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Trends and Challenges 2021+: Five Recommendations for Action by Telecoms Providers

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Trends and Challenges 2021+ Five Recommendations for Action by Telecoms Providers

What was innovative yesterday is already obsolete by tomorrow.

This is more true now than ever in the era of the pandemic which, in many cases, intensifies and accelerates this process. The speed of development is and will always remain high in the telecommunications industry.

And here it is clear: COVID-19 is challenging for the industry, but it can also speed up innovations and advance suppliers’ competitive capabilities, especially in the e-commerce environment.

Where are the opportunities? And what matters most right now?

Particularly since the start of the pandemic, it is clear in most industries that constant change has become the “new normal.” For the telecoms industry, the most important question is how will communication service providers (CSPs) develop? Especially since many services – such as pure connectivity – are increasingly regarded as the norm, other players are advancing in sectors where value creation is the most intense, and cut-throat competition is increasing.

Against the backdrop of the ever-present goal of increasing revenues and market share, many CSPs have recognized that it’s time to become a true “real-time company.”

Digital commerce and time to market are two of the critical success factors here; while eroding customer contact and digital disruptors are among the greatest challenges.

One thing quickly becomes clear: In the first step, telecommunications companies need a future-oriented technological foundation to use their data profitably, increase earnings, and be able to generate added value.

Here are five recommendations for telcos that want to leave half-hearted projects behind and create a digital framework for the e-commerce environment of today and tomorrow.

1. Put the focus on the customer – now for real (eSIM sends its regards)

The exceptionally competitive fight for customers is not a new phenomenon.

Understanding the needs and desires of customer groups and individual users while maintaining customer contact is, therefore, more than simply part of the current agenda for telecommunications providers.

Currently, we are experiencing a rapid change in customer behavior, which requires new organizational and technological strategies.

Customer journeys are increasingly fragmented, new touchpoints arise, online and mobile dominate; previously, direct contact was a matter of course, now not much of this remains.

CSPs have to be in a position to adapt their digital business constantly to continuously remain competitive. This means rethinking and redesigning commercial offerings, employing new techniques, and integrating innovative services into portfolios. And internalizing the motto: “Experience is the new product!”

A good example of the eroding connection to the customer is the paradigm change triggered by eSIMs and the challenges that accompany them. These “embedded” SIM cards are permanently installed in devices and can be activated on the software side with various CSPs’ profiles and network information.

Device manufacturers and other providers thus have the opportunity to bundle hardware and communication services. Traditional CSPs are no longer involved, since they automatically lose direct customer contact and become “white label” suppliers.

Wherever possible, they will now seek mergers with global alliances to monetize communication services themselves once again. Additional sources of revenue could also open up in this segment, such as machines or household appliances with integrated wireless connectivity.

In every case, what’s important is to think of the customer in a future-oriented perspective and position oneself accordingly. Customer centricity – not just on paper.

2. Use Artificial intelligence and machine learning to cultivate customer loyalty – starting with predictive analytics

What, specifically, do customers want and need – in a particular situation or range of interests, at a particular time?

The more relevant and individual the information about new products, services, and offerings is, the greater the chances to acquire customers and gain their loyalty on the long term; also, to do so against the backdrop of comparison and opinion portals and publicly visible evaluations by customers.

The prerequisite is targeted marketing, which is oriented with the appropriate granularity to customers’ requirements. Through appropriate customer channels, storage, and enrichment of customer data in compliance with data privacy regulations in a state-of-the-art Customer Relationship Management (CRM) system, information can be provided quickly and used for personalized marketing campaigns.

Here, the handling of technical innovations such as artificial intelligence (AI) and machine learning (ML) becomes an economic success factor for telecommunications companies.

Predictive analytics is already being deployed – a technique that helps analyze internal and external data, detect patterns, and anticipate future events. Important keywords: Regression analysis, multi-variable statistics, pattern comparison, predictive modeling, and forecasting.

There is also enormous potential for AI and ML in other areas of application.

Thus, within the future of the telecoms sector, scenarios can be supported involving automatic detection of network problems or the identification of accounting fraud, for example.

Intelligent and self-learning systems do not just give telcos tools for understanding their customers better and talking to them in a more goal-oriented fashion in real time; they pave the way for an end-to-end digitalization of entire process chains. Therefore: it’s time to use AI and ML.

3. Bundling, 5G, IoT, cloud, and more: Detect opportunities and think up new business models

CSPs and digital content – that’s nothing new.

