The annual GSMA Mobile Economy Europe paints a mixed picture for CSPs, with continuing consolidation helping to stabilize the competitive landscape, but saturation in B2C pointing to slow growth in traditional revenue streams. The silver lining however, is a faster than expected adoption of 5G and a determined march into new verticals, showing many green shoots of growth.
What’s going on then?
In this blog I offer my perspective on European CSPs’ quickly changing market dynamics, what it means for solution providers like MYCOM OSI, and how our customers can prepare to seize new opportunities. The following four points were most interesting to me, being as they are diverse, but equally relevant to cloud-native service assurance platforms. Let us go through these in sequence:
Figure 1: The four core challenges of the European telco sector, according to the GSMA ‘Mobile Europe’ report, Sep 2018
- AI moving to mission-critical operations | AI is becoming a proven, well-defined category of technology, and is today spreading from the periphery of our customers’ business operations (think chat-bots, guided customer service, personalized marketing) into the critical role of network management itself.
- 5G roll-out big bang | Europe’s 5G strategy is taking shape in the form of the ‘5G for Europe Action Plan’, and it represents a new approach to encouraging value creation among telcos, and even direct investment in promising related projects in new verticals (think connected factories, e-Health, connected cars and utilities). With this co-ordinated effort, GSMA expects almost 30% of connections in Europe to be 5G connections by 2025.
- CSPs struggling to traverse the internet value chain(s) | Telcos risk losing out on revenues from new verticals (IoT is driving mobile GDP contribution CAGR of around 5.5%, while telco revenues are forecast to see only 0.1% CAGR).
- New ways to invest and innovate | Venture Capitalism (VC) is a growing trend among top tier operators to ring-fence investments in categories with high perceived risk, effectively out-sourcing innovation, and bringing successful ventures back in-house to supplement the main brand offering portfolio. We can see parallels with the proliferation of second brands and MVNO spin-offs in recent years, the difference being that the new wave of innovation is focusing on entirely new B2B and B2B2X verticals.
How to navigate these challenges? Enter the Digital Service Operations Center (SOC)
However diverse and unconnected these challenges may appear, they do share a common denominator, which is the need for agile, carrier-grade service operations. Most CSPs see the value of moving from NOC to SOC, and it is the SOC that has the potential to generate the next wave of growth for our industry. Armed with the right tools for the job, the SOC can successfully navigate the CSP from dumb pipe to smart pipe, to DSP and ultimately into a ubiquitous connectivity platform. This involves traversing the value chain and moving into lucrative new verticals while protecting the core B2C revenue stream.
MYCOM OSI is working to support CSPs’ need for agility, real-time operations and closed loop automation: the tools of the Digital SOC. With the Experience, Assurance & Analytics™ (EAA) Cloud Platform, (ECP) and products, MYCOM OSI is working to enable CSPs to rise to the challenge by providing the following essential capabilities to their NOC and SOC teams:
Figure 2: Answering the industry’s challenges
- Effortless onboarding of new services in the 5G, NFV/SDN Era
Working with open source projects and standards bodies like OSM, ONAP, TM Forum, OASIS TOSCA and others, services designed in these frameworks can have quality indicators built into their telemetry / data reporting. So assuring carrier-grade performance can start from ‘day 0’, with little or no human intervention, removing a big bottleneck in the innovation process. This is a community effort that involves solution providers, open source and standards bodies in equal measure.
MYCOM OSI is working to develop these ‘day 0’ service assurance blueprints with the open source community and standards bodies, and you can expect more announcements in the coming months to this effect.
Through effortless onboarding, CSPs will be able to quickly test new services with specific user segments, identify the services that stick and roll those out into the general user population. All the while, maintaining carrier-grade performance.
Just to underline the importance of ‘fail-fast’ culture in web-scale OTTs, consider that Google has killed off 158 projects over the space of 12 years (source: https://killedbygoogle.com/)
- Closed loop automation with AI and Machine Learning, continuously optimizing performance and freeing up SOC professionals to find new potential revenue streams and build services.
I said earlier that AI is moving into mission-critical operations. It has already reached a point at which it is impossible for humans to optimize network performance, given the overwhelming number of permutations of network configurations, which today can change hundreds or thousands of times a day. Who knows what this will look like for full 5G-enabled services with network slicing, managing thousands of services contending to deliver on specific performance guarantees.
MYCOM OSI has started its journey towards what some call the ‘Dark NOC’. For example, our customers are beginning to set specific targets to automate percentages of currently manual tasks, even going as high as 95% in one case. Also among the operators that we are working with, one tier-1 US operator has been able to translate 3 weeks of network data into automated prediction of a growing proportion of faults even before they impact the customer.
By proceeding towards closed loop automation, MYCOM OSI is working to help its customers achieve a step-change in operating efficiency and service quality. With 5G fast approaching, closed loop automation is going to become a key weapon in the competitive arena. Those that can automate more of their network operations will be less constrained by a rigid legacy operating model and out of this change, an increased amount of energy focused on creating innovative services is going to yield lucrative new revenue streams.
- Cloud-Native and DevOps-driven | The word ‘innovation’ is taking on a new meaning in our industry. In the past, we innovated primarily by bundling the same core services in different ways. Today, innovation is about building completely new categories of service, within an ecosystem of developers and partners.
MYCOM OSI is developing its product portfolio guided by microservices architectural principles. We work with many of our customers on a DevOps development basis. The result of this is a rapidly growing catalogue of ‘solutions’: end-to-end assurance capabilities that benefit all our customers. It means that different services launched by our customers can be quickly supported by a tailored assurance solution. If it doesn’t already exist, we work with our customers to quickly build it.
My view is that CSPs know that they need to think outside the box and develop non-traditional services, involve new partners and developers in the ecosystem, all the while being able to deliver carrier-grade performance as a differentiator for their customers. Through its solutions portfolio, MYCOM OSI is working to support this more innovative approach to service development.
- SaaS-like commercial models | In such a fluid market environment and with CSPs grasping for new revenue streams, it doesn’t make sense to have to rely on a static underlying service operations capability.
MYCOM OSI has introduced a subscription commercial framework for its Assurance Cloud customers that is quickly gaining traction. As we move forwards, my view is that as the benefits of a subscription model are proven over time, it makes sense to expand into a purer form of SaaS with usage-based pricing for those customers that need unlimited flexibility to experiment without any long-term obligations.
Stay tuned for more developments in this area. I’m sure we will be sharing more information as we get closer to the all important Mobile World Congress (MWC) event in Barcelona in early 2019.