Who is set to benefit from the COVID-19 outbreak?

For millions of individuals and businesses, the threat of COVID-19 is financial ruin, but there are parts of the technology industry that are benefiting from the considerable changes forced on society.

The FTSE 100 Index is likely to close below 5,000 today, a 27% decline in a month, while the Dow Jones is currently down (at the time of writing) 31% over the same period. Economies around the world are being hit disastrously hard, but some will see gains out of this pandemic at least temporarily, if not permanently.

Cloud Computing

The cloud computing segment has been on the rise for years, though as more employees find themselves restricted to their homes more workloads will have to be migrated to the cloud to ensure the business can function as usual.

For the cloud companies, the coronavirus outbreak is effectively forcing some organisations through a very rapid digital transformation project, to embrace the cloud and mobility trends. From an IaaS perspective it means more money, from SaaS it means more engagement and PaaS more opportunity.

Amazon Web Services, Microsoft Azure and Google Cloud are the obvious beneficiaries as market leaders, though for companies like Oracle, who might be working with more traditional industries that have resisted evolution to date, new conversations about enabling the workforce will have to occur.

Interestingly enough, once these businesses have begun their journey towards a cloud-based business model and environment, it is highly unlikely they will go into reverse. This could be a catalyst for accelerating the already fast-blossoming cloud segments.

Video conferencing and collaboration

Although there is no substitute for a face-to-face meeting to progress and complete complicated projects, alternatives have to be sought today. Many businesses are encouraging more meetings to be conducted via video links rather than email to not only ensure effective communication but ensure well-being of employees. Contact with colleagues via video link is not perfect by any stretch, but it might assist some who are feeling the loneliness of remote working.

Microsoft is an obvious beneficiary here, it announced last week the number of daily active users for its Teams collaboration suite increased by 12 million, though there are many others who are financially better off also.

Zoom Video Communications, a remote conferencing services company headquartered in San Jose, has seen share price increase 130% since the beginning of the year, while more marketers are turning to companies like ON24 to purchase webcasting and webinar services to ensure lead generation projects can continue.

As mentioned above, some companies are being forced into a digital transformation project meaning some of the remote working capabilities might be retained in the long-term, but virtual alternatives are never going to be a complete replacement for face-to-face meetings, where we can subconsciously pick up non-verbal communication cues so easily.

Electronic payments

The likes of Visa, Mastercard and AMEX are already benefitting from long-standing trends where physical cash is quickly becoming a thing of the past, though the COVID-19 outbreak could accelerate this.

In the short-term, some shops are now only accepting digital payments, though as the total number of transactions are decreasing, so will revenues. That said, in the long-term it could force customers into adopting digital payments.

Although cash is quickly becoming a thing of the past, some from the traditional generations still resist the use of digital currency. The chequebook took years to fall out of common usage as banks and shops were still compelled to accept such payment when offered. The same could be said of physical cash; as long as some still want to use it, it will persist. But in refusing to accept physical payments, shops are forcing some individuals to adopt digital payments.

This is not a likely to be a permanent change for all, but it might be for some, both in terms of consumers who adopt digital payments and the shops who will now only accept digital currency.

Ecommerce

The more people are at home bored, the more likely fingers are going to venture towards the eCommerce apps to spend the money which has been saved from not going to the pub. Your correspondent’s household has turned into a satellite Amazon storeroom thanks to certain individuals in the flat.

Streaming, gaming and video content platforms

This is perhaps the most obvious example of a beneficial segment.

In terms of video streaming, parents will need to occupy children, while adults will also need entertaining as pubs, clubs, theatres, parks, beaches, holidays and gigs all disappear. Netflix is already immensely popular, but with more people stuck at home in the evenings, it may well become more so, but this benefit is not limited to the content king. All streaming platforms could benefit, while Disney+ is launching at a good time to capture the attention of European consumers.

In terms of video platforms outside of streaming, YouTube is enjoying particular success. Not only are there those who are trying to entertain themselves, but there is also millions of hours of information (some much more accurate than others) on the pandemic itself.

From a gaming perspective, this is back to the boredom conundrum. With the usual entertainment venues shut down, consumers will need to be entertained. The likes of Microsoft Xbox, Google Stadia and PlayStation are likely securing additional subscriptions as well as in-game purchases.

Savvy corporates

For those corporations who in a more fortunate cash position than others, the shock to the financial markets could be viewed as an opportunity. Softbank is a perfect example.

