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Business And Technology Priorities Shaping Telecommunications in 2023
By Anil
Rao, Senior Director, Product Marketing and Strategy, Oracle Communications
Communications
Service Providers (CSPs) face a rapidly changing set of internal and external business
drivers that are influencing the way they run their business. Telco cloud, programmable
networks and AI are gaining mainstream traction, 5G and edge are driving new
complexity and opportunities in Industry 4.0 and Metaverse, consumer and
enterprise customers are demanding on-demand self-service experiences, and
business models to monetize networks are in flux.
Success in this
market will depend on CSPs' ability to effectively overcome these challenges
and exploit opportunities. Furthermore, the rising inflation and energy prices
will present a whole other dimension of economic challenges. To succeed in 2023
and beyond, CSPs should work to monetize new business models, automate everything
that can be automated, and deliver superior digital experiences. The following technology
trends are evolving realities that the telecoms ecosystem should examine
closely as CSPs continue building, and executing on, their unique paths to
success.
1.
More CSPs will
develop strategies to become a platform company, or Techco, as a way to
monetize their networks in new innovative ways.
5G, cloud and programmable networks
are transforming the way CSPs build and operate networks and services. When
these networks are layered on top with modern business and operations systems,
CSPs will finally have a powerful telco cloud and application stack that truly
enables them to offer on-demand network services. For example, Vodafone is
already working on their Network
as a Platform vision, and T-Mobile
has launched IoT Developer Kit, leveraging Network as Platform for
Innovation. As a platform company CSPs can offer network services on-demand
enabling enterprises to consume network services much in the same way the
infrastructure, platform and software applications are offered and consumed as
a service and paid for on a consumption basis. Most critically, the success of
this transition can only be achieved with a modern automated orchestration and
operations solution, and charging and billing capabilities to monetize those
services.
2. Costs will
increasingly come under the scanner as CSPs maneuver through the economic
headwinds.
The expected economic uncertainty,
geo-political issues, rising energy prices and high inflation will cause
consumers and enterprises to rein in expenses and cut costs. Consequently, the
overall telco ecosystem is likely to experience topline and cost pressures,
with the increased likelihood of CSPs increasing prices of services and
deferring major new investment decisions. However, many CSPs are also likely to
accelerate existing transformation projects that deliver long-term operational
efficiencies and cost savings to safeguard them against the current and future
economic events.
3.
More CSPs will
reassess their strategy to align for a Metaverse future.
It will take years for the vision of
Metaverse to fully materialize, but some CSPs are already jostling for the
lucrative revenue opportunities. For example, SKTelecom has already launched Metaverse based experiences,
ifland. On 29th, September, Telefonica
conducted their first Metaverse Day,
where the CSP presented their strategy for the journey to Metaverse. McKinsey estimates that
the total economic impact of Metaverse will reach approximately $5 trillion by
2030, with the related investments in reaching $12 billion of VC and PE funding
in 2021 and the first six months of 2022 seeing an investment of $120 billion.
It is in this context that more CSPs will assess their strategic plans both
from the perspective of network investments and platform play, and more
importantly, the potential to play an expanded role in bringing Metaverse-based
services and solutions to consumers and enterprises.
4.
The big cloud
migration will accelerate, especially in the private cloud realm, as CSPs look
for ways to balance competing priorities.
CSPs
are in the midst of a significant journey to the cloud and all indicators point
to an acceleration of this journey in the coming years. However, CSPs are
facing an interesting conundrum when it comes to choosing the right type of
cloud - public, private or hybrid. The public cloud has been a very popular
model for many IT workloads, and hybrid clouds and homegrown private clouds
have addressed a niche set of requirements. In 2023, CSPs will increasingly
consider the private cloud option (like the Oracle Cloud@Customer) for OSS/BSS workloads as they try to
balance the need to achieve the same high level of agility, performance and
scale, autonomous operations and reduced infrastructure TCO of a public cloud
while addressing the pressing requirements of data sovereignty, residency and
connectivity concerns.
5.
Transformation
programs that enable the journey to autonomous operations will particularly see
an acceleration of activity.
