As the world goes digital, 5G can save the telecoms sector – not with fast speeds, but with the fundamental reinvention it requires cellcos to undergo.
The telecommunications industry is being challenged as it has never been before. The relevance of traditional communications and broadband service providers is in question. Global internet powerhouses have capitalized on compelling services and massive scale, while network infrastructure is closer to becoming a commodity than ever before with a wealth of access technologies threatening the value of simple connectivity.
This hasn’t happened overnight, but rather as a culmination of a number of factors, many of which directly contributed to telecom’s commercial success even as they sowed the seeds for the inevitable decline of traditional business models.
In short, the digital revolution made compelling content available and handy, and the mobility revolution made it available anywhere and anytime to anyone. With these evolutionary stages largely complete, there are few remaining challenges around accessing content. By contrast, global Internet companies like Google, Facebook, Amazon, and others have focused on connecting people with content.
The question for telcos now is: can they compete in this evolutionary stage?
Telcos have certain advantages, namely access to the customer and the delivery channel. They also suffer from disadvantages with a massive investment in legacy technologies and applications not fit for the purpose of addressing new needs. However, this isn’t the first time that telecom service providers have had to reinvent themselves. This is the single most essential need for 5G, which unlike any other previous generation will determine if telecoms can profit in the age of digital maturity.
The 5G imperative means harnessing data and the cloud
Service providers need a reboot if they are to remain relevant in today’s digital world.
The most pressing business challenges for most modern telcos relate to curating great content for consumers, and effectively monetizing third-party platforms in a widening ecosystem of enterprise businesses, the Internet of Things, and connected solutions (e.g., connected car, home, city, etc.).
Cloud technology is essential to realizing these goals.
Cloud-native applications can be scaled independently, dramatically reducing cost and time to deploy new services and business functions. The independence of these encapsulated functions is also essential for harnessing improved automation, empowered by data.
Data pertaining to usage, performance, and experience is uniquely available to telecoms across all applications, networks, and devices. This data is the key to achieving improvements in automation, lower costs, and new business models incorporating information across these domains.
To put it in perspective, network traffic for the largest telecom service providers is moving from exabytes to zettabytes of data, equating to billions of events a day, encompassing every interaction between users and content, growing exponentially with emerging devices and the Internet of Things.
No other industry creates such a wealth of data. Yet little of that data is utilized today to drive efficiencies or new business models. It is imperative that 5G enable the use of this data to reinvent the service provider, to harness interactions between users and content, to improve the way that content is discovered and accessed, and to automate network efficiency around these functions.
Getting to 5G faster
Even more so than the generations that preceded it, 5G will mean a reinvention of the telecom network, changing the way that the radio access network, the packet core, and end-user devices work.
However, benefits will only be realized if business models are changed and new systems are developed to interwork in ways that incorporate these changes.
With cloud nativity, network applications can not only be independently and elastically scaled, they can also interact more easily through open APIs with non-network systems, including IT and enterprise solutions, to harness data and interactions for new functions.
The facility of these interactions will determine the effectiveness of the “new service provider” in embracing new enterprise business models across a wider ecosystem of partners, and coordinating interactions shaped by new data privacy principles applied across a wide range of industries.
Improved coordination between network analytics functions and other functions, such as policy and charging, will enable machine learning and AI to influence and automate actions that can improve service experience, reduce churn, and raise profitability.
To compete successfully, telecom service providers must become global in scale, via collaboration or reach, managing enormously unprecedented data sets in new ways to tap market potential.
Today’s internet “big data” leaders are mostly one-trick ponies, selling relevant advertising on the basis of data gathered from users’ behavior. Imagine the possibilities of driving new business models, efficiencies, and innovation with a wealthier data set unlocked and usable across a powerful new set of business applications.
That’s the promise of 5G. It can’t get here fast enough. But only those companies ready for it will thrive when it’s here.
Written by Marc Price, CTO for the Americas at Openet. He has more than 20 years of experience working extensively with customers to define strategies and deploy world-class solutions for some of the largest North American and European service providers to achieve business success. He is currently helping operators to plan for the launch of 5G services.