For example, Viacom has developed from a CSP into a media group since 1994, with the takeover of the majority of Paramount Pictures, and later with various acquisitions such as CBS and Dreamworks Studios. For more traditional CSPs, digital content is now becoming an increasingly important instrument for ensuring customer loyalty.

The pandemic has contributed to this, in that consumers have been staying home and spending a lot of time in front of screens. Streaming is the trend, while old-fashioned TV is not making any gains, or is even declining.

In the meantime, partnerships with Netflix, Amazon Prime, or Disney+ are no longer a differentiating characteristic; instead, they are now a commodity product that customers simply expect.

CSPs thus have to play a more active role in the market for existing and forward thinking digital services to gain or maintain market share. Lurking behind this are different technical possibilities, ranging from the use of an external service under a company’s own logo to joint systems.

Another interesting bundling example is currently under development: Some CSPs are considering offering energy services in the future – and vice-versa. The rates are calculated in similar fashion and based on comparable structures, which would mean that the IT work required would be reasonable.

Right now, 5G is still largely regarded and treated as a fast version of 4G, but telecommunications providers in corporate markets will therefore increasingly expand existing business models or develop new ones; for example, in healthcare, in education, or with regard to autonomous driving.

Low latency times of less than 1 ms as well as high and predictable network bandwidth up to 10 Gbit/s make this possible. In the private sector, 5G is also opening doors for new formats, such as cloud gaming via Google Stadia, GeForce Now, Vortex, and Magenta Gaming.

The former low-bandwidth networks can in the future be used for data transfers with low network profile, which includes the Internet of Things (IoT) sector.

The cloud market is also growing by leaps and bounds.

This is also being driven by the pandemic and more people working remotely, meaning that secure storage is more important now than ever. The market share of U.S. tech giants such as Amazon, Microsoft, and Google is estimated at 60 percent, and it seems that these providers have divided up the “cloud pie” among themselves.

Here, there is nevertheless still noteworthy potential for CSPs.

This is the case for telecommunications offerings that are associated with cloud services, such as customer-oriented offer bundles (telecommunications, data services, and IT systems integration) and added-value services such as application hosting.

With that in mind, the focus is also on individual services or partnerships with established providers – or arbitrary combinations of both. Most importantly, when the concern is new business models and sources of revenue: There are no holds barred!

4. Break the spell of digital disruptors

New players in the market are also increasing competitive pressure for telecommunications providers. Whereas these digital-native organizations have mastered all technologies, traditional telco providers frequently have difficulties with new approaches such as microservices architecture, event-controlled architecture, or programmable infrastructure.

An example: Thus far, telecommunications operators have not succeeded in generating much demand for their IoT offerings despite great interest. Instead, it is the non-orthodox market participants that have broken into the market.

In addition to favorable price positioning, this can frequently be traced back to simple transaction models (direct online purchasing). Many providers in this segment do not even have their own networks; they only sell products.

In these cases, the only things that can help telcos would be building their own top-quality solutions or acquire a successful disruptor, therefore entering the market quickly.

5. First digital transformation, then strategy change: Select the right sequence – and then move fast

To be able to deliver what modern, informed customers want, the telecommunications companies first have to dare to complete a true digital transformation.

This should happen prior to a strategy change – even if that is a prerequisite for a successful implementation. Many of the technology platforms that traditional telecommunications companies are using today are really showing their age. So it’s no wonder that IT costs are too high due to the complexity and redundancies of the legacy systems.

Monolithic architectures frequently form the inflexible backbone (back-end/legacy system) via which most transactions are handled (for example, payment traffic, order management, availability check, etc.).

In an environment that has to rely on agile development and microservices, these architectures impede digitalization. In these scenarios that have developed over time, the business models often have to orient themselves according to the IT possibilities, and not the other way around.

This is bad news for competitive capability, as success factors such as flexibility and time-to-market are by necessity left behind.

There are a lot of opportunities here to integrate legacy applications into state-of-the-art architectures. The most common solution is connection via APIs and connectors.

In this context, the so-called “decoupling” of the customer-oriented front end from the back-end layer becomes a central focus.

This is how providers can create personalized customer experiences, gain freedom to experiment, increase their agility, and scale more efficiently. Additional touchpoints with customers can thus be incorporated flexibly into the front end via APIs.

The goal is to realize significant cost reductions and optimize the essential KPIs: productivity, efficiency, quality, and time-to-market.

