2030 Vision: How the telco industry’s past successes will shape its future
Enabled by 5G deployments and increased cloud coverage, we are entering an era of accelerated innovation, collaboration and growth, all taking place in an ever-evolving ecosystem of partners.
This forward march of change can be hard to forecast, and even harder to accurately plan for. With wireless subscribers and enterprises alike expecting more personalized and value-added offerings, telcos have to adapt faster than their customers expect.
While these business model and technical advancements are unpredictable, telcos have been through transformative periods before and thrived every time. As service providers move ahead, it can be helpful to look back and see what lessons can be learned—and how to benefit from them.
First Era—Voice and SMS (1998-2009)
The foundation of the GSMA was a gamechanger. By bringing together the world’s major operators to establish set standards, the industry set its own course forward. This achievement set the stage for explosive growth in the usage of personal and business cellphones, creating massive profits for telcos. Over time, however, new entrants and high mobile subscriber penetration led to the start of B2C saturation. By the end of this era, overall B2C sector growth began to slow.
Takeaway: Collaboration between telcos and other partners can lead to strong revenue growth.
Second Era—Data and Video (2009-2019)
LTE and the proliferation of smartphones paved the way for digital disruption in this era, which prompted CSPs to shift roles to digital service providers. The rollout of 4G also triggered massive increases in investments, which grew to a total of $261 billion, a 43-percent increase from the previous decade. By the end of 2019, nearly two-thirds of CSPs were experiencing commoditization in the B2C market.
Takeaway: Telcos were creative and launched new digital services off the back of a better network. But with mobile data and B2C facing commoditization, telcos need to explore new opportunities.
Third Era—Ecosystems (2019-2029)
Full disclosure—I don’t have access to a crystal ball. But based on the past few decades, I believe that collaboration in a thriving ecosystem will be the key to success in the next decade. Telcos have done it in the past, and they can certainly do it again.
This ecosystem will feature a variety of different players, from telcos and hyperscalers to ISVs and cloud providers. Partnership within the ecosystem will enable telcos to provide additional value with their 5G connections to maximize value. One example is combining new applications with connectivity (e.g., Telstra offering a weather forecast system for farmers leveraging 5G networks).
Takeaway (to be learned): Taking full advantage of 5G will require working with telcos, OEMs and other partners to add value, grow revenues and escape the connectivity commodity trap.
What Telcos Can Expect in the Next Decade
To be successful beyond B2C, telcos will need to continue to expand into the B2B market and become ecosystem service providers. While most operators today generate 90 percent of their revenue from B2C, more than half of their revenue will come from B2B in the next five to 10 years.
But telcos have a history of adapting and innovating; look no further than the continual advancements made in network speed, security and coverage. Those that embrace change successfully will benefit from several exciting developments that will characterize the ecosystem age:
- Cloud infrastructure will create a virtualized world, laying a foundation for ecosystems, harmonious orchestration and collaboration. This thriving environment will enable agile leaders to deliver new business models and services.
- The power of 5G will unlock the potential of new use cases that require critical real-time speeds, such as autonomous cars and discoverable business systems.
- The growing adoption of TM Forum Open Digital Architecture will pave the way for a flourishing B2B ecosystem. This foundation will enable agile, cloud-based architectures that can be orchestrated through AI.
As I covered earlier, there are several lessons telcos have learned from past eras: they had to work together; they had to create new offerings to add value for customers; and they had to leverage the core connectivity they provide
No one could have expected 2020, and we can’t predict 2022 precisely. But the core foundations that served the industry well in the past—collaboration, creativity and connectivity—can apply to their future (albeit in a different market focus).
This time, it’s the B2B market that will be the business driver. But with an increase in competition between providers, hyperscalers and adjacent vertical entrants, growth in B2B will not come easy. To gain an advantage, telcos should find a next-generation technology platform partner to help navigate the new ecosystem and find monetizable opportunities.
Here’s how the three principles will work in the B2B market:
- Cross-platform connectivity—The next generation will be paved by a cloud-first open architecture that can be delivered on cloud-optimized platforms, both public and private, while adhering to industry standards. Telcos will utilize ecosystem platforms so that they can bundle their connectivity and offerings with other providers to enhance value for enterprises.
- Creativity—The most valuable telcos and their partners will have a deep, intuitive understanding of B2B monetization, ideas for new services to offer, and see the value of an open ecosystem. With a digital marketplace, the sky is the limit for the services that can be mixed, matched and delivered
- Collaboration—In an open, shared ecosystem, a technology platform’s first building block is trust. A trusting environment will lead toward a shared culture while stimulating innovation.
No telco knows precisely what this year (or decade) will bring. But if the past is any indication, the core lessons that defined telcos’ past success will set them up for a bright future.
To learn more, read our commissioned Analysys Mason study to learn how telcos can capitalize on the enterprise market and create new revenue streams.
This post originally appeared on TM Forum.