Positive disruption: Delivering a step change in carrier business in 2021
One of the positive consequences of the disruption caused by COVID-19 is that there is a greater appetite for experimentation in today’s international telecoms market.
Shareholders, boards and the C-Suite have all shown a willingness to try new things and have given carriers greater freedom to experiment. There’s an opportunity to solve challenges, optimise operations and turn market disruption into a step change for the industry.
In order to gain better results, carriers cannot keep doing the same thing. They must adapt their strategy and operations to truly transform in a rapidly changing business environment. If carriers do not take this opportunity to experiment and evolve their businesses now, they are going to be trapped in a legacy world that will ultimately become irrelevant.
Here are five things that I believe need to change in wholesale telecommunications in 2021:
New Technologies Remain Largely Underutilised
Software Defined Networks (SDN) and Network Function Virtualisation (NFV) have been in the market for a few years, however adoption and commercial models for them remain under exploited. For carriers to optimise their operations, they must utilise new technologies such as these. Doing the same thing and using the same technologies will not deliver new results. On top of SDN and NFV, different automation technologies are on the rise, which can rapidly speed up operational processes and enable carriers to dedicate more time to other aspects of their business. By automating back-end processes such as operations support systems and business support systems (OSS/BSS), carriers can keep up with the disruptive technologies that will give them the edge in the long-term. With OSS/BSS automation, carriers can close deals faster and more efficiently, with manual and redundant tasks no longer taking up team members’ time.
Legacy Networking Models
The customer utilisation model is changing but the network utilisation model remains fixed. Enterprise customers are increasingly moving their infrastructure to the cloud. The legacy multi-protocol label switching (MPLS) and fixed networks that support hub and bespoke IT architectures are behind the times in supporting mainstream cloud-centric industry applications. Legacy models are overly complex, time consuming, and inadequate to move at the speed that a cloud-centric on-demand ICT ecosystem demands. Open network application programming interfaces (API) can accelerate carrier-to-carrier interconnection and enable carriers to serve new customer demand with increased agility. APIs are the key to making new services and capabilities seamless for carriers, enabling faster transformation and competitive advantage.
The rigid fixed term network pricing in the telecom industry is inconsistent with extremely flexible usage and open pricing models in the cloud computing services. The Software-as-a-Service (SaaS) industry, for example, has flat pricing, usage pricing, tiered pricing, per user, per active user and per feature pricing models available across different players. Many SaaS companies offer a free-to-use product, supplemented by additional paid packages. Current telecom pricing models need to change to offer more flexible options, so that telcos can move with greater agility, scalability and flexibility.
Long Supply Chains and Middlemen
The current telecom model has many middlemen who survive on their access to certain markets and volumes. The margin stacking and middlemen commissions inflate telecom data services prices. Over-The-Top (OTT) models like Voice Over Internet Protocol (VOIP) applications or software-defined wide area networks (SD-WAN) challenge the middlemen and wholesale operators who depend on aggregating traffic, whether voice or data, for their business. These newer models can help to deliver a step change in carrier business by reducing long supply chains and delivering new efficiencies.
Negative Enterprise Customer Sentiment
Business practices are in a status quo despite negative customer sentiment. Most enterprise customers feel they pay too much for telecommunication services versus their IT spend. The case for wholesale intermediaries who do not add value other than to facilitate access will diminish. IT spend for enterprises is shifting to the cloud and increasingly through digital channels. This brings an opportunity for players to cut through these inefficiencies and create disruptive services, such as SD-WAN which is taking significant inroads into the enterprise connectivity markets.
Making Telco Transformation a Reality
To take the next step for widespread telco transformation, carriers need to go beyond the basics and change their business models to enable agility and efficiency. Relying on out-of-date legacy models will drastically slow down transformation and make it difficult to reach set goals.
By embracing rather than fearing the disruptive technologies that are entering the market, carriers can gain a solid foundation for transforming their business into the future. They can utilise new technologies to future-proof their business against competitors and ensure they are keeping up in a fast-changing market. The technologies for transformation are here and readily available – carriers just need to take the leap to adapt their business models and benefit from the opportunities that this can bring.