Today (March 23), Softbank announced it was selling off certain unnamed assets to fund a second share buyback programme. Combined with the first announced on March 13, Softbank will be able to retire 45% of Softbank shares which are currently on the open market.

Generally speaking, the fewer shares which are on the open market, the less exposed a company is to external influences. All you have to do is look at the conflict between Elliott Management and Twitter/AT&T/Telecom Italia to see what influence an activist investor can have on a business where share price has taken a decline. Share buyback programmes could be viewed as a way to protect a corporate strategy from short-term influences and aggressive investors.

Online grocery delivery

With the rush on supermarkets persisting as the days turn into weeks, online grocery delivery companies are seeing a surge in popularity.

Online shopping delivery service Ocado suspended its website last week, telling customers demand exceeded its capacity to deliver. The firm has said it would fulfil its orders and will soon reopen, with rations placed on certain food items. Share price for Ocado has surged this month, though it did decline once it announced it would temporarily stop taking orders.

The telecommunications industry

The telecommunications industry is critical to today’s society functioning seamlessly, though it has traditionally been ignored. Consumers have simply expected the internet to work without appreciating the importance of the telecommunications industry. Telcos are viewed as boring companies, paid little attention in everyday life.

Thanks to the number of people attempting to entertain themselves, work from home or access educational resources the telco industry has been thrust into the limelight. Authorities are putting in measures to protect these valuable assets, not only to ensure consumers are able to continue their daily lives but so emergency services can continue to function, or research labs can collaborate to create a vaccine.

The telco industry underpins the success of almost every element and facet of society, and now the networks are under pressure, everyone realises it.

TM Forum postpones Digital Transformation World

The Digital Transformation World event, which was due to take place in Copenhagen in June, has been postponed to October due to the COVID-19 outbreak.

“Together, we are facing a truly unprecedented situation,” said Nik Willetts, CEO of TM Forum. “The global coronavirus pandemic is affecting our families, our businesses, and our communities. Our thoughts are with all those affected. We’ve been working with our members and the relevant authorities for the last few months to put in place access policies and on-site processes to mitigate the risks of the virus.

“Despite this, we feel it’s best for everyone involved to reschedule our flagship event until October. With the support of our global member base we remain on track to work together in delivering an exceptional event and appreciate everyone’s understanding during these challenging times.”

Digital Transformation World is the TM Forum’s flagship event, bringing operators and vendors together to talk telecoms tech, best practice and generally shoot the breeze. It’s traditionally held in Nice, France in May, but is switching to Copenhagen, Denmark this year. The Danish weather should still be OK in October, but it’s by no means guaranteed that the pandemic will be sufficiently contained by then. Fingers crossed.

China Mobile (Chengdu) Adopts Huawei BusinessPON Solution to Upgrade Private Line Services, Greatly Improving User Experience

Recently, China Mobile (Chengdu) adopted the Huawei BusinessPON solution to deploy gigabit Internet private lines for more than 50 small- and medium-sized enterprises (SMEs) in Chengdu Jiaozi FinTech Center, significantly improving user experience and satisfaction.

The Jiaozi FinTech Center has about 150 innovative enterprises in fields such as big data, cloud computing, artificial intelligence, and blockchain. Currently, the network services are poor in experience and cannot meet enterprise digitization requirements. To improve user experience, China Mobile (Chengdu) carried out joint innovation with Huawei, and adopted the Huawei BusinessPON solution to upgrade private lines for business buildings in the Jiaozi FinTech Center and provide premium gigabit private line experience for enterprises using the PON technology.

  • On the terminal side, gigabit enterprise gateways replace normal home ONTs. One device fulfills multiple service requirements, such as voice, Internet access, cloud VPN, Wi-Fi coverage, and perfectly solves problems of ONT suspension and packet loss.
  • On the CO side, independent MA5800 OLTs are configured with dedicated 10G PON boards, and enterprise private lines are isolated from home broadband services to safeguard the bandwidth of enterprise private lines.
  • On the ODN network, the split ratio is 1:32 (or 1:16) to reduce optical power loss and improve network stability.

A follow-up survey shows no disconnection or frame freezing occurs after the upgrade, and user experience and satisfaction are greatly improved.

