Telco Evolution and security impact - Part 2

Excerpts from last blog – The time I joined telecom sector, so much have changed but still the pace of change hasn’t slowed down. To my surprise we are witnessing a phenomena (be it in terms of technical innovation, changing social need or newer business models) which we couldn’t have thought of just some years ago. We see today’s Telco out from monopolistic cell, challenged by new age entrepreneurs, constantly struggling and re-defining their business model to stay competitive and in business. I shouldn’t be hesitating in saying that these operators’ movements are directly related to their survival issue and not well thought of proactive value addition in their service offerings.    This journey and the experience prompted me to write series of blog each part answering pertinent questions like:- ·          What has changed and why? ·          Value Chain Who Owns the bigger chunk? ·          Top trends impacting Telco’s strategic choice. ·          How to avoid being trapped as “dumb pipe” provider? ·          And last but not the least, Security impact of Telco’s changing eco-system.   “The time has come when communication service providers should learn to exploit the emerging digital value chain, or else they will be reduced to “dumb pipe” providers” Need some clarification!!!! Okay I will attempt to give some insight and will try to simplify this message in series of blogs for you. Let’s find out first what exactly has changed & why

If you remember in the series of blogs which I had promised, part one was mainly focusing on what changes have happened in telecom sector and why. The part-2 now mainly concentrates on understanding the value chain of this sector and who currently owns the bigger chunk. 

If we just look-back a decade ago, the scenario was very different. Google was just emerging (with no idea of Gmail, Google voice, Google earth, android OS, Google phone), apple was known only for its mac-computer and ITunes (No app-store, and IPod), and, Mark Zuckerberg (Facebook founder) was a high school student with no sign of Facebook that we see today. Cloud computing was never heard of and no-one could think of that app-store would be this big phenomena. Skype like services were not there to challenge current business models.

Google, apple, face-book and other likes have turned telecom industry in a battle field. We can safely conclude that in today’s environment communication service means innovative services on the top of transport infrastructure rather than just plain vanilla voice. If service providers continue to be in cell thinking of that traditional revenue generation streams will work, then they risk being reduced to a low-margin dumb pipe provider from smart value added service providers and niche players.

Telco’s too have realized this and we have seen some movements which blurs the boundary between telecom, media, IT and consumer electronics. In recent past some activity suggests movement in this direction where carriers are moving into the content-aggregation and broadcasting space, while broadcasters acquired carriers and moved into session, hosting, and network services. There is no other way and we can safely say that this will continue to happen over the next few years. Pic below depicts converged Eco-system.

Let’s see what value exactly current Telco’s bring on the table. There is immense possibility and various scenarios which will determine if the large chunk of this remains under-control of Telco’s or vice-versa.

Fig1

Above picture (fig-1) from TM-forum Telco2.0 tries to describe the two sided value chain that exist today for operators. There are different possibilities in whole value chain. There could be numerous interferences in each other’s area and business models would constantly get redefined. There may be a scenario of accessing a carrier developed application running on carrier application-hosting platform with carrier voice, VAS, video services running on carrier network. This makes the case of a very integrated and carrier controlled environment. But there is equally a possibility of far end scenario viz. any user generated content or independent application service provider  running on independent hosting service providers platform using independent communication services like Skype and running on infrastructure established by virgin or Google.

Fig2-Possible value Acquisition

Depending on the carrier movement towards NGN / LTE it would be decided that if they would have the capability and necessary enabling infrastructure to enhance and capture end-to-end value chain. It is yet to be seen if Telco’s take initiative and grab most of the chunk of value chain or they become just dumb pipe providers as wholesale data carrier. The first step should be to determine what Telco’s business model should be and the next, how to differentiate themselves from competitors should logically follow. There are many possibilities and none of them is about simply providing an access pipe.

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Part 3 - Will discuss more on “Top trends impacting Telco’s strategic choice”. Till then ..happy reading !!!.

Telco Evolution and security impact - Part 1

Telco Evolution and security impact

 

The time I joined telecom sector, so much have changed but still the pace of change hasn't slowed down. To my surprise we are witnessing a phenomena (be it in terms of technical innovation, changing social need or newer business models) which we couldn’t have thought of just some years ago. We see today’s Telco out from monopolistic cell, challenged by new age entrepreneurs, constantly struggling and re-defining their business model to stay competitive and in business. I shouldn’t be hesitating in saying that these operators’ movements are directly related to their survival issue and not well thought of proactive value addition in their service offerings. 

