Conversations at Digital Transformation World 2019 indicate operators may finally be getting the memo about monetizing 5G.
The long and short of it is that revenue per bit of data is going down the toilet and we’re rapidly approaching the point when connectivity alone becomes a loss-making exercise. This is obviously a bit of a problem if your main business model depends on making a profit from providing connectivity and brings fresh urgency to the somewhat tired buzzword that is digital transformation.
TM Forum deciding to rebrand its event last year was a reflection of how central to telcos’ considerations this is stuff is. For years is has been repeated to the point of cliché that operators need to adapt the way they do business, become more ‘agile’, fail fast, act more like a Silicon Valley startup, etc. Everyone always agrees, but then we end up having the same chat year after year.
Blame for this can be apportioned to two main issues: technological and cultural. At the event to a company called Apigate, which reckons it’s got a major piece of the technological puzzle nailed. Essentially is offers a platform that cuts out all the middle-men and layers of technology involved in enabling operators to sell digital products and services.
Apigate started life as an in-house project at Malaysian telco group Axiata to resolve its own challenges in this area, but was spun off to become an autonomous commercial operation a year or two ago. IT’s still owned by Axiata but is now seeking additional investment from VC types. Platforms like that, if they deliver as promised, seem to facilitate the process of offering new digital products to operator customers significantly.
Bearingpoint Beyond also offers a digital platform designed to offer a path of least resistance between operators and various other commercial partners, but more from an OSS perspective. Our conversation with them at the show focused as much on the cultural side of things and their impression is that the extent to which operators are acting on all this noble digital transformation sentiment has increased significantly in the past year.
Operators are usually large, listed companies that are used to acting more like utilities than Silicon Valley startups. The strategic emphasis is traditionally more about efficiency and scale than innovation and risk-taking, but the looming ARPU crisis means that’s not sustainable even in the mid-term. Operators all know this but need to find more executive will and nerve than they’re used to showing, to make it happen.
Most of TM Forum’s work is geared towards removing technological hurdles to successful digital transformation, but events like this one are in many ways more about the cultural side. There is definite optimism from them that we’re reaching some kind of cultural inflection point at which operators start taking more risks and vendors get better at helping them do so. The advent of the 5G era, with all the new commercial opportunities it promises, seems to have hastened this process.
For years we’ve been hearing about OTTs making all the money over the top of commoditised connectivity services, so it’s not like this is news. But cultural inertia has meant the eureka moment of fully understanding that connectivity is now just the means of delivering digital products rather than a profitable business by itself. If that arrived then it’s not a moment too soon.