The year 2020 has shown us how quickly things can change and exactly how fast the digital transformation is proceeding.

Sooner rather than later, telecommunications companies have to transform themselves into digital service providers and E-Commerce players to stand up to and battle the “digital dragons.” This is a term that Gartner’s analysts have coined for companies that already have a functioning highly-scalable online business model; examples include Amazon Web Services and Alibaba.

Transparency instead of complexity, modularity with standards and open interfaces – this is how the digital transformation itself can be completed at high speed. It’s high time for telco providers to act.

About the authors

Steven Bailey, Chief Strategy Officer (CSO), AOE GmbH

Steven Bailey has many years of experience and expertise in the digital transformation of international companies and the development of their business and IT visions. As Chief Strategy Officer at AOE, he is responsible for business development and customer support in the digitalization and omnichannel E-Commerce strategies sector. A focal point of this work is the development of B2X transaction portals and mobile solutions that allow companies to map new business models and generate long-term revenue streams.

Uwe Ritter, Board of Directors, People at Work Systems AG

Uwe Ritter can look back on more than 35 years’ IT experience. After completing his computer science degree in Ulm in 1983, he worked for two years as a development engineer at Dornier System GmbH in Friedrichshafen. After that, he joined Nixdorf Computer AG in 1985; he remained there in international marketing for Unix systems and as Director of the international Targon support until 1990. From 1990 to 1996, he built up the technical marketing department at Oracle Deutschland GmbH. In 1996, Uwe Ritter was a founding member of Siebel Systems Central Europe. During his first years there, he was responsible for establishing sales support and marketing activities; then he took on various management positions in Siebel product marketing, and was finally responsible for Siebel’s entire technology basis as Executive Director. At the beginning of 2004, Uwe Ritter joined People at Work System AG as shareholder and chair. He is responsible for the areas of products, consulting, and development.

Views from the Inside

The era of the eSIM

Hamish White

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MOB022 - Mobile users

Telcos have been reluctant to take up eSIMs. In some ways, who can blame them? After all, removing the physical SIM and embedding eSIM technology into a mobile device removes much of the hassle of changing service providers and makes it far easier for customers to switch, if they’re drawn in by a better deal.

However, there are many reasons why eSIMs are a telco’s friend, not a foe. And against the current backdrop of remote working, ever-evolving tech, and major shifts in the way we do business, now is the time for this reluctance to fade.

Taking flight

No longer is it necessary to purchase plastic SIM cards when travelling to new countries. Thanks to eSIM’s remote provisioning capabilities, all customers need to do to obtain the best network and service in their destination of choice is have access to an eSIM-capable device, install an app, select a network plan and purchase.

Most eSIM services will email over a QR code for the user to scan to activate the device, although others offer in-app provisioning for an even smoother experience.

Multiple plans can be stored on a single eSIM capable device and used when required. This isn’t only beneficial for end users — service providers are also able to work more flexibly and present various plan options to customers without the cost of distributing new cards.

eSIMs can help providers maintain their competitive advantage, rather than hinder it.

Multiple choice

It’s also worth noting that there are far more eSIM-compatible devices on the market nowadays. eSIM first gained popularity in consumer devices when Apple launched the technology in its iPhone XS in 2019. At the time, the device retailed at around $999, or roughly £720 — placing it at the higher end of mobile device affordability.

Now, just a few years later, mid-range Apple devices such as the iPhone SE and iPhone 12 Mini have been produced with eSIM capabilities. Many of the latest Android phones also support eSIM, including the Samsung Galaxy S20 and 21 and multiple generations of the Google Pixel, to suit all customer preferences.

According to GSMA Intelligence, the definitive source of data and analysis for the mobile industry, 110 eSIM consumer devices were launched as of December 2020.

Lessons to learn

However, while new ways of working and the latest mobile tech foster an ideal environment for eSIM adoption, the technology’s widespread uptake still largely depends on decision makers understanding its value.

We’ve already discussed eSIM’s flexibility and ease of use for customers, but what’s the business case for service providers?

Advantages for service providers can be divided into cost saving and revenue boosting activities. As part of the former, and without the customary process of sending plastic SIM cards to customers, service providers can streamline their logistics, reduce costs and drive greater use of digital distribution channels.

As an inherent part of this process, relating to the latter benefit, service providers can enhance the customer purchasing process with simple onboarding and streamlined in-app provisioning.