 

This journey and the experience prompted me to write series of blog each part answering pertinent questions like:-

·         What has changed and why?

·         Value Chain Who Owns the bigger chunk?

·         Top trends impacting Telco’s strategic choice.

·         How to avoid being trapped as “dumb pipe” provider?

·         And last but not the least, Security impact of Telco’s changing eco-system.

 

“The time has come when communication service providers should learn to exploit the emerging digital value chain, or else they will be reduced to “dumb pipe” providers”

Need some clarification!!!! Okay I will attempt to give some insight and will try to simplify this message in series of blogs for you. Let’s find out first what exactly has changed & why

 

Telco’s eco-system is under constant change be it operational, technical transformation or newer business model. As market dynamics changes, service providers are still learning how to evaluate and adopt these changes to the best of their business objective. I would say it is directly result of underlying fact that they have realized immediate need to work on strategic initiatives which will help develop flexibility, agility and efficiency in Telco’s infrastructure, organizations, and processes to profit from emerging value chain. It can serve as key part of creating a “smart pipe” or else there is chance of huge value erosion having competition from newer business models of Google, Amazon, Skype, Facebook and twitter.

Telco’s that are little ahead in their strategic thoughts have embarked on various transformation journeys suitable to their current business environment and are trying to adjust to new age reality. But this also brings another critical dimension here – Have they thought enough about “Security”?.  Telco’s find themselves vulnerable to growing risk brought by rapid changes in the technology evolution, changing business environment and requirement to stay competitive. Today they are facing security threats that would have been un-imaginable only a few years ago. Due to advent of new technologies and the convergence, currently happening between various industrial sectors such as telecommunications, broadcasting, information technologies, media content providers and consumer electronics, security threats have become much more eminent and some-times un-predictable. So it has become crucial to learn what significant impact security will bring in.

Lets’ discuss what exactly has changed and why

Gone are the days when Telecom industry was dominated by large and regulated monopolistic carriers. Till recent past technologies were often proprietary and complex with a very little or no chance of innovation. Telco’s started with plain transmission and switched PSTN voice services. Then came the Internet which changed the way the business is being done.

In my opinion, Internet opened new avenue of innovation with transparent and easy access to mass market. The era of Internet service providers (ISP) started in 90’s and still continuing. I credit this discovery spreading so fast because of one underlying fact - current service providers’ network could extend the internet to users by using PSTN services to every home. This short-circuited the time it would have taken for Internet to become so big phenomena today.  In early days carriers took the Internet as a distraction. However, as the nineties progressed, most of the carriers were having Internet services infrastructure. With internet being on the center stage of every Telco’s, it became carrier grade but still far away from the next generation need of carriers where they  wanted to host  even mission critical systems and futuristic services.  It finally resulted in formulating the next innovative path like LTE, NGN which standard bodies are trying to evolve.

I have tried summarizing the reasons for Telco’ constant change in landscape and how we have evolved to be in the era where we are right now. There are mainly four factors which are shaping these changes viz market, competency, convergence and technology.

Apart from self-explanatory drivers of change detailed above in diagram, one major factor I would like to elaborate is “long time to market” which is detrimental for provider’s business health. Gone are the days when resources where vertically aligned to cater to every new services. Duplicity of resources required in delivering a number of services cannot be sustained in long run. Essentially for every new service Telco had to plan every layer starting infra / service till application. This, added with non-standard interfaces, proprietary protocols etc. resulted in lack of service portfolio, leave apart the customization and flexibility in services. Today service provider expects transparent backbone which can support any service and same is true for upper layer of infrastructure stack for which I can see investment picking up towards SDP (Service delivery Platform) and NGOSS (next generation OSS).

Finally, I would say, everything boils down to cost efficient and profitable business model which can sustain in long run. Changing business requirements and fast pace of technology evolution is forcing the changes in Telco eco-system and market dynamics. To sustain and remain in business service providers are constantly trying to find new revenue generating model with lowest and efficient operational expenditure possible. If technology evolution can cater to this requirement Telco’s are bound to transform. Last but not the least, Convergence between telecom, media and entertainment is also another driving factor and is opening door for new and innovative service which no-body could have thought of earlier.

In the next part I will cover the digital value chain and will try to give some insight into changes happening there and who owns the bigger chunk. Till then happy reading.