The last two years have been anything but predictable. That might make predictions on telecom industry trends seem a little futile.
We’re honest enough that we can’t say for sure what will happen in 2022—but there are trends that have been gathering momentum for the past few years, and will continue into the next one.
For example, last year, in our 2021 telecom trends, we predicted 5G investments accelerating, enterprise telco competition heating up, and ecosystems requiring strong collaboration between telcos, partners and other parties. We’ve seen those trends borne out in 2021, and we’re confident they’ll continue this year.
So what’s the outlook for 2022 (and beyond)? And what is the megatrend underscoring all these telecom trends? Read on to find out.
MEGATREND: TELCOS WILL BECOME THE CENTER OF DYNAMIC ECOSYSTEMS
KEN KENNEDY, CHIEF OPERATING OFFICER & PRESIDENT OF REVENUE MANAGEMENT
I’ve been hearing the term “ecosystem” emerge more in telecom industry conversations. CSPs are building partner relationships to deliver more services than they ever could alone. But telcos aren’t just standby parties in these ecosystems. Telcos are the oxygen—the core element—without which these ecosystems can’t exist.
In a telco ecosystem, telcos play an invisible but crucial role in keeping ecosystems running, enabling the inhabitants of the ecosystem to deliver services through connectivity. Ecosystems are often illustrated through the B2B2X framework (business to business to any other entity). Telcos can play the role of the first “B,” where they sell connectivity to partners that sell to the end customer. Alternatively, CSPs can play the role of the second “B,” where they sell partner services and own the relationship with the end customer. In all instances, telcos require an open, flexible and scalable platform to manage the multi-party complexities.
In 2022, telcos will cement themselves at the center of dynamic ecosystems, without confining themselves to either “B” in the value chain. By establishing B2B2X marketplaces, telcos can sell partner services to consumers (like what Maxis is doing) or to enterprises (like what Axiata Labs is doing). Instead of limiting themselves to one “B,” they can have both, enabling themselves to deliver exceptional experiences at scale across the entire customer lifecycle. Just like air is needed to keep every aspect of the ecosystem alive, telcos’ core placement in the ecosystem will help them drive meaningful new revenue with industry-specific solutions.
1. TELCOS WILL START LAYING THE FOUNDATION FOR THE METAVERSE
HAIFA EL ASHKAR – EXECUTIVE DIRECTOR CORPORATE STRATEGY, TELECOM
It’s fitting that we closed out 2021 with a film series that pioneered the concept of the metaverse: the Matrix. As seen in past movies, the Matrix is a fully immersive, persistent and sensory environment that normal people can interact with, which they perceive as no different from the real world (until it’s revealed the construct isn’t quite what it seems).
The real-world application of this science-fiction “metaverse” concept is much more aspirational—and also much closer to launching than we think, thanks to 5G. With 5G’s near-millisecond low latency, broad coverage and extremely fast data processing (up to 100 times faster than 4G), CSPs will be able support use cases and Network as a Service (NaaS) business models that will make up the metaverse (think 8K streaming, augmented reality and autonomous operations).
To be clear, a fully-fledged metaverse is still several years away, but telcos can start laying the groundwork now by extracting value from 5G. This will require dynamic, scalable, zero-touch ecosystems that can scale to support millions of devices across global networks, and integrate with partner services to provide the most value. Telcos will also continue offering 5G slices of their network for specified use cases, which could include virtual offices, virtual sporting/entertainment events and more. While telcos may not be entering the metaverse themselves (yet), they’re laying the foundations for the metaverse.
2. TELCOS WILL SHIFT B2C MENTALITY FROM COST CUTS TO VALUE ADDS
JAMES KIRBY, SVP & HEAD OF EMEA
Over the past two years, connectivity has become an essential resource due to various stages of lockdown and working from home, which means that connectivity has also become a commodity. When a service is a commodity, price is often a critical factor when consumers shop around.