When eSIMs first made it into the consumer realm, digital onboarding often required a QR code that customers needed to scan upon beginning their contract. Now, to make things even simpler, users can download the operator’s mobile app and activate their eSIM profile in just one tap.

Mobilise’s latest solution — eSIM as a Service — uses in-app eSIM activation, making the onboarding experience quick and uncomplicated. This option removes the need for visual explanation and step-by-step instructions, so users can focus on the things they want from their service provider, like staying connected.

At Mobilise, we have seen the penetration of eSIM capable devices increase from five per cent twelve months ago to 35 percent now. Following this trajectory, by the end of 2022, we expect to see 70 to 80 percent market penetration of eSIM capable devices in Europe.

Front runners deploying eSIM early will have the benefit of competitive advantage, while others, before long, will find themselves racing to catch up. Now truly is the era of the eSIM.

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It’s time for telcos to step up as drivers of industrial 5G

Fotis Karonis

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It’s time for telcos to step up as drivers of industrial 5G

Industrial 5G is set to be a catalyst for unlocking the potential of intelligent industry and accelerating data-driven digital transformation. However, most organizations are yet to realize its true potential. A variety of challenges await industrial organizations as they navigate their 5G roadmaps, and now is the time for telcos to step in and aid manufacturers in achieving their ambitions.

Quite rightly, manufacturing firms widely recognize 5G as the cornerstone of the next generation of Industry 4.0. The combination of high capacity and coverage is making mid-band 5G a particularly attractive choice for a variety of new and transformative industrial use cases.

Recently, we conducted  research on 5G in manufacturing and found that 40 percent of industrial organizations expect to roll out 5G at scale at a single site within two years.

Telcos are aware of the opportunity this presents, and they’ve been busy preparing. More than two thirds (68 percent) have already launched commercial 5G services, while the remaining third are at advanced stages of rollout.

However, as is the case with many endeavours, the COVID-19 pandemic has caused significant delays in implementation. This has led to slowed standards development, and delays in spectrum auctions, not to mention the supply chain disruptions, which have impacted telcos’ original equipment manufacturers (OEMs). Yet these challenges have ultimately proven to be short-lived, and now governments and enterprises are accelerating their deployments.

Now that the wheels are in motion for 5G projects, telcos need to step-up and drive these projects forward, and there are several different ways in which they can do so.

More than connectivity

Telcos need to finally unburden themselves from their historical role as mere ‘connectivity providers’. In the 5G world they must act as a solution-driven provider equipped with value-added services — one that is fully aligned with, and is an integral part of, the manufacturers’ digital transformation journeys.

We know that more than half of telcos are aware of these opportunities, but the question remains: how can telcos turbocharge their current offerings with vertical-specific solutions that integrate connectivity, platforms, applications, and devices directly to enterprises?

Private networks and the edge

When industrial organizations plan their 5G initiatives, private 5G networks are the preferred choice, as they provide complete control over their networks and data along with high performance levels.

Our study found that telcos are aligning their enterprise 5G strategy with the demand for private 5G networks. Two-thirds (63 percent) have also launched industrial grade private network solutions to address the private network opportunity and meet the needs of industrial customers.

Verizon, for instance, sees itself as an end-to-end partner for private 5G network implementations, positioning itself to provide services along the customer journey: from helping organizations purchase local 5G spectrum to setting up and managing the private networks on their behalf.

Industry demand for low latency applications and real-time data and analytics continues to grow, with edge computing acting as a key enabler. Because of this, the market for edge computing is estimated to reach USD15.7 billion by 2025.

Take AT&T for example, its on-premises edge portfolio already includes 5G-capable edge computing, and Verizon has also launched a 5G-based edge platform. Telcos therefore must seize the opportunity and incorporate 5G-enabled edge computing services or strategies into their wider business development agenda.

Paint the benefits of 5G

Despite the increasing awareness around the benefits and opportunities presented by 5G, many industrial organizations are still not clear on whether 5G features will translate into practical applications on the ground.

Telcos should take proactive steps to educate industrial customers by demonstrating the impact of 5G in client-specific industrial environments, share real-world results of pilot projects and trials, or even provide a lab like T-Mobile, or create a lightweight platform. Capgemini has also developed 5G Labs in Paris and Mumbai to showcase industrial use cases and manifest new perspectives for industrial clients..