  • A high-tech startup company of 10 employees focuses on AI and machine learning. Before upgrading the private line, the network would frequently disconnect (once to three times a week), had a rate of only 20–30 Mbps, and could not well support video surveillance services. After the upgrade, the Internet access speed now exceeds 200 Mbps, and the video surveillance service switches on immediately. The network service experience is much better.
  • A software company of around 20 employees relies on big data and cloud computing to develop payment software for banks. Previously, sending and receiving emails were slow, code sometimes failed to be uploaded to the cloud server, and it took several minutes to log in to the product demonstration page. All in all, the overall network experience was poor. After the upgrade, login to the product demonstration page takes only 1 second, and everything turns on immediately. Video conference also becomes smooth, improving the office work efficiency.

Digital transformation has become a common requirement of various industries. SMEs, which are most vibrant in innovations, are in urgent need of high-quality one-stop cloud private lines. They value the actual service experience, and require private lines that support high concurrent access by multiple employees, with guaranteed bandwidth, flexible and secure cloud access, as well as agile O&M. In the joint innovation carried out by China Mobile (Chengdu) and Huawei, the Huawei BusinessPON solution significantly improves the enterprise private line quality.

Many SMEs are not only technologically innovative, but also play a critical role in providing jobs and promoting economic growth. Enterprise private lines for business buildings are typical application scenarios of F5G. Huawei adheres to the principle of customer requirements first, and will continuously upgrade the BusinessPON solution to help operators build differentiated new private lines, provide ultimate gigabit experience to customers, and enable digital transformation for SMEs.

Over half of UK businesses lack confidence to launch 5G-based IOT

Research from professional services firm EY suggests that while enthusiasm for 5G might be gathering steam, the in-house capabilities to transform into a connected enterprise is lacking.

While the progress of technology might be accelerating, it does appear the business models, structure and capabilities to take advantage are lacking. This appears to be the overall message from EY; enterprise customers in the UK are brimming with enthusiasm, but it might be a case of ‘all the gear and no idea’.

“UK businesses are keen to invest in 5G, but this is not matched by most organisations’ capabilities,” said Praveen Shankar, EY’s Head of TMT.

“To overcome this challenge and reach the full potential of 5G, providers need to articulate a more compelling vision of the opportunity, while businesses need to educate themselves on the game-changing possibilities. Success will require adapting existing strategies like IoT to take full advantage of 5G and also understanding the links with adjacent emerging technologies such as AI.”

EY suggests that while only 15% of UK businesses are investing in 5G for the moment, this will increase to 70% within three years. Only 44% are confident they can successfully implement 5G-based Internet of Things (IoT), while 75% believe a significant overhaul of their operating model would be needed to realise implementation.

This is perhaps one of the more significant worries about the industry, especially in the UK. The technology and network might be progressing, but is the customer ready? Has enough been done to educate and engage the customer, both consumer and enterprise? We suspect the answer to these questions are no.

There are incubation hubs in various countries, but these are small and very niche. Adverts have largely been focused on speed upgrades as opposed to the additional benefits of 5G. And finally, Release 16 will formalise some of the more important specifications for 5G such as the core, standalone RAN, virtualisation, low-latency features and network slicing. The industry is still waiting for the completion of this release.

Although the customer engagement has been slightly lacking from the telcos and the supporting ecosystem, this is not the worst situation to be in. Innovation is generally somewhat of ‘chicken and egg’ situation, and in this case network deployment and technology is progressing faster than the business cases to support them. The telcos might not like to hear it, but they will just have to wait it bit longer for the 5G rewards than previously anticipated.

Q&A with Thandi Demanet of Tessellate Advisory

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Thandi Demanet, Director of Tessellate Advisory, sits down for an exclusive Q&A with the MVNOs Series to talk data and digitalisation.

What new business opportunities is digitalisation bringing to MVNOs?

Digitalisation offers a world of opportunities across all sectors, not least of which, of course, telecommunications. For MVNOs, the opportunity is the same, however they benefit from intrinsic advantages such as generally being more agile in structure, not dealing with as much legacy both from a technology and a cultural viewpoint…  Unfortunately, they also face unique challenges in the form of being largely reliant on MNOs, steep competition and in some cases the regulatory environment in which they operate (including gaps). MVNOs can and should innovate and experiment with new business models and partnerships which they can certainly do more swiftly than incumbents. This includes (but isn’t limited to) becoming partners with MNOs in new ways, collaborating to deliver new services and drive revenue for all in the value chain. Successfully seizing digital opportunities will depend on the ability to create and manage the right ecosystems, internally and externally. It’s also time for MVNOs to firmly address enterprise markets, especially in light of advanced digital services like IoT and 5G, find or create new markets, work with disruptors, or indeed become disruptors.

