (NFV).
Using digital enables businesses to transform via servitisation as well as harnessing increasing automation. Internet of Things (IoT) is an important constituent of business transformation as it opens up new revenue streams for telecom providers. IoT is gathering momentum in advance of digital transformation and is a part of business transformation initiatives.
Indian IoT market holds tremendous potential for telecommunications (telecom) operators, as connectivity is the backbone of IoT deployment. With the country moving towards a digital economy, the growing adoption of cloud in IoT services, shifting of focus to industrial IoT (IIoT), rising market of M2M communication, and increasing trend of wearable technology applications are among the major factors driving the IoT market in India. As a critical player in this value chain, telecom companies can build new revenue streams. Telecom participants will need to step up and move beyond connectivity to play a larger role in this IoT wave to capture the growing market and bring in a transformation in their traditional business model. Forming strong partnerships, developing platforms, providing innovative services and adopting a consultative approach toward enterprises for embracing IoT should be the main focus areas for communication service providers to cash in on the IoT opportunity effectively.
They must transform their operations and shift the skills into newer areas and altering the company culture even further away from the recent heritage of being network operators.
Skills transformation of existing employees is an important element here. The telecom industry, like many in the technology sector, faces a future in which its legacy businesses are quickly becoming obsolete. With its industry moving from cables and hardware to the internet and the cloud, the telcos have to be in a sprint to reinvent themselves. The overhaul presents an enormous HR challenge. There are lakhs of people employed in the telecom industry in India most of whom got their education and foundational job training in a different era. But rather than hiring new talent wholesale, the industry has to rapidly retrain its current employees while striving to engender a culture of perpetual learning. The new landscape requires skills in cloud-based computing, coding, data science, and other technical capabilities. Many of these fields are advancing so quickly that traditional methods of training and development cannot keep up. Given that the supply of technical talent is limited, and everybody is going after it, the best option is to reskill the existing workforce to fill the gap.
Aside from increased flexibility and productivity, one of the main goals of digital transformation is to provide enhanced experiences for users – consumers or professional. 2019 is seeing a coming together of several different technologies and concepts that enable and support digital transformation and ultimately newer and rich customer experiences. These extend from new technologies such as 5G, NFV, IOT, servitisation to AR/ VR, AI, machine learning and deep learning. These technologies are innovative and transformative and will play a significant role in providing superior customer experience which will be the key differentiator for telecom providers.
Secondly, one of the biggest steps that the telecom providers in India can contribute to customer experience is through the move to subscription based revenue models. Various try-and-buy and freemium business models are now widely available in the telecom space and telcos have been forced to respond, both in terms of their end-user offerings, as well as packaging traffic and other services to their OTT collaborators. With traditional metered subscriptions still largely being the backbone of the telecom service provider business model, some creative thinking will be required for them to adopt new strategies to improve customer experience.
Only by going through these four levels of transformation, the Communication Service providers can become digital service providers in its true sense.