With B2C margins already taking a hit from digital players, telcos are unlikely to fight on the price but instead stretch their margins with cost cuts, as expenses alone range from 50-80 percent of revenues. To offer lower costs to consumers and cut costs behind the scenes are noble goals, but shifting focus to add value for consumers is a promising area and a more appealing opportunity for telcos to prioritize.
In 2022, we will see telcos offer complementary non-telco digital services with their core connectivity, like TalkTalk bundling fiber broadband with Netflix or Verizon offering six months of Disney+ with an unlimited subscription. Telcos will find that adding more has multiple benefits, as 45 percent of consumers say that bundled offers encourage them to spend more and stay more loyal.
Bundling offers with one partner is just the beginning. Letting consumers add one, five or even ten services to their plan will, in my perspective, be when the added value really takes off for telcos and their customers.
3. CONFIGURING COMPLEX TELCO SERVICES WILL BE AS EASY AS ORDERING A PIZZA
GREG TILTON, VICE PRESIDENT, CPQ & ORDER MANAGEMENT
Over the past two years, we’ve seen many global lockdowns, so ordering food online has been a lifesaver for many consumers. With a couple of quick clicks, you can select your entrée, customize it how you like, and get your order at your door.
But for telcos, setting up services isn’t nearly that easy. Historically, configuring, pricing, quoting and ordering telco services (especially complex B2B ones), has been a manual process, with little validation that the information is correct. That can lead to a delay in time to fulfillment (and erode customer satisfaction while they wait for their order to go through). And even when solutions appear easy to use, they can lack the deep functionality required for complex telco orders. (After all, does a making a pizza require bundling a multi-site VPN, internet and adding Office 365 licenses coordinating service activation across locations and users?)
This year, telcos will focus on automating the CPQ and quote-to-order process so there are fewer errors and faster fulfillment. Part of this automation process includes Open APIs, which help telcos seamlessly integrate the rich array of services from the back-end or partners, then combine services through a product catalog. These changes will make it easy for business customers to self-serve and select feature-rich products and solutions from their telco. But to do this, telcos will need the right, robust equipment—the last thing you want to do when growing your enterprise business is rely on a toy oven to bake a gourmet pizza.
4. TELCOS WILL DISCOVER THERE IS NO 5G KILLER APP
ROBERT MORRISON, EXECUTIVE DIRECTOR, PRODUCT AND SOLUTIONS MANAGEMENT
Since the 3GPP announced its first 5G standard in 2017, there have been thousands of articles guessing at the 5G killer app. And that’s understandable—every previous network generation had one killer application. For 2G, it was voice; 3G, data and web browsing; 4G, video.
But 5G is a bit muddier. At first glance, this might seem disappointing to telcos, who are hoping for a silver bullet to recoup their $720 billion 5G investment through 2025. While the 3G and 4G killer apps weren’t known initially, we may look back and say augmented reality was obviously going to be it!
However, the opportunities for 5G go beyond a single killer app. Rather, 5G will enable every app in every industry, from manufacturing to healthcare and beyond. And while 5G is getting initial (advertising) buzz in B2C, the biggest value will come from enabling complex B2B business models at scale (e.g., configuring a 5G network slice for a delivery van fleet and bundling streaming video for drivers with the offer). This will require rich ordering and monetization across different parties, locations and dimensions (e.g., B2B2X).
But the example above is just one of many—and there are countless telcos haven’t dreamt up yet. In 2022, instead of looking for 5G success in a finite use case, telcos will reframe their thinking around 5G and embrace it as a platform for business innovation. One helpful comparison is to look at software as a service (SaaS) and platform as a service (PaaS). Telcos can launch offerings like connected cars or 5G phones and earn recurring revenue from those services (SaaS), all delivered over their 5G network (PaaS).
So let’s kill the idea of the 5G killer app. Instead, let’s see 5G for what it is—a creator app.