Higher levels of operations
automation are going to be essential to not only transform the economics of
operations, but also as a critical part of the success of strategic goals such
as the transition to platform company, increasing service and business agility,
and delivering superior customer experiences. The ultimate goal to achieve
zero-touch, lights out, autonomous operations provides a north star for the
direction of travel, and any programs that facilitate and accelerate this
journey will see increased traction. Oracle
Unified Operations has been conceived to precisely
enable this vision, bringing together key solution pillars, Unified
Orchestration, Unified Assurance and Unified Inventory and Topology.
6.
Network digital
twins enabled by near real-time topology will start to become a reality in
order to drive automation and efficiencies across the business.
Digital twins have been employed in
other industries such as automotive
and manufacturing to great effect. CSPs have a
semblance of a network digital twin in its inventory systems, but the sheer
number of systems, siloed data, poor data quality and frequency of updates have
given them a bad reputation. However, with the emergence of technologies such
as network telemetry, advanced data analytics based on ML and AI, and cloud
based data platforms, there is now a real opportunity to create a more unified
and accurate, near real-time network and service topology of the dynamic
network and the services that ride on top of those networks. With this
capability, CSPs will be able to create a true network digital twin, which will
supercharge a whole plethora of use cases such as intelligent network
investments, efficient network design and planning, advanced service impact
analysis and automated operations.
7.
CSPs will get
creative with 5G pricing to improve ARPU.
Now that CSPs have launched 5G (with many
more planning 5G SA commercial launches over the next year), CSPs will likely
employ charging as an innovation platform to pioneer new pricing strategies for 5G in efforts to drive ARPU
growth. In some regions (e.g.: mature markets of JPAC), the initial 5G ARPU
bump has begun to wane as network penetration has increased. As a result, CSPs
in the region have begun to embrace new 5G pricing strategies, such as speed
tiers, to improve ARPU. This trend is likely to become more widespread, with 5G
SA and modern converged charging systems (CCS) enabling new pricing levers
enabling pricing based on 5G speeds and quality of service or experience.
8.
CSPs will
reassess their billing solution roadmaps as they look to capitalize on 5G B2B
monetization opportunities.
CSPs will increasingly come to grips with the
fact that the existing billing solutions and B2B customer experience
are not entirely fit for purpose for the
complex requirements of enterprise customers and are therefore a hindrance to
5G monetization. To mitigate these challenges, CSPs will put in place plans to
transform their billing systems. Key areas of investment will include:
supporting new and more flexible pricing and billing capabilities for B2B;
improving partner settlement to enable B2B2X business models; supporting
complex B2B account hierarchies; and moving to a cloud native architecture
to improve scalability while improving operational efficiency.
9.
CSPs
will accelerate partnerships with vertical industry players on use cases that
go beyond connectivity, creating a springboard to take the leap towards
becoming Industry Service Providers.
Enterprises
have always been a lucrative market for CSPs, with most or all of the Fortune
500 companies procuring connectivity services from leading CSPs. Some of those
CSPs have made good progress enhancing their relationships by providing
additional services with IoT, managed connectivity and security services, and
more recently with mobile private networks. However, in most cases, these
value-added services have still been connectivity oriented, although, providing
good revenue growth and margins. In 2023, CSPs will look to further expand
their relationships to truly go beyond connectivity and assess how they can
offer industry-specific solutions. Innovative CSPs will take initial steps
towards becoming Industry Service Providers, by combining the Telco cloud,
communications networking and monetization and operations applications, and
industry applications.
Without
question, 5G implementations will expand and gain critical depth in 2023. To
succeed, CSPs must get many things right, from decisions on cloud-based platforms
and billing roadmaps to automation strategies to new business models and pricing
strategies and vertical industry partnerships. CSPs that effectively tackle
these challenges and embrace new opportunities may find a faster path to achieving
business success around profitability, revenue growth, customer and employee
satisfaction, and many other priority KPIs.
##
ABOUT
THE AUTHOR
Anil Rao is the Senior Director of Product
Marketing and Strategy at Oracle. He leads product marketing for the
Communications Applications business and is based in the UK. Prior to joining Oracle, Anil was a Research Director at Analysys Mason responsible
for driving market research and advisory for telecoms business and operational
software applications.