Thursday, December 18, 2014

Blueprint: Tectonic Shifts in Telco Market Start to Appear

by Lars Mansson, Senior Director of Product Management and Strategy at DigitalRoute

December, with the end of the year approaching, lends itself to both reflection and speculation. Of particular importance is weighing up what will come next. In business, we know that preparation is critical for success; accurate speculation today will enable us to build the right foundation for the sort of impactful future action that leads to long-term success.

Some years see subtle change and incremental progress in the Telco market. Others bring a more radical shift in the landscape. Still less frequently, some introduce a change in the fundamental tectonics of the market. I think 2015 may open the door to the latter.

Why have I reached this conclusion? LTE/4G services are bedding in, and nascent NFV and SDN implementations are gradually picking up speed and will, eventually, redefine the character of the network and its management. Customer experience is fast becoming a trend and a reality to which more than just lip service is paid. Lean approaches to replace and/or complement parts of the legacy IT stack (particularly in BSS) are taking hold.

By 2016, my guess is that many of the commercial drivers we’ve become familiar with in recent years may be consigned to the past. In their place, a new operating model is arriving. 2015 is likely to be the year that a number of dramatic changes related to it take root. Let’s look at them:

Enhanced voice services (a.k.a. VoLTE, ViLTE, VoWIFI, RCS) are going to change the competitive equation for Communications Service Providers. 

The widespread launch of VoLTE services will continue and expand next year and will fuel the pace of industry change. But despite the usual degree of marketing hype, my guess is that operators will still use charging models that are data-centric so the first instances of these services will be imperfectly conceived and executed.

Still, enhanced voice will finally and fully enable CSPs to compete like-for-like with OTT’s and the operator’s advantage will be the control of quality and the ownership of the mobile number (a unique, global way of being reached). Charging-wise, the thing to remember is that enhanced voice will drive more data through the network (video calling, file sharing during calls, etc.) and thus a higher likelihood of customers upgrading their data packages.

There’s an interesting corollary question here, too. It’s this: Will the CSP’s really drive this revolution or will they instead try to follow a wave led by the Over-the-Top players? Though they might be loath to admit it, the OTT’s have innovation in their DNA to a far greater extent than is the case with most CSPs. Either way, though, whoever leads the revolutionary charge the result will be the same to the extent that it will drive data usage in the CSP’s network.

LTE could play out in more than one-way too. For one thing, if OTT players deliver the dominant services then network operators will increasingly find their futures lie in a partner game. Conversely, if the operators become the key providers then next generation Quality of Service will become critical simply to protect, let alone to grow, the value chain.

Whether or not the enhanced voice predominates in 2015 is unclear. That it will start to rise up the agenda, as an issue of central importance I think is certain.

Hand-in-hand with the above, partner enablement (done in a new way) will also become a central issue for Telcos

My guess is that in 2015 operators will have to finally stop hedging their best and the ones that ENABLE partners, OTT’s and MVNO/SP’s will, in the long term, be the winners.

The plain fact is that walled gardens and other unsubtle attempts at protecting traditional territory are dead. They haven’t worked and they’re not going to start working now. Enablement can best be done by smart integrations for OTT partners/MVNOs/SPs in a way that lets them influence the quality of service delivered to the end-customer sitting on the host operator’s infrastructure. This means things like allowing split billing scenarios (most often an end-customer and partner split), etc. The key to success here is once again going to be deploying smart, lean applications as the enabler and not engaging in a massive MVNE (partner enablement) approach that will deliver an infrastructure as dense as existing BSS and OSS together for the host operator to build and manage.

If the two trends above are my focal predictions, I also foresee developments in other areas of the market, among them:

  • Network Cloud hype turns into reality - Network Function Virtualization (NFV) will continue to grain traction though in my view, 2016 is when things will really move ahead with larger, hosted installations managed by the big NEP players running virtualized core networks for many of their operator customers.
  • IT Cloud means “lean will be mean” – more of the lighter ‘agile’ type of applications in BSS/OSS will be installed on a virtualized basis, or in an “IT-cloud” (for instance, mediation, service orchestration/activation, OSS fault management systems etc. all fit into this category).
  • OSS is being reshaped, starting now. The growing focus on CSP customer experience means service monitoring will become precedent over network monitoring. At the same time, a focus on CSP network quality. This means the ability for networks to cost effectively generate and distribute the massive data volumes (streaming session/signaling traces etc.) required for the reshaping of OSS, but without massive investments in probe systems etc.
  • Lean approaches to BSS and OSS are inevitable as more and more operators conclude that buckets/bundled services are best executed and supported when counting is managed close to the network via a very cost effective BSS solution that ideally leverages an application that they have already invested in. 

In the end, 2015 will be a year, I think, for stage-setting even larger changes in 2016. As usual there will be winners and losers on all sides of the market – vendors and operators alike. By 2017, don’t expect the landscape to look much like it does today!

About the Author
Lars Mansson is DigitalRoute’s senior director of product management and strategy. In this role, he is the owner of the company's product portfolio, go-to-market and the long-term development of its products & solutions as well as its product strategy, roadmap and thought leadership. Lars has a background in technical pre sales and was previously a system architect and technical coordinator for mediation systems at Tele2 in Sweden.

About DigitalRoute

DigitalRoute has been providing new approaches to enterprise data management since 1999. Its software platform offers high throughput and provides a unique degree of user configurability, processing all usage and statistical data extracted from the networks, including both billable and non-billable events. Over 300 leading companies worldwide actively use DigitalRoute technology to meet their data management needs, including a number of OEM partners who use our platform as a central part of their own offerings. DigitalRoute is built on the core values of Expertise, Open- Mindedness and Commitment. DigitalRoute is a venture-backed, privately held company with a turnover of 30m EUR in 2013 and a record of profitability since 2005. With close to 200 employees, the company is headquartered in Stockholm, Sweden with regional offices in Gothenburg, Atlanta, and Kuala Lumpur.

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