Hyper-competition, demanding customers and the continuous need to invest in new technologies will drive telcos to fundamentally transform their offerings and market positioning in 2021.
CSPs need to now anticipate and focus on emerging opportunities beyond traditional connectivity, to meet and beat new digital- and cloud-first disruptors which taking certain markets by storm.
Here are some of the trends you will see in 2021:
Connectivity as a utility
With working from home, on-line education and entertainment now the rule rather than the exception in many markets, broadband connectivity has become an essential lifeline utility service. Consumers expect resilient connectivity, both privately and professionally - with “always and everywhere” broadband connectivity. This will drive accelerated network deployments by CSPs, both in developed markets as well as in areas with only rudimentary or spotty coverage, and will drive further adoption of new technologies like cloud and open RAN.
For this to be economically sustainable, CSPs will be focusing on autonomous networks and AI to drive end-to-end automation for lowering operating costs. Capabilities like self-healing and network elasticity will ensure automated operations, quality-of-service and network capacity that’s there when it is needed.
CSP transformation to XaaS
Staying profitable by selling traditional connectivity services gets harder every year; it is no longer sustainable as a business model for a CSP to focus on connectivity only. And prices for connectivity services continue to be under pressure. In Japan, there are already moves urging carriers to make their services more affordable for consumers.
Harvard Business School & Keystone Analysis concluded that by 2025, success in 5G will force CSPs to generate additional non-connectivity revenues in order to reach break-even. Proponents of 5G are fully focused on the B2B market, helping accelerate industry innovation and productivity. This means CSPs will have to engage in B2B2X service offerings beyond traditional connectivity. Everything-as-a-Service (XaaS) offers vital growth opportunities (Bain Prediction). In order to capture a slice of this market opportunity, CSPs will have to collaborate with eco-system partners and deliver must-have services by engaging in new opportunities such as security solutions, smart factories, smart events, smart farming, connected cars, robots/drones and distance learning. An outside-in strategy and collaboration with each other, hyper-scalers and new nimble insurgents will be key.
New players with global ambitions
The introduction of cloud-based network architectures and cloud-native IT will enable necessary CSP-service agility. Competition from cloud- and digital-native platform companies such as Japan’s Rakuten and India’s Reliance Jio is beginning to nibble at the heels of traditional CSPs.
They have made their infrastructures as standardized as possible with commercial off-the-shelf hardware, keeping their networks as close to the cloud as possible. In addition, new players like Rakuten are positioning themselves not as traditional CSPs, but as platform players. CSPs will have to partner with each other and key players in the respective areas to build a competitive platform offering.
The pandemic has brought a surge in demand for traditional connectivity services. But continued hyper-competition in this market, in combination with heavy investments in new technology like 5G, will require CSPs to fundamentally change their business model: monetizing their data lakes, providing key capabilities for must have services, introducing XaaS business models and building strong partner eco-systems.
They will have to build a resilient connectivity offering while, at the same time, drive internal and external digital transformation.