This blog was first posted by Honore’ Labourdette on LinkedIn here
The past is behind us
Telcos have been through an exhausting time in recent years. Nerves and profits have become a little frayed. As MWC17 approaches, however, there is every sign that things are about to change. To put it another way, there is overwhelming pressure to make sure they do.
The competitive mind-set has been focussed on lower prices and attempts to reduce costs, the latter not always possible in a market where customers demand increasing sophistication and innovation. Competitive pricing has contributed to a reduction ranging from 13% to 36% globally in mobile voice ARPU since 2012. Meanwhile, costs have increased rapidly to meet demand, with network investments potentially exceeding $2 trillion over the next decade. Once again, it’s set to be a time of big investment as Telcos align their services and capabilities to become principal catalysts for the Fourth Industrial Revolution.
Now, the commoditisation trend has to stop. Both the enterprise and the consumer market are looking for services that make the revolution they have heard so much about become apparent. The network is at the heart of all this.
Mobile World Congress has never ceased to deliver optimism and enthusiasm around the next wave of technological progress. MWC17 promises to keep the momentum going as it adopts themes such as the Fourth Industrial Revolution, the Pervasive Network, the Connected Consumer, and Disruption, among others. If we think we have seen a data deluge so far, it’s nothing compared to what is about to come:
“As companies require greater access to cloud and mobile services, annual data flows are forecast to reach 44 trillion gigabytes by 2020, ten times higher than in 2013″.
With cars, machines, buildings, systems and people all exchanging and sharing data, carriers will need to heavily invest carefully in new technology and networking infrastructure to meet the need. They will also need to create new business models and revenue opportunities to ensure healthy return on the investment.
In the Telco camp, as boards gather round the campfire to discuss their battle plans, where does current thinking lie? There cannot be another downward spiral. No organisation has the inclination any more for the race to the bottom. New strategies are emerging to replace old styles of competition. The next step is about evolution from differentiation on price and network coverage to customer experience, Quality of Service, and Quality of Experience. In short, those at the heart of digital transformation are about to plunge into their own digital transformation:
“The telecommunications industry has a complicated relationship with digital transformation. At one level, the industry is an important building block of the Fourth Industrial Revolution, propelling a transformation in how businesses, governments and individuals interact, collaborate and compete. But this digital revolution also represents an aggressive challenge to the primacy of business models and infrastructure that the telecommunications sector has spent decades building.”
The recent World Economic Forum article from which the above quote comes identifies key challenges for Telcos on the eve of the new revolution, stating that the biggest will be in creating the network of the future. The pressure is now on in terms of how Telcos achieve this nirvana within relatively unforgiving timeframes.
Agility will rule the day; making sizeable incremental steps at a pace. They will want to retain the benefits of their legacy infrastructures while moving forward and not spending a fortune to do so. This strategy will bring technologies such as Network Functions Virtualisation to the fore; the ability to virtualise key network functions alongside legacy systems to make rapid, cost-effective and cumulative incremental gains.
At the same time there exists the critical challenge of embracing a new innovation focused mind-set so that Telcos can deliver a strong and competitive customer-centric proposition to their customers. Telcos no longer operate in a world limited to data and voice communications. Their horizons now need to be redefined to a world where the data they transport can be used to drive continuous services improvement.
Fulfilling the vision
The ability to spot insights and new trends from this Big Data will be fully exploited only if all parts of the organisation can subscribe to new ideas and innovations triggered by the insights. This is a skills issue – making sure that those charged with driving the organisation forward can employ 360-degree vision.
Telcos were much credited with being at the forefront of innovation five to ten years ago. It is critical now to recapture that spirit and avoid being left behind, as much by their markets as anyone else. This is a real and present risk as the weight of legacy infrastructures, nervousness about new investments such as the still to be defined 5G protocol, and lack of exposure to fresh thinking could potentially slow Telcos down.
The conversation around the campfire needs to focus on new innovation-focused approaches to business strategy. The technologies that are becoming established in the market are now demanding a new style of IT professional – unconstrained by siloed disciplines – able to see the opportunities and understand the challenges of virtualised infrastructure. A new race is on to find such professionals since they are in high demand and short supply.
Expertise abounds in this market in other forms however. Agile approaches are required if organisations are to access agility. One such approach is to exercise openness about where new ideas can come from; specialist providers of the requisite software and systems that can get Telcos in shape fast to face the challenges of 2017. This is set to be a much-shared topic at MWC17.
If you’d like to meet with the VMware team in Barcelona please email NFVMWC2017@vmware.com. We have some solid ideas about aligning the abilities of today’s Telco with tomorrow’s world.