1. 5G – it’s happening
2019 will be a year of industry resuscitation. I’m going to take a wild guess here, but I’d say that 5G messaging will be on just about every stand at Mobile World Congress 2019. And rightly so. The telecoms market has taken a bit of a beating in the last couple of years and many operators and vendors alike will be pinning their hopes on 5G.
The early motivators for operators to make these substantial investments in rolling out 5G are numerous. These include, but are not limited to the need to keep up with the competition and extending to rolling out use cases like enhanced mobile broadband (eMBB) to fixed-wireless access (FWA), and providing the foundation for enterprise and consumer IoT. From a Digital BSS view point the main opportunities here will include enabling management and monetisation of the new services enabled by 5G, which can include new pricing options based on QoS and/or latency.
2. 5G will mean operators get serious about the enterprise IoT market – but they’ll need partnerships for scale
The enterprise market has been woefully underserved by operators for years. However, the arrival of 5G will open a gigantic new market opportunity in 2019. Our recent industry survey revealed that IoT services (from enterprise, smart home and consumer) enabled by digital transformation and 5G will make up the top three revenue earners for future providers. New digital services will be key to unlocking these new sources of revenue and turning “basic” operators into true digital service providers (DSPs). Over time, digital services revenue will replace traditional telecoms revenues, with current estimations that service provides will generate $294 billion from digital services in 2019. This will increase to $462 billion in 2022.
Most service providers have started their digital transformation projects for this very reason – but there is still a long way to go and a lot to play for. Delivering on the business case for any new product or service needs a monetisation solution that can incorporate it easily and with much less cost than the revenue the product or service will provide. If operators are to be able to access this slice of pie in 2019, they must be ready to partner to build the scale that this market will need.
Partnering as part of IoT eco-systems in 2019 will require a very different mindset related to how partners are integrated. It will require standard and open APIs, to on-board partners and their catalogue of products—along with the ability to settle and share revenue across a partner eco-system; with elements of service assurance and the ability to identify and counter fraud thrown in for good measure.
3. Open Source and DevOps will drive the emergence of partnership models in Digital BSS
Operator and vendor co-development will move up a gear next year, as network transformation driven by open source, DevOps & Microservices continues apace. In 2019, this open approach to developing functions will provide the environment to turn traditional telecoms software development models on their head, working themselves towards the OSS/BSS layer.
Some large operators will develop their own bespoke solutions in-house using open source, employing agile development methodologies, which will see them increase their developer headcount. However, many will not then benefit from the economies of scale afforded by working with vendors and will have to content with a high level of failure. Smart vendors will start to partner with operators instead, working with their developer teams to provide solutions that take advantage of open source, DevOps & Microservices through cloud native, Open Digital Architecture and digital APIs. This will give service providers the freedom from being constrained by a vendor’s rigid roadmap and release dates, and offer smaller providers cost effective best of breed digital OSS/ BSS platforms.
4. Digital assistants become mainstream – accelerating the use of AI for voice activated customer care and service management
IDC predicts that by 2020, 40% of commerce transactions will be enabled by conversational AI solutions. But we’d be even more bullish than that. In 2019 demand for voice activated virtual assistant systems will continue apace, driven by rising applications in sectors such as banking (especially useful for fraud and security) and automotive. Consumers will become even more comfortable using digital assistants like Telefónica Aura, in turn accelerating the use of AI for voice activated customer care and service management in telecoms.
We’ll increasingly start to see AI tools that connect directly to the core of the network and BSS systems. These will allow customers to engage directly with the operator without other human interaction, and without the need for the customer to contact customer care or find the information in an app or on the website. We expect this to lead to significant cost savings for the service provider through a reduction in reliance on call centres and play a hugely important role in improving NPS/customer experience.
5. As consumers become more aware about mis-use of personal data and security concerns trust becomes an increasingly important attribute for operators – not just in selling digital services, but also in consumer IOT / smart home market.
Consumer trust is becoming more fragile by the day. The Facebook/Cambridge Analytica scandal took a surprising toll on consumer trust around the globe earlier this year and thrust digital companies and their use of personal data firmly into the limelight. This is going to have lasting effects on trust in OTT players and digital services in 2019.
Operators have traditionally protected subscriber data, while also collecting vast amounts of information – safely guarded – to understand the behaviours of each individual customer. This faltering consumer trust has created a window of opportunity for mobile operators around the world, as a direct result of their traditional role as the gatekeeper to their customer’s data – all the while OTTs have been intent on its monetisation.
This will throw up important considerations for mobile operators in offering their own digital services, as they must keep the protection of individuals’ personal data as a top priority. One area of paramount importance will be the Smart Home. Revenues currently make up a small portion of telecom operator revenue, but it is predicted that revenues will increase by 21.6% in 2019. Higher smart home device purchases will be the main driver of this and will lead to better engagement with operator services. Operators that offer compelling services while also staying true to their role as gatekeeper will have the most success in this area.
In the past couple of years the industry has discussed change. In 2019 these changes will become reality. 5G is being rolled out. Operators are starting to reclaim their place in the digital value chain as they look to build on consumer trust to sell a wide range of digital services. In the Digital BSS market, what started off as focused discussion on how the BSS vendors do business and a need to ‘change the game’ in 2018 is heading towards mainstream acceptance in 2019. Old development and delivery models are being replaced. Cloud based systems are becoming standard, real-time, agile and open systems are the new reality Digital BSS. The old and broken vendor, customer model that was pervasive in the legacy systems era is well on the way out. A more partnership focussed approach between operators and partners that is mutually rewarding will be foundation for working together.
6. The new cycle of upgrading network capabilities will begin. “Big transformations” will be abandoned in favour our build-around alternative new architectures and strategic renovation of software. Bad news for legacy giant vendors but great news for System Integrators.
Evolving to being a Digital Service Provider and getting ready for 5G, IOT and partnerships is a must for operators who want to see any revenue growth. But how they will make this evolution will change – with the gigantic transformation deals of recent years being formally abandoned and an acceptance that “polishing the old silver” (trying to upgrade IN platforms and Billing systems, relying on mega-vendors to have leading edge upgrade programmes) just will not work. Instead Operators will embrace “build-around” low cost, low disruption strategies to upgrade their capabilities – leaving the legacy networks with maintenance level expenditure to keep the lights on, but invest in innovation with faster to deploy, cheaper to run, architectures. Few Operators will want the hassle of managing a range of smaller vendors – so it will be boom time for the smarter System Integrators.
7. Public Cloud won’t quite be there yet for operators to take advantage of.
The advantages of leveraging cloud offerings from Microsoft Azure, AWS, Dell and all the larger players are incontestable. But security concerns persist about letting a third party pipe go behind firewalls. So expect a lot of activity by the mega-cloud providers to reassure operators that they can put the fears to rest in this regard – but also expect operators to be ultra-cautious about leveraging the full economic benefits of the potential that cloud can offer.
8. Large Internet Players partner and disintermediate the IOT/M2M/Enterprise markets.
Expect players like Amazon and Google to finally show their hands in seeking to be the connective tissue between device and sensor manufacturers and end consumers and businesses in 2019. Quietly they are ramping up Telco expertise having spent a number of years assuming that Telco wans like the internet – and then discovering that it is a lot more complex and challenging. So partnership deals will flourish and the internet storefront players will finally kick start the IOT revolution !
I look forward to working with you in 2019.
