Kapil Raval

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Telecom Industry Trends 2017 : A Perspective

Latest Trends in the Telecom Industry

Telecom Industry Trends 2017 : A Perspective

Communication Service Providers (CSP's): Change continues to be the only constant

The most interesting part of focusing on the Telecom industry is the fact that it remains a very dynamic industry where, with changing market conditions, new innovations are taking place every year. Today, mobile connectivity is the default connectivity because it is more convenient and meets the demands of today's always-connected consumer. At the same time, the cost of connectivity for consumers is going down. Unfortunately growth in data traffic does not result in revenue or margin growth for CSP's. We see saturation in subscriber growth in almost all regions and the only way to increase subscriber growth is by capturing them from other providers. The constant pressure on revenue and margin is forcing CSP's to look for ways to reduce operating costs by continuing to invest in automation, simplification and standardization.

Over last 4-5 years, CSPs face new type of competitors in Google, Amazon, Facebook, Microsoft etc. These are truly global players with deep pockets and neither their subscriber-reach nor their business model can be matched by any regional CSP. These disrupters have different business and cost models and CSPs will not be able to compete on a like-for-like services. CSPs will have to differentiate themselves by delivering increased value to enterprise customers, e.g. offering SLA's along with cloud and other OTT services. CSP'c provide connectivity and network asset is their biggest differentiator which they should leverage. For this, CSP's will have to invest in solutions that help them understand customer experience and help manage SLA's in near real time.

With standardization in the network technology and devices, the only way a CSP can differentiate themselves is by delivering superior customer experience. All these challenges are forcing CPS's to look for new sources of revenue. We also see continued migration to 3G in under-developed countries and to 4G in developing countries while developed countries have started 5G trials with a goal of deployment by 2020. In parallel, autonomous vehicles and drones are being tested as they will be some of the key applications taking advantage of 5G.

Content is king:

CSP's have realized the importance of content to drive revenue growth. The amount of content generated and distributed is increasing and the premium of high-value content is increasing. The demand for content on any screen is increasing and so is the consumption of non-linear media. For many years, CSP's have allowed content delivery through their network by other providers (CDN players) and were satisfied with the revenue they got for hosting infrastructure of CDN players. Now CSP's want to play a role in the revenue chain by offering Content Delivery service to enterprises as they see new business models opening up. We also see growth of operator-led OTT services. All these developments also lead to increased M&A activities between CSP's and media companies. Investment in 5G will fuel growth of video services. 5G being designed for low latency, high bandwidth communications will be perfect for consumer and enterprise video use cases. As broadcasters and content creators move to focus more on their content creation, there may be an opportunity for CSPs to offer hosted archiving, asset management and other video production services in aaS models, thereby utilizing and monetizing their networks.

Internet of Things:

The industry has moved from M2M to IoT with a lot of enthusiasm. CSP's see this as a new source of revenue. Although standards are being defined, there is increased focus on consumer and smart city use cases. Industrial and healthcare use cases are expected to deliver better business case and ROI because of relatively more value and increased margin compared to consumer and public sector IoT use cases. As mentioned earlier, by offering connectivity with SLA's, CSP's will be able to deliver increased value on healthcare or business or life critical applications. Industry analysts expect IoT devices and wearables to quickly grow to 50 billion (some analysts estimate this number to be much higher) by 2020. This will also fuel growth of more mature and profitable applications. The growth in IoT will also drive global enterprises to look for global connectivity providers with the right commercial model, preferably aaS with no up-front cost. IoT solution providers will also prefer to work with one or two CPS's to deliver connectivity globally.

Autonomous vehicles, drones etc. will generate so much data and will require processing of that data closer to the vehicle or device in order to meet response time requirements. Even in the world of 5G, it will not be possible to send the data back to central system in the network, process it, analyze it and send response back to the vehicle to respond to changing road conditions etc. This has forced the industry to look for more processing of data and decision making at the edge of the network and more closer to the device. We see that countries like US, UK, Korea and Japan have already started looking at Multi-access Edge Computing (MEC). Enterprise customers will also look for more use cases with MEC. We expect a few deployment and more trials to occur over next 12 months.

The Only Differentiator is the Customer Experience:

In order to retain customers, CSP's have increased their focus on customer experience like never before. It is important for Telco's to manage network more efficiently and effectively and be more responsive to customer preferences. CSP's continue to modernize, simplify and automate network and services operations to reduce their costs. The focus is to eliminate complexities by infrastructure rationalization and simplification by moving away from proprietary appliance-based network equipments. Time to market for innovative services takes on greater importance and so managing complexity of service launch and dev ops environments are key to the success of a service provider. The focus on automation is contributing to growth of software driven networks and solutions as well as development of AI in operations and in customer care. The move towards specific use-case driven NFV and SDN is gaining acceleration. NFV will also drive modernization and transformation of VAS environment. As more applications are virtualized, CSP's will have to look for unified repository of customer data and make it available to diff applications and services.

A few years ago, CSP's would shy away from deploying any solution on open source platforms. But that has changed. We see that there is broad acceptance of open source / open stack in the Telecom industry. We are also seeing digitization of sales, billing, customer care to improve response to customer requests and customer experience. Big data analytics will continue to play an important role and its growth will help CSP's deliver more personalized services to customers and target them with new but more relevant services.

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Kapil Raval is an experienced technology solutions consultant with nearly 20 years of experience in the telecom industry. He thinks ‘the business’ and focuses on linking business challenges to technology solutions. He currently works for HP and drives strategic solutions in the telecom vertical.