Tag Archives: Internet of Things

Jul 14 2015
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Telecoms Future

Are telcos losing pole position as digital disruption impacts demand and supply?

A client recently asked me to present on the top 5 disruption themes in the industry. A pretty broad brief given that I have covered almost every aspect of the industry over the years of being an analyst. So, I had to find a framework within which to identify the disruptions. The following evolved:

  1. Demand is taking over from supply in shaping the telecoms market so the start point has to be the demand side.
  • The individual: how do individuals see the telecoms piece of their digital lives?
  • Households: is the household a market and if so, who is the domestic CIO?
  • Business: what is driving business’ use of telecoms services?
  • Society/government: how is telecoms fitting in with the increasingly joined up whole public sector play?
  • IOT: Cuts across all the segments above, throwing a whole new light on the demand side with its mix of personal, household and business/industry connections. How will this fit and who will provide these business process services?
  1. Supply has to face this massive shift in demand with several constraints:
  • Firstly the flat if not shrinking market for telecoms services in terms of revenue. This is especially acute in the highly regulated European markets but it is increasingly true around the world.
  • Secondly, the revenue position belies a massive uplift in volumes and complexity of traffic. The more granular networks have to cope with video but also with complex series of loops including our personal, business and society links that may be private, open to public scrutiny or part of a 3rd party business process such as in the healthcare sector.
  • It is not that the role of connectivity is lessened, but that it is being absorbed into much broader business activities. The clear end-to-end nature of the early telephony systems has been replaced by either ‘end’ being variable, virtual, and dynamic and often via cloud-based 3rd party application. The connectivity provider may get the blame for poor performance of an application despite there being many steps in the process beyond their control.
  • The disruption on the supply side in terms of investing in the long term suitability of the networks to cope with this new age demand means that NFV , SDN , small cells, WiFi, shorter application development cycles and a generally more agile approach to business all add up to a short term need to increase budgets to get over the investment hump of removing siloed, legacy networks and services in favour of simpler more adaptable fixed and mobile services.

Given the pressures on the connectivity front, telcos are, of course, tempted to shift up the value chain towards the applications that really make different industries tick. And, the IOT also represents new territory to ‘conquer’. Neither, in my opinion, are that easy to achieve. The business applications players are already well versed in the industry-specific apps and that also translates for the major integrators when it comes to IOT in specific industries.

The answer is to adopt a much more open stance towards partnering with other specialist players and accept a supporting role. As ever, the caveat is that every country market is different. Some telcos will continue with prime contracting with a strong business, retail and/or media presence, but all players should seriously consider a multi-channel approach to the customer and let the customer choose.

And, by the way, there is little sympathy for the telco from outside. It is often perceived as having taken high profits over many years and neglecting to invest for the long term of the industry. Outsiders see the telcos as fair game when it comes to exploiting them in the digital marketplace. Customers, of course, see the benefits of their app-based worlds across their different devices as either part of their hierarchy of needs or just their basic human right.

Policy has to ultimately rebalance this demand and supply issue. If telcos are not incented properly to build future-proof networks then the politicians won’t be able to use broadband and digital inclusion as just another thing to throw around during election times.

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Sep 25 2013
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Telecoms Future

Ensuring Quality in a Virtualising Telecoms World

The benefits of a virtualised infrastructure have been well-documented on many PowerPoints, webinars and web pages of late. All parties in the ICT world are getting excited about the potential savings and increases in flexibility and performance that virtualised processing, storage and networking can bring under a cloud banner. Telcos are no exception to this excitement. However, from the internal telco perspective, it raises some very significant questions about changing process, approach and even culture.

The traditional telecoms world of cosy but fraught relationships with Network Equipment Providers (NEPs), key software players as well as the essential niche players has always been part of the conservative, controlled world of telecoms with long lead times for product and service development and testing. Integrity of the software driving the network and emerging services from the telco portfolio has been done under ‘safe’ conditions. As the value and supply chain is disrupted by non-telco players, as the key network functions virtualise across the disparate infrastructure, ‘steady’ development time is being challenged. Add to this the fact that the telco will have to support the apps developed for the increasing proportion of smart mobile devices. Ironically, as the market stretches, the telco (and hence its suppliers) will have to work even harder to provide a control layer to underping the customer experience of the actual end user.