How can MVNOs harness data to maximise their business potential?

Data can be used to gain customer insight and drive loyalty, but also to uncover niches opportunities. We’ve heard the cliché about data being the new oil and the real value (like in oil) coming from refining it – analytical capabilities and looking beyond the data is what is needed, uncovering gaps and new market segments based on new services customers aren’t necessarily asking for yet. Data can be leveraged to harness “blue ocean” opportunities as well as enhance “red ocean” business – ultimately it comes down to the leadership’s (and board’s) vision and appetite for risk. Data in itself is a business, one with significant risks and potential rewards, but that is another topic.

What advice do you have for MVNO start-ups trying to succeed in the saturated MVNO market?

Following on from the previous question, those who succeed in a highly competitive, saturated (“red ocean”) market need to uncover new markets, develop new services for new needs that people/businesses may not realise they want or need yet. Visionaries like Henry Ford and Steve Jobs didn’t wait for the public to ask for a car or iPhone, they created demand by creating the product. A service that adds value to a business or customer segment is one with potential, then the business model wrapped around it is another issue and in the context of the digital economy, a considerable on stemming from the complexity of managing ecosystem monetisation models. The key is to identify an opportunity and go for it, not to wait to have the perfect plan or everything set up, but to move forward with a minimum viable strategy and be prepared to pivot as needed.

Are there any innovative MVNO business models that have caught your attention? Why?

Partnerships and ecosystems are the way forward as no individual organisation can singlehandedly deliver a complex digital service required by customers (whether enterprise or retail) in the digital, connected world. While opportunities are multiplied by these business models and while risk is shared, so too is reward and effective monetization models are still not in place. Commercial collaboration is unavoidable, but there remains a lot of work to be done on the financial engineering side. MVNOs have an opportunity to innovate and lead here. It’s about leveraging capabilities to co-create value.

Which disruptive tech should MVNOs be keeping an eye on in 2020 and beyond?

All the usual suspects, 5G, AI, IoT, DLT (distributed ledger technologies), AR/VR. These can be leveraged by MVNOs themselves to optimise their own operations and can also provide new sources of revenue. That said, companies should have a strategic plan before embarking on costly tech implementation initiatives and avoid just going with trends “because everyone in the market is going that way”. Again, partnering can be a great model to take advantage of and/or experiment with these.

You are set to chair a track at MVNOs World Congress 2020. Can you tell us a bit about why you are attending? What you will be doing there?

I’m very much looking forward to chairing the IoT track at MVNOs World Congress and getting into some deep discussions with industry leaders. This is always a great event to attend, it’s truly unique in bringing the breadth of the MVNOs community together and provides a level platform for peers, partners and of course competitors to engage and steer the industry forwards. IoT holds huge opportunity for digital and telecommunications service providers and I can’t wait to learn more about how MVNOs are seeing their future in this space, what actions they are taking and how they are innovating. It will be interesting to see as well how much the topic of 5G comes up in this track.

 

If you liked these insights from Thandi, make sure to catch her talk at MVNOs World Congress 2020 in Berlin, 27 – 30 April.

Europe unveils its digital grand plan

The EU reckons Europe can be a digital leader so long as it does what the European Commission tells it to.

To be fair to the EC this is a pretty ambitious project as it seeks to define the rules, parameters and scope of all the digital ambitions for the entire bloc. It encompasses the European data strategy and its rules for the development of artificial intelligence in such a way that it helps the continent out, but doesn’t result in a Terminator-like dystopia.

“Today we are presenting our ambition to shape Europe’s digital future,” said President of the Commission, Ursula von der Leyen. “It covers everything from cybersecurity to critical infrastructures, digital education to skills, democracy to media. I want that digital Europe reflects the best of Europe – open, fair, diverse, democratic, and confident.”

Democratic eh – who elected you then Ursula? Anyway, the collateral associated with this announcement is predictably encyclopaedic, but if you want you could start here, or here, or here. As if the scope of the project wasn’t broad enough the EC seems to be trying to reconcile a bunch of other trendy political issues like diversity and green stuff while it’s at it.

