Altran360

El blog de innovación y tecnología de Altran España

Telco operators in the digital disruption era

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A lot has been written about Digital Transformation, everyone gives his/her opinion, figures, forecasts, vision about the current situation we are living nowadays, but one point is clear, the world has changed (from the physical economy to the Digital one, and now the Transformation) and it continues to change, faster and faster, and every sector is being impacted by this change. As every change process, uncertainty comes up, raising a lot of questions, how is this change going to affect my business, my company, my sales, my organization, me, etc.?

Telco Operators are not out of this disruption wave. For ages they have had the control of their market, a young market in fact, but something happened on 2007. One Digital Company called Apple, formerly known as a Computer Company, and later as a Computer and Media Company (iPod –iTunes, first version was unveiled on 2001 and they changed the music industry, but this is another story to be told in other moment), broke into the Telco arena with another special device, nowadays well known, called iPhone, bringing new rules and a new business approach.

At that time, around Telco Operators were already flying others actors such as Google, Facebook or Twitter, but they were seen as bandwidth eaters, new young guys trying to do business from the Internet, nothing related to the Telco value chain. Nobody in this sector were able to forecast what was going to happen in the following years.

Digital Shakers

January 9th, 2007, at MacWorld Steve Jobs unveiled one device (iPhone) that put together three concepts: iPod + Mobile + Internet Communicator, easy to use, adaptable, fancy… Ok, we all know the surface, but it brought a business disruption to the Telco value chain that nobody saw.

Thanks to the investments that Telco Operators were doing along years in fixed broadband (ADSL, ADSL 2+, VDSL, Fiber, etc), and mobile broadband (GMS, GPRS, and UMTS at this point), more physical connections were available, and these physical connections were taken by new players, young players in fact, to create Digital Connections, connections between people. This was the case of Facebook for example, that in the beginning was just a game, to connect person to person, and people with more people, the Digital Connection was created… but this was possible thanks to the existence of the physical connection, thanks to the Telco Operators investments.

The next step once the Digital Connection has been created is the Interaction between people, and at this point, these new players have also been disruptive by creating new services for everyone with one physical connection (fixed or mobile), their business model was completely disruptive, that is, an “all you can eat” concept at a reasonable price: FREE.

Coming back to January 9th, 2007, at Macworld, Steve Jobs realized of all these parameters, and saw that Apple needed something to take advantage of this new playing field that was being controlled by Telco Operators, that is, the Internet Gate, Apple had to control the Internet Access, and that was the main purpose of the iPhone.

With this vision Apple was going to have something to control the access (through the Device), something to connect with the final client, something to grant a new kind of interaction, something to take over the final customers, users, and something that could take the Customer Value directly, with new business rules, Apple’s rules and that was what the iPhone put on the Telco Operator’s table.

Apple Disruption

These new rules were things like: Apple decided what Telco Operator, in each country, was allowed to sell the iPhone, what kind of rates will bundle with the iPhone package, what marketing plan would be deployed… Now Apple is in control. Apple started to control the service value chain, to control the premium Device that directly connect the client to Apple, and to control their service ecosystem, and the Telco Operators started to realize that something strange was happening, but at this point it was not serious for them because the Telco Operator that had the iPhone in their portfolio started to sell more, and started to attract customers from competitors, to sell more Data Plans, more SIMS, so it was fine… It was business as usual, a good business in fact.

But in 2008, Apple launched the AppStore, granting anyone to develop over their iOS, any kind of Software, and they were able to be sold through this Store, that is, more kind of interactions, more business, new business models (new Digital Business), new services… and out of the Telco Operator control… They noticed they were doing something wrong. Now Apple started to control the Device, The customer, the service, the service developer ecosystem, the entrance to the mobile Internet, the VALUE…

The Telco Market earthquake,  was growing faster and faster. Facebook, Twitter, Google… kept on building new services, new interactions, new business models. Google launched its first Android mobile with HTC in 2008, and in 2010 decided to launch its own device called NEXUS. Google, for example, knew they controlled the Internet Web Gate, and realized that the mobile was the next step, so tried to follow Apple’s strategy.

