Traditional operators are incapable of digital transformation

The Digital Transformation World event this week shone a light on quite how far from achieving digital transformation many operators are.

Such is the perceived importance of this concept to the future health of the CSP industry that TM Forum, which has traditionally been more focused on just the underlying technology used by CSPs, decided to rebrand its big show of the year accordingly. Everyone in attendance seemed to agree it’s important, but that certainly doesn’t mean it’s going to happen anytime soon.

First, what the hell is ‘digital transformation’? Like many persistent buzzwords it’s sufficiently broadly and vaguely-defined that it can be applied to pretty much every aspect of corporate evolution. In the context of CSPs it’s generally understood to refer to the necessity of changing the way they do things to match the speed of innovation typically associated with Silicon Valley internet companies. Or, as CEO of consultancy BearingPoint Angus Ward said at the show “How do you create more compelling, differentiated products and services that are harder for other people to copy?”

In this respect digital transformation (which we would abbreviate if it wasn’t for Deutsche Telekom – sigh) can be broadly subdivided into technological and cultural evolution. The former concerns all the cleverness currently underway in virtualizing, cloudifying and automating network management, which was a major theme last year.

Culture club

This year we felt the discussion focused much more on the cultural side of things, a view shared by many others in attendance. And if you thought the technological transformation was tricky, the cultural challenges can seem insurmountable, so much so that you have to wonder whether it’s even possible.

“That’s our big question,” said Nik Willetts, CEO of the TM Forum (pictured above, delivering his keynote). “Let’s assume for a minute the technology problems can be overcome – if you look outside the industry a lot of them have been overcome by hyperscale internet companies. But if you put all this amazing technology in an environment where people work and procure and think and sell the way they always have, it’s a bit like having a Ferrari engine in a Skoda.”

TM Forum launched its Digital Maturity Model last year and a Digital Transformation Tracker this year, both designed to shine a light on the challenges associated with all this stuff and to help companies go about it. In common with the technological challenges, the culture shift can seem to enormous and daunting that companies need it broken down into manageable chunks to have any hope of making progress.

One person who seemed impressed with this approach was Mary Clark, CMO of Synchronoss, which specializes in providing digital products and services to operators that they can then pass on to their customers. “I was happy to hear a consistent theme of looking at digital transformation in a modular way – breaking it down into manageable chunks that can then be executed upon,” she said.

“Rather than hearing about all-encompassing projects, there is a real embrace of targeting specific areas, setting objectives, and executing in a much more narrow way, giving more opportunity for success. I heard several examples where there was focus put on a specific business area, like enterprise or SMB and the subsequent actions taken to improve the customer journey for standard actions. And then get to it. Then if there are lessons learned there they apply them to another area. It makes the whole prospect of even beginning with a digital transformation project more feasible.”

BearingPoint’s Ward flagged up some research his company has done, segmenting companies by business and this culture type. “It’s quite a nice framework for things like culture,” said Ward. “So asset providers are very centralised, with a business case for everything and slow decision-making. But that is in conflict with the retail side that wants to move a lot more quickly. Also the culture of an asset-intensive business may be very different to one based around intellectual property.”

Bearing point 4 models

Bearing point 4 quadrant

The customer is always right

Bengt Nordstrom of telecoms consultancy Northstream identified the key cultural challenge as the move to a customer-centric mindset. “A digital transformation project must always start with a customer and business process mindset,” he said. “For instance, how would we like to serve our customers in the future? How would they like to buy and consume our services? What in our ways of working can be improved and streamlined to gain shorter lead times and cost reductions? After such analyses they can investigate how technology can help them to achieve their objectives.”

And it’s not like the operators haven’t got the memo. We spoke to several and they spoke with a common voice. “You’ve got to know what people want to buy; how do you stay relevant and make that pipe something you never leave?” said Ibrahim Gedeon, CTO at TELUS.

“Operators need to offer their customers contextual, useful things and be careful not to appear to be trying to exploit them,” said Erik Meijer, who works in Strategy GPM/Group Innovation at Deutsche Telekom. “What John [Legere] did in the US was to go into the call centre rather than the board room and listened into the calls to understand where the problems are. Then he started to eliminate problem by problem, by asking how he could help them.”