“We want every citizen, every employee, every business to stand a fair chance to reap the benefits of digitalisation,” said Executive Vice-President for A Europe Fit for the Digital Age, Margrethe Vestager. “Whether that means driving more safely or polluting less thanks to connected cars; or even saving lives with AI-driven medical imagery that allows doctors to detect diseases earlier than ever before.”

“Our society is generating a huge wave of industrial and public data, which will transform the way we produce, consume and live,” said Commissioner for Internal Market, Thierry Breton. “I want European businesses and our many SMEs to access this data and create value for Europeans – including by developing Artificial Intelligence applications. Europe has everything it takes to lead the ‘big data’ race, and preserve its technological sovereignty, industrial leadership and economic competitiveness to the benefit of European consumers.”

It’s hard to know what to make of such a massive initiative. This was clearly the sort of thing Vestager’s role was created for, but what does it mean on the ground? AI clearly needs some kind of global supervision and Europe has plenty of catching up to do with its geopolitical rivals when it comes to the digital economy. We’ll probably have a better sense of how effective this initiative has been in a decade or so.

World Bank continues mission to make Africa more investable

The World Bank has selected Progressus to head-up the second phase of its ambitious African Regulatory Watch Initiative (RWI).

The African RWI is an interesting and unique project, aiming to tackle some of the more unique challenges faced across the African continent. Despite progress being made in the connectivity field, there are still some very difficult hurdles to overcome to close the digital divide on the continent, as well as place Africa on a level playing field with more developed regions.

The RWI will aim to tackle some of these challenges, such as licensing, spectrum allocation, taxation and tariffs, as well as appropriate regulatory oversight and accountability.

“This is an extremely exciting project,” said Olivier Jacquinot, who heads up RWI at Progressus. “RWI Phase 1 managed to identify some key regulatory levers that pushed forward the development of broadband in some countries. Phase two will deliver an even greater level of analysis – and help keep the African telecoms industry moving forward.”

Despite being managed by the World Bank, the financiers are staying pretty quiet regarding their own drivers and ambitions. That said, it might not be difficult to guess, these are moneymen after all and have some very obvious objectives.

One objective might simply be confidence. Bankers and venture capitalists are always looking for new investments, and the telecommunications industry is proving to be increasingly popular. An initiative which provides an improved and standardised regulatory environment across the continent might well be an important step to providing confidence to invest in the African telecoms and infrastructure industries.

Despite there being great potential for investors on the continent, Africa has several unique challenges. Accessibility, both financial and technological, is a significant one, though an incredibly fragmented and varied regulatory landscape across the continent is an issue.

At AfricaCom in November, MTN CEO Rob Schuter used the acronym CHASE to indicate the major challenges on the continent; Coverage, Handsets, Affordability, Service bundles and Education. Some of these challenges can be addressed through industry initiatives, such as the RWI, though others need much bigger thinking. Making the economics of network deployment or handset accessibility is a significant barrier.

On numerous occasions, more nefarious challenges such as government and regulatory corruption are raised as barriers also. Such rumours will always make investors nervous.

The first phase of the initiative was launched in 2017, and due to the success, the second phase will be launched imminently. 22 regulators have signed up so far, perhaps demonstrating how desperate some of these nations are for external investment; no-one likes being told how to govern or regulate their own sovereign nations after all.

In the second phase, Progressus will introduce the RWI Index. This ranking system will benchmark each of the nations involved in the RWI. The Index will be based on spectrum management, Universal Service Funds management and other Government support measures and regulatory governance.

Africa is a unique continent with some very unique challenges, and this initiative should provide a stable route forward. It isn’t the most revolutionary idea, but there is no need to reinvent the wheel sometimes.

Telefónica doubles down on the smart home

Telefónica has created a global unit, known as the Chief Digital Consumer Office (CDCO), which will champion new digital products and services, paying particular attention to the smart home.

Led by Chema Alonso, the team will aim to drive forward the Aura AI digital assistant, as well as continue the creation of the ‘fourth platform’. The initiative will help take Telefónica into the digital era across several areas, but there does seem to be particular attention being paid to the smart home ecosystem.

José Montalvo will become Chief Data Officer, with a primarily focus on the development of the fourth platform project, including integrating new products and services such as Aura onto the platform. David del Val will become Director of Core Innovation, with a particular focus on edge computing. Antonio Guzmán is the Director of Digital Home, tasked with overseeing the development of the smart home and digital services ecosystem.