5. TELCOS AND ENTERPRISES TAKE THE NEXT STEP
IAN WATTERSON, SVP & HEAD OF APAC
As B2C revenues plateau and 5G rollouts accelerate, the enterprise B2B market is accelerating as a focus for service providers. Service providers in advanced markets have shown strong revenue growth from adopting an information, communication and technology (ICT) approach to their offerings.
But in 2022, the approach to each enterprise will need to vary. Large companies look for long-term trusted relationships; medium enterprises want scale and capability of service delivery; and smaller enterprises want cost competitive bundling. Stratifying the enterprise market into large, medium and small allows telcos to tailor their offerings to each business (e.g., private network services, edge computing and network slicing), using a tailored product catalog and go-to-market strategy.
This year, supporting sophisticated go-to-market strategies providers will require increased spending for supporting infrastructure like 5G networks. This will require a new digital, cloud-based or dedicated B2B ecosystem, where the customer journey can seamlessly flow from customer engagement platforms and ordering systems to catalog, billing, mediation and provisioning.
Lowering the cost of service for enterprises with cloud-based systems is just one benefit. Improving NPS and CSAT and driving revenue growth and high profitability will be the rewards for embracing the next level of enterprise strategy.
6. TELCOS WILL REFOCUS ON ROAMING AS TRAVEL PICKS UP
FINN KORNBO, EXECUTIVE PRODUCT DIRECTOR
If I had to pick a theme song for the last few years, it likely would be “Don’t Stand So Close to Me.” But as I look forward to travel in 2022, I’ll be playing the Allman Brothers’ “Ramblin’ Man” on repeat, because travel is poised to make a serious comeback in 2022—by one estimate, by at least 37 percent to the tune of $1 trillion.
However, we do know that traveling in 2022 will look vastly different than it did in 2019. When hitting the road, travelers will need to stay connected more than ever, and for things (slightly) more important than Netflix and Spotify, like new travel advisories, restrictions and outbreaks. Telcos can help make travel safer by providing reliable, high-quality access for their subscribers while roaming.
In 2022, CSPs will embrace the next phase of roaming, founded on Billing and Charging Evolution (BCE). For years, the industry has used Transferred Account Procedure (TAP) records to settle roaming charges. But this increasingly rigid system can’t keep up with new innovative services launched as part of 5G and IoT. Telcos will look to BCE to support the services related to 5G and IoT. BCE will help operators deliver roamers real-time, enticing offers that enhance the traveling experience. Telcos have a unique opportunity to make travel safer, and more enjoyable, in 2022.
7. TELCOS AND HYPERSCALERS WILL BE A MATCH MADE IN THE CLOUD
JON FAGAN, SENIOR PRINCIPAL SYSTEMS ARCHITECT
I am on record as being a cloud superfan—from podcasts to conferences, I’ve been singing its praises. Some people collect jerseys of their favorite sports teams, but I’d rather have customized cloud gear (see here for what I mean). While I might be a bit biased, I do believe that 2022 will be remembered as the year that telcos finally began to fully embrace the cloud—and they’re just in time.
The International Data Corporation (IDC) estimates that global cloud spending reached $706 billion in 2021 and will increase to $1.3 trillion by 2025. The main benefits of affordability, security, scalability and agility offer CSPs the ability to power innovative new use cases. Think, for example, of the scaling resources needed for things like autonomous cars and remote surgery. The cloud can pave the way for innovation in a way that physical data centers simply cannot.
In 2022, as telcos begin to embrace the cloud, a telco cloud ecosystem will flourish, led by CSPs and cloud platform providers like AWS and Azure. These formidable alliances will allow operators to step up their customer experience while accelerating new and exciting offerings. If telcos and hyperscalers work together and leverage each other’s strengths, a robust and mutually beneficial relationship will emerge this year.
Want to learn more about how to capitalize on the ecosystem megatrend and the other telecom trends in this article? Download our Ecosystem Playbook for CSPs.