Play an active role

Telcos can play an active role in simplifying manufacturers’ path to 5G adoption and lay a strong foundation for their 5G implementations. By taking a deep dive into customers’ business problems and KPIs, while bringing together viewpoints from stakeholders across the business, telcos can help map out priority areas.

Belgium-based operator Citymesh, for instance, identified more than 100 use cases for one of its clients, based on extensive discussions with stakeholders from across the organization. It has presented a solid starting point for 5G implementations by helping organizations see the full set of possibilities that 5G can offer them before they identify priority areas.

Telcos can also consider simplifying access to vertical-specific solutions by providing them as an as-a-service/ subscription-based model, and onboard suitable partners rapidly to tailor specific industrial 5G use cases. To weather the rapid globalization process, telcos should also develop scalable and global solutions that address the 5G networking needs for a worldwide industrial customer base.

Manufacturers have varying needs, so telcos should offer a portfolio of solutions that address multiple network deployment scenarios, including private or dedicated, hybrid or virtual hybrid, all with clear service level agreements (SLAs). Telcos must also stay focused on security and sustainability to ensure that the networks they help build are resilient and future-proof.

Creating the ecosystem for tomorrow

Industrial executives are now seeking solutions that enable them to not worry about managing a multi-vendor 5G environment. Telcos should therefore focus on building an integrated service offering that combines connectivity with devices, applications, and the security layer – all of which are essential components of an overall 5G solution.

This will require building trusted relationships with a range of ecosystem partners, including cloud providers, edge computing providers, network equipment vendors, hardware providers, and system integrators.

Looking at real life cases, South Korea’s SK Telecom launched a subscription-based smart factory solution for small and medium-sized enterprises (SMEs) that enables organizations to optimize equipment maintenance using 5G-enabled sensors placed on manufacturing equipment.

Only by working together with cloud providers, OEMs, and other partners to build a holistic ecosystem of devices, solutions, and service offerings, can telcos successfully unleash the possibilities of 5G and accelerate adoption in the industrial sector.

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Connectivity of choice: Why you should prioritise FTTP

Barry Tuffs

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FTTP

Back in 2001, internet connection speeds were estimated to be just 0.1Mbps. In fewer than 20 years, broadband and connectivity have changed in ways we could never have imagined.

And the evolution is far from over.

Fibre to the Premises (FTTP) takes the fibre optic connection directly from the local exchange into a business’ building, offering download speeds of up to 330Mbps and upload speeds of up to 50Mbps. These figures demonstrate just how fast the world is changing. If businesses don’t change with it, they’re at risk of being left behind.

WHY FTTP?

Primarily, FTTP ensures ultra-fast performance with little-to-no dropouts thanks to the direct fibre connection.

Although accelerated by the pandemic, the new work-from-home landscape is here to stay, with 26 percent of Brits planning to work from home regularly once all restrictions are lifted. Businesses around the world are beginning to recognise the benefits of a flexible approach to working for both productivity and employee wellbeing. This shift has caused a spike in the drive and demand for increased bandwidth.

However, 80 percent of the country is currently unable to access a stable fibre broadband connection. So, establishing the infrastructure to handle this volume of people working remotely starts with FTTP.
Many employers are worried about their staff being unable to maintain a secure and speedy internet connection throughout the day. Investing in FTTP will guarantee employees can work remotely without the drawbacks of unreliable residential connections — particularly in more rural areas of the country.

Not only are more people working from home than ever, but the average number of connected devices per household continues to creep up. Each home has just over nine connected devices— from laptops to tablets to smartwatches —that require a stable internet connection. An FTTP connection supports all these devices and ensures each one’s performance isn’t hindered by the volume of devices connected to the same network.

WHY NOW?

The prices of traditional broadband are on the rise, and the era of analogue phone lines is coming to an end. The 2025 ISDN Switch-Off is just four years away, meaning all traditional copper phone lines will be replaced with VoIP, which requires an active internet connection.

Currently, 42 percent of SMEs in the UK still rely on analogue lines to transmit data. For the businesses that don’t upgrade their systems, the Switch-Off is likely to have consequences.

Without a big enough bandwidth to host the VoIP services, businesses will experience poor audio quality or intermittent services that hamper their operations.

So, businesses need to start planning ahead.

Why wait until every business is scrambling to safeguard their connectivity and stay up and running? Why wait until the price of FTTP shoots up due to a surge in urgent demand?

Anticipating these fast-approaching changes and getting the ball rolling will be invaluable to securing a cost-effective and trusted connection before it’s too late.

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