Since 2008, the APP business has been quickly growing, and has as well been quickly evolving appearing new languages, new technologies, and new tools, to create new Digital services and products fast and cheap, that is, new interactions. Examples to support this spectacular growth is Cloud Computing, a basic tool to leverage the cost reduction, quick deploy, and quick fault and retry processes.  To be and do Agile is the new standard, if you don’t follow this wave, probably you will be dead.

At 2010, suddenly, with no time to analyze, to react, to breath, there were thousands of new actors trying to take the value directly from the customer, they didn’t need to ask the Telco Operator to address any service… the Telco market was being shaken and changed, and the new coin was DATA.

Disruption, new way of life

Ok, we are at 2010, Telco Operators started to “dance”, they all started to design their own Application Stores, to invest a lot of money from Marketing to roll them out, spending around 18 months in this process, with complex designs, 3rd parties negotiations, integrations, roll outs, operation, etc. They had to change their old channels like WAP portals to new more flexible and fancy ones. There were a lot of different strategies, one decided to create a new organization to build up a new UI including virtual stores from scratch, other decided to join 3rd parties technologies to bring more stores…

But the main problem was they didn’t control the service layer of the Value Chain anymore so, for example, they didn’t control the content generation, so their stores were poor from a content perspective, and many times they had to pay for these contents injection in order to push their Store proposal.

But meanwhile Telco Operators were investing, and trying to launch their new value proposition to the market (remember, between 10 and 18 months TTM), all these new alternative companies were coming up with new ideas, new kind of interactions, very quickly and some of them were being prepared for the next step in the disruption wave…

As we have told before, some companies, in the middle of this change, were developing new technologies to support new services. For example, Cloud Computing, it was a way for Amazon to take advantage of its resources thus creating a new market, going directly not only to enterprises, but also to single developers… Another example, is how Google was investing in how to exploit the huge amount of Data they were collecting from their Internet services, and created a new paradigm BigData.

So, by the year 2011, all this market was growing, was changing, new OTT (Over The Top) services were continuously coming up, and something new started  to be heard: M2M. In 2012, the music started to change to the title of the Internet of Things… In 2013 more titles… Internet of Everything… At the same time LTE rollouts accelerated everywhere, so more connections, more capacity to interact, more services to provide, and new small companies in the other side of the planet launching new services to take the VALUE from the Telco Operators customers… More Data sent by physical connections (Telco networks), and new ways to squeeze Data VALUE, to enhance it, every one started to try the Big Data approach, but it was not easy… and there are some young guys that know very well how to address it.

The Digital Density is impressive and Telco Operators try to launch more and more services, by copying models already deployed by young companies at 20,000 Kms. How many Whatsapps have been launched by Telco Operators taking advantage of their networks, IMS Core… and how many have succeeded. Are these strategies profitable when start-ups move faster and cheaper?

Digital wave and IoT

Telco Operators are still not dead in this battle, they like this kind of games, and they can still play… if they want, and realize about the new value chain and new players..

IoT can be one of the most important levers that Telco Operators can manage to come back to the services arena.

But IoT is more than Devices, it is more than Wearables, it is about more connections, more kind of interactions, more kind of services, more Data, and more VALUE. The key point is how to take the Value  out of these new kinds of interactions. It is foreseen to have billions of connected devices (depending of the analyst the figures moves from 20 to 80 billion, so you can figure out nobody really knows the size of this market, but what it seems to be true is that it is going to be huge) so this will bring more connections, new kind of interactions, more Data, and more Value to be created, and of course, for sure, young companies, that is, Start-ups and OTT players will bring it at a reasonable price: FREE.

Telco Operators have the opportunity to move forward through the Telco Value Chain, and take over the Service Layer. They have very good levers to take advantage of:

  • Millions of home based customers (HBC)
  • Thousands of Corporate customers (CC)
  • Network infrastructure (fixed and mobile)

The customer base of the Telco Operator is huge, and they have the physical infrastructure that makes possible the connections between them. In fact, Telco Operators have the opportunity to connect, and make them interact:

  • HBC – HBC
  • HBC – CC
  • CC – CC

Service

Taking advantage of the data generated by the service interactions, evolving this data into customer knowledge, evolving this customer knowledge in order to improve the customer experience, and again closing the virtuous circle evolving the service.

