With the power of 5G, communications service providers can unlock B2B
Communication service providers (CSPs) are at a critical decision point in their business: 5G and enterprise integration will unlock B2B for their future.
Communications service Providers (CSPs) are at a critical decision point.
They can either fundamentally reimagine their business, or risk another decade where the lion’s share of the value created by their network investments will be captured by others.
Disruption is nothing new to communication service providers (CSPs); they have been managing over a decade of disruption and it has squeezed their profits.
When comparing the top 25 global CSPs to the top eight listed Internet companies (2014-2019), the CSPs’ share of the total profits fell from 74% to 40%. Also, their corresponding share of market cap went from 54% to just 22%, according to McKinsey.
This trend continued during the pandemic, although the demand for bandwidth increased significantly because of people working from home and schools turning to online education. Yet, where other industries – like technology, media and semiconductors – showed a shareholder return of 35% plus during the pandemic, the return for the telecommunications industry was just 4.8% according to Bain & Co.
Why did CSPs fall from grace?
After the 2010 launch of the new 4G/LTE networks, much of the value created by this new technology was in the consumer market. This was soon captured by hyperscalers like Microsoft, Alphabet, Meta, Amazon and Apple. Today, with the introduction of 5G network technology, CSPs have a staggering US $700 billion market opportunity in industrial 5G networks and B2B2X service offerings, according to TM Forum.
Hyperscalers are moving further into the telco network domain, increasingly moving network intelligence to the cloud. They already have the largest backbone networks, are heavily investing in core network functions and are shifting their investments to and increasing their investments in edge cloud to support new metaverse services. This is expected to drive the further degradation of connectivity prices, the core of the CSP business.
Hyperscalers don’t want to become telcos but do want to leverage these networks to obtain data and drive their own digital business. CSPs must now fundamentally reimagine their business or risk falling further from grace.
From connectivity to enterprise connections
Shifting from a connectivity centric offering to a data and business outcome centric offering will be key for CSPs to make this transition. Some CSPs, like Japan’s Rakuten Mobile and India’s Reliance Jio, are already making this shift. It is essential that CSPs boost their enterprise engagements and get in front of CIOs to set up joint programs where they can utilize the capabilities of the new network technology.
There is a wealth of data out there, from CSPs’ own connectivity and geolocation data to their clients’ partners and ecosystems data. What if CSPs could integrate all these data sources, both on-premises and in the cloud, and enable the extraction of value from this data?
What if CSPs could get a clear view of their own B2B business processes and optimize and enhance these processes to work with their enterprise customers and key ecosystem partners?
The traditional 3G/LTE focus on the consumer market is so last decade. CSPs now need to leverage the power of 5G to focus more on enterprises.
If you want to learn more about how process mining and along with API management and integration from Software AG can help, click below.