75% of the telecoms industry think 2019 will be a great year

Three quarters of the respondents to the latest Telecoms.com Annual Industry Survey feel positive or fantastic about the industry’s prospects in the new year.

There is hardly a better way to usher in the new year with a reality check on the industry we are in, and an informed look into the era we are entering. The recently-published Telecoms.com Annual Industry Survey report can very well serve such purposes. Thanks to the enthusiastic responses by well over 1,000 telecoms professionals, the majority of whom having more than a decade’s experience in the industry, we are provided with plenty of optimism as well as sober assessment.

A strong contributor to the optimism towards 2019 is the fast rollout of 5G. Not only will the long-awaited 5G networks be switched on in different parts of the world, consumer mobile devices are so close to hitting the market. In addition to eMBB that has been offered on limited scale in the US and South Korea, more ambitious services will be launched to fulfil the 5G’s promises. But at the same time, 62% of the respondents believe the benefits of 5G have not been properly communicated to consumers.

“Only time will tell what a future 5G truly holds, but it’s safe to say there’s a healthy dose of reality within the carrier market. While the promise of 5G and all its intended benefits are still on the horizon, it seems the industry is still identifying which industries can be best served with 5G,” said Sigal Biran-Nagar, Senior Director for Corporate Marketing at ECI. “It’s likely that confidence in the technology, and the willingness for consumers to pay for it, will only grow after its reliability can be assured, and it’s been implemented for a long time, which would also give critical industries and others the confidence they need that it won’t fail.”

All of 5G’s promises are supported by key technology advancements. One of the most frequently discussed areas is virtualisation. The industry continues to show strong belief in virtualisation, with close to 80% of the respondents recognising the significance of NFV for the success of their business. But it does not mean it would be an easy ride for the enthusiasts.

“We are seeing NFV gathering momentum to ‘cross the chasm’. Most respondents think that NFV is important or critical, and their spending in 2019 will be maintained or will increase.” said F5 Networks. “But challenges clearly remain. Only 8% of respondents think NFV is easy to implement. And two thirds thought that the process could be simplified and that automated systems for purchasing could help.”

All the new technologies that make 5G possible also pose new demands for the capability of testing, measuring, and monitoring. More than ever they should already be extensively implemented at the pre-commercial stage due to the new lead use cases, the complexity of its air interface, as well as the central roles played by software and virtualisation.

“5G is on the horizon bringing new opportunities for business growth. CSPs need to tightly control their ecosystem and ensure 5G is done right to deliver on promises for a whole range of new smart applications,” commented EXFO. “Partnering closely with 95%+ of the top CSPs worldwide, EXFO provides next generation test, monitoring and analytics solutions to support operators end-to-end, from lab to live and from the subscriber to the core. EXFO solutions feature real-time network, service and customer insights, process automation, NFV service assurance, prescriptive analytics as well as troubleshooting embedding machine learning and AI.”

Meanwhile, the industry also recognises that 5G is much more than a technology. For the CSPs, it is a significant step on the journey towards digital transformation. Many operators are seeing 5G as a watershed moment to seriously expand beyond the connectivity utility. One third of respondents believe 50% of revenues could be generated by new digital products and services in four years’ time. Opportunities abound.

“The survey provided an industry viewpoint on how much revenue operators will generate from services enabled by digital transformation. This is the foundation for why transformation is needed in the first place,” said Martin Morgan, VP Marketing, Openet. “The survey also provided a health check on how far the industry is advanced in its digital transformation journey and how far it needs to progress to be able to meet their digital services revenue goals. What this means for vendors is that they can set out realistic transformation roadmaps with their customers using the survey results as an industry benchmark.”

One of these growth areas is IoT. 56% of respondents saw IoT as an important driver to expand their service portfolio, while 46% saw it as significant channel to deliver new revenues. Both the short-range IoT, the largest part of the total number of connections, and wide-range including cellular-based IoT, are expected to grow very fast in the coming years, with the latter registering a much faster pace of growth.

“Never before has the digital world impacted the physical world as it does today. IoT drives autonomously driven cars, turns on lights, controls the quality of water, and lets you know who is standing at your front door,” said Ronen Priel, VP Product and Strategy at Allot. “This requires ubiquitous connectivity and security. With 5G mobility, wireless technology, and Fiber to the X (FTTx), connectivity is sorted. But, security is lagging far behind.”

Security is indeed one of the biggest threats to the industry, and that goes beyond IoT. 74% of companies responding to the survey have seen an increase in cyberattacks to their customers over the past year. Businesses are busy shoring up their defence, but they need to recognise that as attacking techniques constantly evolve, so should the defending technologies and business processes.

“We are privileged to contribute to the Telecoms.com 2018 survey report. The survey revealed that end-users and network operators still rely on legacy technology: 63% of network operators use DNS blacklisting for end-user protection. Also, 45% operators are not confident that they are ready to manage IoT security requirements for their customers. It’s crucial to use next-gen technology and start protecting users proactively,” explained Einaras von Gravrock, CEO of CUJO AI.

Now that this report is in front us to provide a panoramic view of the industry today and tomorrow, it will be fascinating to observe how our fellow professionals are turning those promises into reality. You can download your copy of it here. Happy 2019, everyone!

Digital transformation: are we there yet?

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this piece Martin Morgan, VP Marketing at Openet, reflects on what a recent survey tells us about the telecoms industry’s progress towards digital transformation.

