It’s no surprise that the future of today’s service providers hangs in the balance. Their role as traditional communications and broadband service providers is constantly challenged and the rise of global internet powerhouses, capitalizing on services that were once their bread and butter, is significantly hampering growth and revenue.
But this shift hasn’t happened overnight. In fact, several factors have culminated in the crossroads that service providers today find themselves at. Indeed, the same factors that directly contributed to operators’ initial commercial success – namely, the digital revolution that made compelling content available and handy, followed by the mobility revolution that made said content available anywhere, anytime – has played a part in the inevitable decline of traditional business models.
The revolution is coming
There’s no doubt that our reliance on smartphones has changed the way we live. This reliance has changed the focus for operators and so the question today is: can they compete in this new landscape? One where the emphasis is no longer around accessing content, but around connecting users with content – something which the likes of Google, Facebook and Netflix have been heavily invested in doing.
Operators have several advantages over the big internet players, namely their direct access to the customer and delivery channels. But they are also lumbered with many obstacles – for one, the massive investment made in legacy technologies means they are slow to move and finding it difficult to change.
However, this isn’t the first time that telecom service providers have had to reinvent themselves, and successfully doing so will determine if telecoms can profit in the age of digital maturity.
One of the most pressing business challenges for modern service providers is to curate quality content for subscribers and effectively monetize third-party platforms in a widening ecosystem that encompasses the IoT and enterprise businesses. To do this successfully, service providers must embrace new technologies and harness the assets they already own.
Cloud technology is essential to this. Cloud-native applications can be scaled independently, dramatically reducing the time and cost needed to deploy new services and business functions. What’s more, the autonomy of these functions means service providers will be better positioned to improve automation, empowered by the use of data.
Data will also play an important part in operators’ transformation. Network traffic for the largest service providers is rapidly increasing, from exabytes to zettabytes of data. This means that billions of events, interactions and content exchanges are recorded each day. No other industry generates and has access to such a wealth of data – but few service providers know how to utilize this information in a way that drives efficiencies and creates new business models.
In the era of 5G, data will be key to service providers’ transformation by allowing them to harness the interactions between users and content, improve the way that content is discovered and accessed, and improve network efficiency around these functions.
Getting to 5G faster
Embracing new technologies and utilizing existing assets is only half the work, however. If service providers are to reap the rewards of their transformation, they must ensure that existing business models are evolved and new systems developed to mirror the alterations that will be made to the Radio Access Network (RAN), the packet core, and the end-user devices with the arrival of 5G.
Cloud-nativity will not only mean greater autonomy but will also enable network applications to be elastically scaled. This allows applications to interact better with non-network systems, such as IT and enterprise solutions through the use of open APIs.
The facility of these interactions will determine the effectiveness of the “new service provider” in embracing new enterprise business models across a wider ecosystem of partners, and coordinating interactions shaped by new data privacy principles applied across a wide range of industries.
Improved coordination between network analytics functions and other functions, such as policy and charging, will enable machine learning and AI to influence and automate actions that can improve service experience, reduce churn, and raise profitability.
Survival of the fittest
If service providers are to compete successfully, they must become global in scale, whether that be through collaboration or reach, to tap into the new revenue streams and market potential.
The reality is that while Internet giants are stealing the limelight, they’re mostly one-trick ponies when it comes to data – selling relevant advertising on the basis of data gathered from users’ behaviour. Operators could be far more efficient in using the data they own, and could drive the creation of new business models, greater costs savings and innovation just by harnessing these datasets.
For service providers, 5G can’t get here fast enough, but it’s only the companies that are capable of transforming themselves that will thrive once it gets here.