These are only a few of the names, but it does appear Telefónica is hoping to create a standardised smart home ecosystem for the markets which it currently operates in. This is an incredibly intelligent approach to creating value in the future, and with its global presence, Telefónica can provide competition to other players who are attempting to create a platform to control the smart home ecosystem.

This initiative builds on progress being made in the smart home following the announcement of a partnership with Microsoft at Mobile World Congress last year.

Alongside Microsoft boss Satya Nadella, Telefónica CEO Jose Maria Alvarez-Pallete launched the fourth platform initiative in attempt to own the smart home ecosystem, seemingly learning from the ‘walled garden’ business model which has been so successful for the likes of Facebook.

In this model, Telefónica leverage its relationship with the users, creating a platform for third parties to offer products and services. Telefónica will of course offer its own services, such as content, but why not create revenue by monetizing the link between the user and other companies in the digital economy.

While the smart home is still emerging as a viable segment in the digital economy, this is a very intelligent move from Telefónica . Connected objects are becoming more common, as there will need to be a focal point to manage this ecosystem, but also guarantee security. Telefónica has a trusted relationship with the consumer, a recognised digital assistant and the power of Microsoft as a partner. This is not a guarantee, but at least Telefónica is trying something new under the threat of the connectivity industry becoming commoditised.

Could Iliad Italia be a victim of Corporate Darwinism?

Iliad’s Italian business unit has lodged complaints with Italian and European regulators regarding network sharing deals, but could these objections be effectively ignored?

While network sharing is a proposition which offers great benefits to cash-strapped telcos in pursuit of the eye-wateringly expensive 5G connectivity dream, it is not without its opponents and critics. Some regulators have become very defensive about the progressive idea, while there are telcos being left out of discussions who are objecting also.

In Belgium, Telenet has raised concerns over a tie-up between Orange and Proximus, while the European Commission prevented O2 and T-Mobile from expanding an existing agreement to include 5G in the Czech Republic. Both of these network sharing partnerships have been halted in the pursuit of maintaining attractive levels of competition, but Iliad’s objections might fall on deaf ears.

Iliad is objecting to network sharing agreements between Wind Tre and Fastweb, as well as another between Telecom Italia and Vodafone Italia. Iliad is the only major telco in Italy not to be in a network sharing discussion. If these partnerships bear fruit, efficiencies will be realised, meaning competitor funds can be redirected elsewhere.

If this is a prediction of the future, Iliad will be in a weakened position to compete in the Italian market, and financial pressures could become too much to justify the venture. Iliad could become a victim of Corporate Darwinism.

The competition versus consolidation conundrum

Competition has been somewhat of a difficult topic of conversation between the regulators and telcos in recent years, primarily because of the polar-opposite opinions on market consolidation. The telcos would like to consolidate to achieve scaled economics, while the regulators want to preserve the number of telcos in each of the markets to maintain competition and encourage investment.

There are pros and cons on either side of the fence, though the regulators do not seem to be shifting. This argument has knock-on effects for network sharing agreements.

Ovum’s Dario Talmesio points out, network sharing could be viewed as consolidation through the backdoor. Combined assets reduces the number of independent networks in the market, and potentially reduces investments and competition.

In the Czech O2 and T-Mobile case, the European Commission suggested as there were only three major players in the market, further combination of assets between two of the parties would present too much of a risk of the third being squeezed out. The same case has been presented by Telenet to the national regulator in Belgium.

Regulators are sensitive to any propositions which would negatively impact competition in a market, but what about markets where the number of telcos could actually be reduced?

How much is too much competition?

While there is no official stance on the number of telcos in a market, the European Commission does not generally approve activities which would reduce the number of telcos below four. Vetoing the O2/Three merger in the UK, or Telia/Telenor in Denmark are two examples, but this might not be the case in Italy.

If regulators were to allow the network sharing agreements to proceed, Iliad would certainly be in a very precarious position, though there would still be four mobile service providers in the country; Telecom Italia, Vodafone Italia, Wind Tre and a Fastweb proposition enabled by its agreement with Wind Tre. This might be deemed enough competition in Italy to maintain a healthy market for the consumer and a financially sustainable one for the telcos.

The four telcos named above are venturing into untested waters here. This presents a new question for the regulators to answer on competition. Theoretically, suitable levels of competition are being sustained, and this network sharing dynamic has been approved by regulators in the past.