Virtuous Circle

IoT is one of the most powerful tools which the Telco Operators can leverage. We can find several movements in order to do this:

  • Wearables: Small DATA processing, DATA from the customer.
  • Industrial Internet: Optimizing industrial processes, from reactive to proactive approach.
  • Verticals currently isolated: eHealth, Connected Car, Home Automation, etc.
  • Isolated sensors spreaded around the world: Already deployed in different businesses for general purpose.
  • Mobile apps and mobile sensors: Current digital services

All these elements are part of a global approach, the present digitalization, now part of our current reality, but with the power of proposing new services to enrich the experience by connecting different devices, verticals (smart cities are one of these examples), business and final customers, by mixing data, creating new use cases, and taking the customers insights directly from them.

CSPs provide network connectivity to the endpoints, that is, sensors, and this is one important step, but, depending upon the business model, Telco operators can also generate more revenue by providing additional service, support, and marketing and distribution services. For example, they could propose Premium services, where it could be retail solutions (home customers, or enterprises) and take advantage and revenue for the data access. Other aspect to follow is wholesale market, and how to sell these services, premium one, and multiply the value.

To get all these, the IoT platform is needed. These platforms help simplify M2M or IoT application development and ongoing management. Common industry challenges include the lack of a standard set of technologies around which an IoT service or application can be built, rapid lifecycle of devices and device components, longer time-to-market for new IoT services, and lack of qualified personnel to develop new IoT services. By providing access to a standard set of published interfaces or APIs, IoT platforms shorten the time to develop and bring new services to the market faster.

Nowadays innovation comes from outside the companies (clients), so Telco Operators have the opportunity to reconnect again with their customers by providing new services based on their information, using their context, and interacting in real time. Clients are moving faster than companies, many times they have better technology than them, and they are continuously looking for new ways to interact based on the available new connections.

Digital Transformation brings new business possibilities, and helps to develop quickly with low costs, and launch and try processes, get the insights and enrich the services to be provided again. This loop has to be addressed in an agile way, by using flexible platforms that give easy and cheaper ways to develop these kind of services, easy to integrate, easy to deploy, easy to adapt, easy to scale, and able to exploit the data gathered to restart the product and service development process with the faster Time To Market ever seen.

Telco Operators have to address a complex Digital Transformation, by evolving their Support systems (Business and Operation) to more flexible and customer centric ones, but there are some levers they can use, to position and give new and better value to the market, while they change their legacies (Processes and Systems), and take advantages of the IoT platforms to boost IoT service launch.

This is what ALTRAN proposes to the Telco Market and IoT, this is what PLAY by ALTRAN does. Do you want to PLAY with us?

3 Comentarios

  1. Very complete and clever article; congratulations!

    I guess that most of the potential you have identified on IoT for operators is related to the fact that IoT not only needs a flat communications channel like current mobile/fixed Internet applications, but also some other network features that are only under the operator´s control.

    Maybe the challenge is also to find other network features that improve customer experience; that way operators can get the control again…

    • In the end, it depends on the Operator strategy, their approach, they can be deliver M2M services from their core network infrastructure, they can design an OTT approach or a mix of them.

      Nowadays the most of the Operators bring connectivity services, and just few of them are trying to deliver more value, enriched services. Main points are Time to Market, what is the IoT/M2M position the Operator wants to take in this market, and what kind of value added services they need to deliver.

      Not all Operators have to have the same position, and not all know how to address it (Business wise).

      We are convinced that Operators has a great opportunity to take advantage of this wave, not only because of the technology itself, but also the current Operator position in the market. They are in the middle, and they can take the value from this.

      Of course, Altran is helping them to design the best approach, Altran has the technology, Altran has cross business knowledge, and we are willing to help them to position them on this.

  2. Pingback: IPV6 and digital explosion within Telco Operators | Altran360

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