A future scenario where the telco is relying more and more on software developed by the NEPs, OTT players as well as off and near-shore in-house and partners along with a diminishing amount developed in-house), all puts an increased strain on the quality assurance and integrity of change management within the essential operating systems of the organisation.

This is all part of the move towards a more software defined telco. After all, the appeal of virtualisation is to operate in a more and more standard and dramatically lower cost compute environment.  Software Defined Network (SDN)  has emerged in the data centre with its new control plane to improve operational control and will now begin to impact the service delivery across the (Wide Area Network) WAN and on to the ever more mobile end device. Network Function Virtualisation (NFV) promises much as the key network functions gain the virtualised benefits of an open stack approach.

However, the timescales for developing and testing new infrastructure and services are being squeezed by the agility of the OTT players on the one hand and by the Cloud delivery players coming from a non-telco origin on the other. Change management is, therefore, even more critical and telcos will need to adopt a radically different approach to deliver competitive turn around times. The burden will, in many ways, be on the OSS and BSS areas. By definition, this is the software focus for the telcos and will tie together the various distributed components.  This subsequently raises the question of where the OSS sits within the organisation and puts the spotlight on the niggly issue of how networking and IT relate to each other in the telco. Evidence is scarce that the gap between the two has closed dramatically.

The solution may well be for the telco community to embrace the Cloud approach and encourage its suppliers to develop their own software components with appropriate APIs in the Cloud for the flexibility needed to match services coming from non-telco sources Having said that, it also needs a fundamental cultural and management change throughout the telco..

In short, the relationship between the telcos and their suppliers with a services component will become the underlying delivery mechanism for many of their future infrastructure and services portfolio to an ever more demanding market with individuals, households, business and the Internet of Things (IOT) demanding high quality services at a reasonable market rate.

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Aug 19 2013
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Telecoms Future

Plotting the telecoms future

We are entering a major annual planning cycle for many players in the ICT industry. The challenge for the telecoms sector is that there are so many moving parts, some positive, some negative and all interacting with each other. And with the increasing digitisation of everything, factors from outside the telecoms market will seriously impact the future shape of telecoms. Indeed, one thought for the backburner is whether we will even think of telecoms services as a market in the future – but that’s for another day!

The basic equation for the telecoms market looks something like:

  • Demand from individuals, households and businesses and now ,‘Things’ (M2M) continues to grow as communications expands its horizons both in numerical and volume terms.
  • Total Revenues from traditional and new connectivity services are either in decline or about to go into decline – it is still a very big number overall, something like $1.4 trillion worldwide. The mix of legacy and new revenues varies by country but few doubt the gap left once the legacy services have washed through the system
  • New revenue streams such as TV/media, IT services, security, cloud, M2m all have attractive connectivity dependent components but they are also being addressed by other parts of the ICT industry and generally have lower margins than the connectivity services
  • Applications and content leveraging the telecoms networks are increasingly disconnected from the telecoms world and increasingly linked to the apps and links on our multiple screens through which we consume and execute
  • Maintaining a network infrastructure that can handle the explosion in traffic across all access methods and across the core, including in and out of data centres, needs major investment along with a rationalisation of the internal ICT infrastructure for most operators if margins are to be maintained, let alone grown

We need to recalibrate the expectations of the industry and its investors. Perhaps considering how many connections per household, individual, business and ‘thing’ require  and a fixed rate of revenue for each. This would define the worst case scenario, but still potentially very profitable. Add to this a percentage of the adjacent markets from ICT and Media and two-sided business models from pretty much every industry sector, and we have the potential future addressable market. However, remember that this new digital world means that the adjacent market incumbents can equally enter the telecoms space!.

There is fundamentally a lot of ‘spend’ at stake from all on the demand side. As everything digitises the demand side is increasingly likely to dictate through which channel the service (including connectivity) is consumed. So, a multi-channel strategy is needed along with major network and ICT rationalisation to bring the telco of the future into the new digital era.

Don’t get me wrong, Telecoms does have an underpinning role in the future scenario.  It may not necessarily be as the deliverer of the final service function or feature but there is a fundamental role at the heart of the new digital era for a trusted, reliable provider of the digital glue.

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