Digital transformation is throwing a spanner in the works for telecoms service providers. There has never been more pressure on operators to change and evolve into agile, flexible, providers that can meet increasing consumer demand for more data, more content and more services. Most service providers have started on their digital transformation projects for this very reason – but there is still a long way to go and a lot to play for.

In its annual industry survey Telecoms.com Intelligence revealed that digital services revenue could reach $462 billion in 2022, up from an anticipated $294 billion in 2019. Yet despite this huge revenue opportunity, operators are still some time off from monetizing new digital services, with the survey revealing that in 2022 the majority of operators will only be halfway along the digital transformation “journey”. With this clear gap in digital transformation progress and future revenues, how can service providers evolve in a way that will allow them to plug into digital services of the future?

Understanding the opportunity

Digital transformation is everywhere, and today, it permeates every aspect of telco operations with many service providers placing efforts on tackling it. The good news is that many service providers have already embarked on their digital transformation projects, and are already starting to benefit from the new revenues generated by digital services. But progress remains slow. According to telecoms.com, the majority of service providers will only consider themselves a third of the way into their digital transformation journey by 2019. That’s not very far ahead at all, and considering the work that still needs to be done to ensure service providers can capitalize on new revenue opportunities, it’s evident that a change is required to speed things up.

It is critical that service providers seize the opportunity to change now. The speed at which the industry is evolving means transformation is no longer a ‘nice to have’ option, but rather one of survival. As shown by the telecoms.com Intelligence survey, the future of service provider revenues lies in digital services, with enterprise IoT, smart home and consumer IoT anticipated to be the biggest revenue earners in the coming few years. Unlocking the potential of these new digital services will only happen if service providers can succeed in their digital transformation efforts.

As with most things, digital transformation is easier said than done. With service providers citing insufficient business cases, general inertia, over-reliance on legacy systems and CapEx constraints as the top 4 obstacles to digital transformation, it’s clear to see that service providers’ challenges are varied and multi-faceted.

Making OSS/BSS the solution, not the problem

The telecoms industry is filled with dos and don’ts when it comes to digital transformation, with different experts voicing different opinions about where operators should start. Unfortunately, no one has yet come up with a definitive answer, but industry associations such as TM Forum are placing a huge emphasis on the importance of upgrading legacy OSS/BSS if organisations are to become ‘digital-ready’. OSS/BSS is critical to enabling fast time to market and gives service providers the ability to try out new business models, at a much faster pace and lower cost than existing systems. This is a crucial element of digitization – service providers simply cannot afford to go at their current pace if they are to manage increasing mobile data and subscriber demand for an enhanced user experience.

Much like the concept of digital transformation, upgrading legacy OSS/BSS is no easy feat. According to telecoms.com, almost 60% of service providers are only 40% along their BSS/OSS transformation journey. When it comes to refreshing OSS/BSS a lot of work is yet to be done. With many of these systems dating back to the 1980s, it is no surprise that they have become ill-fit for purpose. So when it comes to upgrades and transformation, which methods should service providers adopt?

When asked which approach they favoured, the majority of service providers agreed that a ‘big bang’ approach – whereby legacy systems are swapped out for digital systems in one large project – is the worst approach to OSS/BSS transformation. This is unsurprising given that McKinsey, Forbes and telecoms.com all report that the failure rate of large scale transformation projects is at approximately 70%.

Instead, service providers favour a more pragmatic approach. In joint second place was the greenfield and add-on systems approaches, which both received scores of 3.44 out of 5. A greenfield approach allows service providers to add new digital systems to support new lines of business such as IoT or second brands, while an add-on systems approach enables service providers to add on new digital systems as an overlay to existing legacy systems. This then allows service providers to phase out their legacy systems gradually.

The most popular approach to legacy system upgrades was the phased systems method, whereby service providers take a step-by-step approach to replacing legacy solutions with digital solutions. While there will never be a one-size fits all approach to transformation, it’s clear that pragmatism wins here. These approaches minimize disruption and also allow service providers to reduce and maximize the cost spent on transformation. With service provider margins increasingly slim, the prospect of financial cost savings and minimal disruption is a welcome sign.

Continuous transformation

While many service providers today have a clear understanding of digital transformation’s ultimate goal, the reality is that digital transformation is a continuous journey. Service providers will never be finished with it – it will continuously require new thinking, new advances, change and adaptation. Service providers thinking of digital transformation as a finite journey will struggle to measure their organisation’s success as they focus their aims on an unachievable digital transformation utopia.

Digital transformation represents major upheaval – and even inconvenience – but without it, service providers won’t be able to keep up with the pace of change. They must transform to survive, and that starts within their organisations – with their culture, their processes and their existing network infrastructure. But adopting the right approach is key and service providers need not make digital transformation scarier than it already is by embarking on large-scale, lengthy transformation projects that reap few rewards. It is only through the adoption of a tactical, pragmatic and step-by-step approach to transformation that service providers will be able to evolve and, ultimately, start monetizing the multi-billion digital services revenue opportunity.

 

openet-martin-morgan-BWMartin Morgan is the VP Marketing at Openet. With 25 years’  experience in mobile communications software, Martin has worked in mobile billing software since the early days of the industry. In that time he’s spoken at over 50 telecoms conferences worldwide and had a similar number of articles published in the telecoms trade press and served on trade association and company boards. At Openet Martin is responsible for marketing thought leadership and market interaction.