The telecoms sector is changing beyond recognition. Indications of that change were everywhere during 2014 and 2015, and in 2016 they can be expected to bite harder and deeper, affecting all levels of the industry. Change will be experienced by every Tier 1 network operator, with ripples felt right down to the level of consumer and small business user.
Carriers and service providers must make decisions in some important areas in order to successfully transform their business and stay relevant. In most cases, this transformational journey is underway. But for those that have chosen to soft pedal on key changes, or defer action altogether, then 2016 could prove their undoing.
Here we identify some of these key battlegrounds and assess where opportunities might lie.
Software is set to control everything, and successful automation will be the engine of profitability. The pace in software-enabling and automating the network has already been set, and now the watchers and followers must catch up. AT&T, for example, is well on target to virtualise 75% of its vast network by 2020 as it continues to move to all-IP and away from legacy infrastructure and services. But this transformation in the control of network functions does not come cheap, and not every carrier will be able to manage it on their own.
There will inevitably be major carrier consolidation next year as some struggle to implement SDN and NFV on their own. A number of large and mid-sized carrier names can be expected to pool their interests, and this is as likely to be in Asia as North America or Europe as regulators face the reality that there are simply too many competitors struggling to transform on their own and ready themselves for the era of cloud and everything-as-a-service.
Legacy service areas will finally run out of profitability and new ones must be launched. The winners in the carrier transformation race will be those that achieve the agility needed to move swiftly into new, exciting service areas ahead of the competition. The cash cow service areas that have formed the bedrock of carrier revenues for decades will be all but exhausted as a source of profitability by the end of 2016 as OTTs continue to launch appealing new products.
To take the area of voice services as an instance, few operators can hold out much hope for their standard voice offer as a continued earner. Next year will see huge growth in VoLTE and HD Voice, and in the platforms that securely enable such services such as IPX. Traffic will need to be prioritised into classes of service to allow these new offers to flourish.
The network will get a lot more intelligent. We won’t get 5G mobile services much before 2020. But network operators will need to get busy next year planning for what 5G will bring. When it comes, 5G will not just transform our understanding of what a network is and does, it will change our entire world. Everything that is now possible on 4G will be several order of magnitude faster. This paradigm shift in performance and latency will be accompanied by the interpolation of mobile technology into every aspect of our lives.
Operators must spend next year planning for this change, and understanding just how profoundly the 5G-enabled Internet of Things could change their own business model. But there will be no Internet of Things without greater intelligence in the network. Next year will see operators further refine their use of Big Data analytics as they seek to make networks smarter and smarter.
The network is under continued threat. This year has seen several headline stories involving attacks on network operators and their customers by hackers and fraudsters. Telecoms fraud is going to have to be a much bigger conversational topic in 2016 than it has been to date if these stories are not to multiply. Carriers must spend money to protect themselves and their service provider and enterprise customers, or reputations will get irreparably harmed.
Fraudsters are getting much more organised. SMS fraud is a particularly problematic area. Carriers need also to shut down grey routes whereby MNOs are carrying free A2P traffic that earns them no termination fee. Profitability across the telecoms sector is not something that can be taken for granted, which is why existing revenue streams need to be protected just as urgently as new ones must be developed.
Telecoms companies must define much more clearly what they are offering. The market for communications services is changing radically, and telcos must adapt to meet that change head on. But it’s not good enough to work behind the scenes on transforming a telco business unless that is accompanied by a clear and compelling marketing message. Telcos must define what they offer, not just for their existing customer base but for a huge potential new audience. Channels must be developed to take this message as directly as possible to where it matters most so that the whole of their potential market understands the benefits of the services they are supplying.
Next year will, by necessity, see marketing assume top importance as more and more players in the wider communications ecosystem converge on the spending power of consumers and enterprises.
Any questions, contact us at matthew (AT) ilexcontent.com