“It’s all a question of still being in the value chain in two, three, five years from now,” said Thierry Souche, CIO at Orange and SVP of Orange Labs Services. “That’s why we put a lot of effort into conversational services and identity. Digits from T-Mobile in the US is a good illustration of this as it allows you to loosely decouple your identity from your number, SIM and device.”

“Ultimately it is about survival,” said Nordstrom. “In a fast-moving ICT world, operators are only relevant as a channel for its various service and product providers and for its customer if they are digitizing their businesses at least with the same pace as they do.”

A few people we spoke to agreed that, as well as introducing digital transformation incrementally, it’s probably a good idea to have distinct, semi-autonomous business units within the company that are largely insulated from the incumbent culture and given longer-term, more qualitative, more collaborative incentives.

“Webscale companies like Amazon focus on smaller product-focused teams with all the right people in them to get the job done and their focus is on an outcome for a customer,” said Willetts. “Compare that to your classical enterprise – telco or otherwise – in which people operate primarily within their siloed department, and it’s completely different.”

Play to your strengths

Another common theme was the need for operators to open up to collaboration with partners that are better at things like apps and digital services than they are. This involves things like open APIs and creates risk, but the risk of not doing so seems greater.

“These days few, if any, innovations, whether they’re service improvements, or new products and services, are solely created in-house,” said Ward, who unveiled some research on partner ecosystems at this year’s show. “So you have to have a differentiating ecosystem of partners and they bring with them different cultures.”

A great illustration of how badly it can all go wrong when a traditional, siloed organization tries to act in an agile, customer-centric way without having undergone digital transformation is the tragic case of Vodafone 360, which saw the telco attempt to combat the OTT threat by launching a walled-gardened hardware and software platform. It had problems from the start as it was a massively inferior experience to iOS and Android and was embarrassingly canned just two years later.

Attempting even minor changes to the culture of large, old organizations is notoriously different. Not only is there a general cultural inertia, but you have levels of management that have built their careers on the old way of doing things and often all the incentive structures are set up to support the status quo. It’s hard to see how operators can hope to do this with the way they’re currently set up. The cruel irony is that they’ve probably got to transform themselves a fair bit just to be able to make a start on full-blown digital transformation.

To paraphrase the Philosopher Sam Harris: the most harm is done by good people with bad ideas and bad incentives. For CSPs to have any hope of achieving the digital transformation they all agree they need, they need to communicate that idea throughout the whole company and incentivize every single employee to implement it. Sounds simple enough, doesn’t it?

Q&A with Bernard Bureau, 5G and Wireless CTO at TELUS

What use cases do you think will drive adoption of 5G?

Use-cases driving 5G adoption will occur in stages as the technology matures over time. Initially, 5G technology will be applied by the operators for a few use cases:

Enhanced Mobile Broadband (eMBB). The newest flagship smartphones will quickly support this use case and the end to end adoption will be driven mainly by two things:

  • By the requirement for operators to lower unit cost for data. 5G technology can do this with technologies such as massive and multi-user MIMO and the appropriate 5G spectrum such as 3.5 GHz and mmWave, as long as the regulators allocate wide enough channels (100 MHz for 3.5 GHz and 400 MHz for mmWave for example).
  • By the fierce competitive pressure among operators in many markets like Canada. Even advanced LTE-A Pro networks won’t be able to compete on equal grounds with 5G networks so as soon as one MNO launches 5G, other quality MNOs will be compelled to rapidly do so as well.

Wireless To The X (WTTx). The size of this opportunity is still being assessed in many countries. In Canada, fiber rollout to households and businesses is already progressing very rapidly and millimeter wave spectrum has not been auctioned yet. Due to fiber and spectrum timing, WTTx will probably not be massively deployed in Canada but it will still have its use where fiber is either unfeasible or too expensive.

Machine type communication (MTC). Although not using the 5G new radio technology, low-power wide-area LTE-based technologies are going to achieve the 5G goal of being able to support 1 million devices per square kilometer. These use cases are already in full development across the globe, addressing real problems for a number of verticals.

5G however will be able to deliver much more than this. As the technology matures to support URLLC (Ultra Reliable Low Latency Communications), coupled with Dynamic Network Slicing functionality, a vast array of new and potentially disruptive use-cases will become possible, opening up vertical and horizontal opportunities across a wide array of industries and sectors such as C-V2X applications, autonomous drones, etc.

