What will the telco of the future look like?

What will the telco of the future look like?
Connectivity-first has always been the mantra of telco companies, but this is no longer enough

Richard Humphreys |

This article first appeared in the Autumn 2017 issue of The Record.

Until recently, ‘connectivity-first’ has been the mantra of telco companies, who have battled to win business based on their promise of high-quality, reliable and affordable networks.

But this is no longer enough. “While the race is on for these companies to provide the ultimate 5G service, they need to do more if they want to compete in an ever-evolving marketplace,” says Rikke Helms, Microsoft’s managing director for Global Telecoms.

This, says Helms, means focusing on expanding services to meet the needs of both consumers and businesses. “In order to meet the needs of consumers, telcos are increasingly having to move into the media space. For most, this means creating partnerships so that expansion can be made quickly and that assets can be shared.

“Many telco companies are becoming multifaceted digital businesses, capable of delivering a myriad of services through platform business models and enabling digitisation across every industry, globally through more than connectivity,” adds Nik Willetts, CEO at TM Forum, a global industry association that drives digital transformation of the communications industry through collaboration. “These digital service enablers (DSEs) will have a very different mindset to the operators of yesteryear. They will be fast, agile, and capable of bringing together an ecosystem of services, touch points and customer engagements.”

This need for agility is front of mind for Australian telco company Telstra, who, as well as setting up its highly successful technology start-up portfolio Telstra Ventures, has also recently announced that it will invest up to AUS$3 billion (US$2.4 billion) over three years on a major wave of customer-focused investments.

“Our customers and our networks are our biggest assets. We must invest to set new standards and deliver excellent experiences for our customers,” Telstra CEO Andrew Penn said in a recent press release. “This will position us to deliver significant customer benefits and reinforce our market differentiation over the longer term. It will also deliver business benefits such as capital efficiency, reduced operating costs and increased revenue.

“The opportunity is clear as average monthly data consumption on our networks increased ¬seven-fold over the past five years, with mobile traffic growing almost nine-fold in the same period. We are now accommodating and anticipating growth in the number of connected sensors and devices as well as specialised applications and services.”

It’s a similar story for the other big players. Vodafone has teamed up with Idea Cellular in India and in talks regarding a merger with Liberty Global’s Virgin Media. AT&T, meanwhile, has said that it will invest up to US$200 million in a venture fund that will identify promising startups and speed up its route to market for new solutions.

“Telefonica is another example,” explains Willets. “Due to pressure and competition from other providers, it is transforming its operating companies into platform-based providers, able to cater to customers’ demands according to desire and need. This transformation requires a complete overhaul, from business processes, and support systems to the network itself.”

Through the help of TM Forum’s Open API’s programme, Telefonica in the UK has seen O2 team up with a car insurance company to offer customers better deals on their car insurance. “Collaboration and digital transformation can undoubtedly help operators differentiate,” says Willets.

With their focus on investing in new networks and partners, large operators also need to find ways to become more efficient with their existing business and data centres – and this is where Microsoft comes into its own. “Microsoft Azure is proving to be a safe haven for these companies,” Helms says. “It offers an opportunity for them to become stronger and more efficient.”

Indeed, Microsoft is seeing large Tier-1 operators like Telefonica harnessing the power of the cloud to create exciting new user experiences. And a multitude of others are swapping their cumbersome, expensive, monolithic business support systems for agile, new cloud-born software-as-a-service and platform-as-a-service manifestations.

“With the development of Azure, Microsoft enables many of our members to accelerate their journey into being a platform-based business, a vital stepping stone in creating digital ecosystems,” Willets adds.

“Azure presents a huge opportunity for telco companies,” Helms concludes. “I’m excited about the direction the industry is moving in and am happy to be helping some of the biggest players transform themselves.”

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