In the UK, Three and EE have formed MBNL, while Vodafone and O2 have CTIL. These are passive infrastructure sharing joint ventures, focusing on the rural environments. It is a similar situation which would be created in Italy, and the UK does have a sustainable telco industry. It is evidence that the dynamic could work, with or without Iliad in the mix.

Could this be a case of Corporate Darwinism?

Corporate Darwinism occurs when a market evolves to such a degree that players are either irrelevant or uncompetitive, and therefore go out of business.

The best example of this is Blockbusters. Once a dominant player in the movie rental business, as the distribution of content moved online the proposition of Blockbusters was no-longer relevant, therefore the company did not survive. This is an example of a market evolving to such a degree that the business was no-longer relevant.

The Iliad example is perhaps one where the market evolves to such a degree that the business is no-longer competitive.

If the four remaining mobile service providers have network sharing initiatives driving network deployment, investments can be more intelligently spend (a) on the network, or (b) in other areas of the business.

The shared networks might have a greater geographical footprint, have future-proofed technology and higher performance specs. Theoretically, Iliad would churn subscribers to higher quality rivals. Also, as less money is being spent on network deployment, tariffs could be lower, but profitability could be maintained. Or, more cash could be invested in value-add propositions for products. Rival offerings could look more attractive than Iliad products.

If regulators approve the network sharing agreements between Telecom Italia and Vodafone Italia, alongside Wind Tre and Fastweb, Iliad would find itself in a very difficult position. It become difficult to see the telco surviving in the long-term.

Unfortunately for Iliad, there is a coherent argument to approve the partnerships to drive towards a more sustainable telecoms industry, allowing the telcos to realise efficiencies ahead of the vast expenditure of 5G. The consumer would benefit, as would enterprise customers and the Italian economy on the whole. It might be a case of letting Iliad die out for the greater good of the Italian telecoms sector.

What we talk about when we talk about digital transformation

Digital transformation is one of the core buzzwords used in the telecoms industry and beyond, right up there with 5G, cloud computing, and artificial intelligence. What sets digital transformation apart from the others is the sheer number of different things it can stand for.

Here we are sharing the opening section of this Telecoms.com Intelligence special briefing to look into how the industry practitioners have undertaken the tasks of digitally transforming their businesses, what are the key success factors as well as the main obstacles to the success of these endeavours, and which approaches they prefer to adopt to tackle the challenges.

The full version of the report is available for free to download here.

In its broadest sense, digital transformation has been used in the socio-economic context by organisations like the United Nations. The 2019 Digital Strategy of United Nations Development Programme (“UNDP”) sees in digital transformation the pathways to the UN’s sustainable development goals. Although it heavily relies on the communications industry to help make the strategy happen, e.g. “digitally deliver policy and programme support”, UNDP’s strategy scope goes beyond that.

When it comes to the communications industry, digital transformation is often cited as an overarching theme to encapsulate all the telecom operators’ efforts to expand their role from mere connectivity provider to that of a digital service platform. However, there are so many components in such a context that one would likely get a different definition of digital transformation from every industry person one asked.

To start with, certain quarters of the industry, still occasionally conflate digitisation with digitalisation. It is therefore necessary to clarify the concept from outset. Digitisation refers to the change from analogue to digital. For example, the process can be called digitised when the application form to open a mobile account can be filled out on the computer instead of in paper form. Digitalisation refers to the change of processes, often focusing on automating previously manual processes, using digital technologies. In the example of opening a mobile account, the process can be viewed as digitalised when the whole application process is done online. Digitisation is therefore a prerequisite for digitalisation.

In the mobile telecoms world, digitisation was completed when 2G replaced (the retrospectively named) 1G networks. Digitalisation, on the other hand, is still an ongoing process and by all accounts will be with the industry for a long time, not the least because digital transformation is so much more complex than digitising the radio signal.

Despite that telecom operators may not agree with one another what digital transformation means to them individually, almost all of them agree collectively that they must undertake the transformation. This is both a strategic imperative and a competitive necessity. It is also widely agreed that the main objectives of digital transformation include:

  • To grow top line revenues as a way of sustaining the business, when the income growth from selling voice minutes, text messages, and data packages has stalled
  • To defend bottom line by improving operational efficiency
  • To develop technological and organisational capability to be more future ready

The following chapters of this report will look into the key steps the industry has taken and still needs to take, the major obstacles to overcome and the worst misunderstandings to dispel, to achieve digital transformation objectives. The discussion and analysis will draw heavily on the first-hand insight and experience from the practitioners.