Dynamic Network Slicing promises to enable at a very low cost real-time service configuration with the ability to deliver specific SLAs for specific group of applications, type of clients, etc.

How do you think 5G networks will be monetized?

We think there are a few angles:

  • The benefits of using AI deep-learning to analyze 5G big data and optimize cost for businesses and simplify consumers’ lives will drive everyone to connect everything that surrounds us.
  • As briefly mentioned, 5G will be able to provide a better unit cost than 4G for delivering data for the eMBB use case.
  • The new use cases inherent to the 5G technology (eMBB, mMTC, URLLC, Network as a Service etc) will open up a large and new set of business opportunities, some of them disruptive.

We plan to observe the industry and market developments in order to take advantage of emerging business opportunities as they arise, and help to actively develop others such as in the health sector.

In order to respond quickly to rapidly evolving business demands and expectations, it is imperative that we build a 5G network which supports all the key enablers.  This will allow us to adapt and support a myriad of use-cases as they emerge, thus monetizing our 5G assets in an efficient manner.

What are your industry predictions for 2018?

  • We expect to see the 5G use cases to continue evolving very rapidly.
  • 2018 is the year when 5G will start to materialise as a real available technology.
  • A number of countries have already started doing commercial trials for iconic events such as the Olympics, and this type of activity will continue to pick up pace during 2018.
  • We will see 5G commercial launches but not yet for smartphones. These early launches will be focused on WTTx use cases and Customer-Premise Equipment (CPEs).

What is your key message at 5G North America this year?

Access to internationally harmonised mid-band spectrum such as 3.5 GHz band is critical for deployments of 5G networks. More work is needed in North America on that front.

Companies and countries that get a head start on 5G stand to benefit significantly as technology leaders and use-case developers, while the rest will have to catch up to the lost opportunities and market share.

 

Bernard Bureau is a keynote speaker at 5G North America 2018, May 14-16, taking place in Austin, Texas. He will be discussing Telus’ 5G plans and enhancing network capabilities by achieving Gigabit LTE Speeds as well as taking part in a panel discussion on challenges in the harmonization of spectrum.

 

Huawei claims first North American live FWA trial with Telus

Barred from the US, Chinese networking giant Huawei pointedly went north of the border to show everyone how it thinks fixed wireless access should be done.

Huawei is trying to coin the term ‘Wireless to the Home’ to describe its FWA, although its chosen abbreviation of WTTx seems deliberately designed to keep its options open. Either way FWA is generally expected to be one of the first commercial manifestations of 5G and Huawei isn’t about to let Ericsson and Nokia have things all their own way just because they’re allowed into the US and it isn’t.

This was ‘an end-to-end user trial for WTTx 5G service using a specially-designed 5G CPE (Customer Premise Equipment) unit,’ according to the release. It was conducted in partnership with Telus in Vancouver, specifically in a part of Vancouver that has been designated a ‘5G living lab’, which seems to consist of Telus employees.

“This trial represents continued progress toward the launch of 5G, as we start to replicate both the in-home experience and network footprint we will see when 5G becomes commercially available in the near future,” said Ibrahim Gedeon, CTO at Telus. “Wireless 5G services will generate tremendous benefits for consumers, operators, governments and more through the use of advanced IoT devices, big data applications, smart city systems and other technologies of the future.”

“Millimetre Wave technology will be an important tool in ensuring widespread deployment of 5G technology in Canada,” said Dr. Wen Tong, Huawei Fellow, and CTO of Huawei Wireless. “Huawei’s 5G solutions and terminals will enable 5G coverage over a neighbourhood or small community cost effectively, while providing more convenient and high-speed home broadband Internet access services. This friendly user trial will drive the global 3GPP unified 5G standard and build a solid foundation for the 5G early commercialization.”

This effort apparently builds on some trials the two companies did in the middle of last year. It used the 28 GHz spectrum band, and a massive 800 MHz of it, as well as groovy new technologies such as Massive MIMO, F-OFDM, and Polar Code. Huawei is clearly unhappy at its treatment by the US and it wouldn’t be surprising to see it up its investment in Canada to make a point.