Predicting or envisioning the future of something is not an easy task. If it is about the telecommunications industry, it is even harder as the amount of change taking place in the telecoms and technology fields today is unprecedented. The way this industry has re-shaped within the recent past actually raises the question as to whether the conventional industry we used to call as “Telecommunications Industry” still exists. Let’s look little closer as to what drives the change, what business problems exist today, how likely those business problems are going to be addressed and the type of transformation we can expect in the future in the telecommunications industry.

Consumer behavior

If we start from the consumer side, we can clearly see that the behavior patterns of all types of consumers, whether residential, business/enterprise/corporate, mobile or any other, has drastically changed. In fact the consumers have also transformed themselves to “producers” as well and hence the word “prosumer” – one that consumes and produces. With everything going digital, consumer engagement with telecommunications services has also become or expected to be digital. We can see digital transformations taking place in many fields including banking, finance, retail, education, health etc. But telecommunications filed seems to be lagging in getting in to digital, compared to the other fields.

Business problem

The uncontrollable change in the user expectations, market behaviors and the socio-economic  changes at large, together with other factors exert a huge pressure on traditional Telecom companies or Communications Service Providers (CSPs) to transform to Digital Service Providers (DSPs). A DSP is supposed to have all the engagements with the customer digitally (external) and use digital workflows (internal) to provide the expected services (or more correctly experience) to the customer.

If you look at the real business problem the CSPs have today, it is all about increasing cost and flattening revenues.

To support the increasing traffic, mainly driven by video (real and non-real time for entertainment and communication) – some 70% globally, CSPs need to make huge investments to build the required resources and capabilities in their networks, Data Centers (DCs) and related systems. As a result, the cost (both CAPEX and OPEX) curve is going up. However, the number of customers and the revenues / Average Revenue Per User (ARPU) are not increasing comparatively. In most of the markets, especially in mobile, the penetration rates have gone over 100% and are getting saturated.

Transformation

Addressing the decoupling of network traffic and operator revenue, requires either bringing the cost curve down (we cannot bring the traffic curve down) and/ or increasing the revenue curve up (it is difficult to increase the number of customers). This requires fundamental changes in the way CSPs strategize, architect, engineer, design, plan, implement and maintain their networks, DCs and systems.

The first such change was transforming the traditional or Old Generation Networks (OGNs) based on legacy technologies to Next Generation Networks (NGNs) with packet technologies based on Internet Protocol (IP). The networks need to be further transformed to the next level of Software Generation Network (SGN). It is only then the CSPs can transform themselves to DSPs easily.

The future control and management of everything, including telecommunication systems are done through software as it gives greater flexibility and agility in doing thing more efficiently and effectively than directly doing them on hardware. This allows on one hand to lower the Total Cost of Ownership (TCO) and on the other hand and more importantly to bring in new services and products to the market quicker helping to increase ARPU.

We can also see the traditional boundaries of Information technology (IT) and Communications Technology (CT) is getting blurred creating new human resource requirements like computication engineers who can handle both computing (including coding and programming) and communication.

CSP will also use concepts like machine learning, Artificial Intelligence (AI) and big data extensively in future networks and systems. 

Virtualization and cloud

Virtualization and cloud are two indispensable concepts in future telecom networks. Virtualization simply means emulating hardware in software, whereby effectively and efficiently using a common hardware resource pool. This has brought immense benefits to the IT world and the very success of all the web scale companies (Ex:- Amazon, Alibaba, Facebook, Google, etc.) is on virtualization.

Cloud computing is doing computing work on a remote computer. This eliminates the requirement of maintaining dedicated computing resources locally for specific requirements. With cloud computing, the required resources can be purchased / consumed on demand.

Virtualization is always used in all cloud computing platforms. While these concepts actually originate form IT world, due to the proven benefit, CSPs are also adopting these in their networks and systems in their journey to become DSPs.

Places to People to Things

An industry which was started over 150 years ago by first connecting places and then connecting people has now stepping in to an era of connecting “things”. These “things” could be anything ranging from wearables, household items, vehicles, drones, medical equipment etc. This has given rise to the Internet of Things (IoT) or Internet of Everything (IoE) and Machine to Machine (M2M) communications. It is expected that by 2020, some 20 to 100 Billion devices will be connected through IoT. Most of the devises used in smart concepts like smart education, smart transportation, smart cities etc. will be part of IoT/IoE.

Managing, controlling and ensuring the security of these devices will be a real challenge and this industry is now working and researching on possible solutions.

Wireless as a ubiquitous access medium

As humans we like to be wireless from the day we were born. The future access for places, people and devices will be mostly on wireless and technologies like advanced Wireless Fidelity (Wi-Fi) and upcoming 5th Generation (5G) will play key roles in this regard. However, wired technologies like optical fiber will also play a vital role in providing required backhauling for all the access networks.

Conclusion

The future of telecommunications industry gives both opportunities and challenges to all industry stake holders. Multiple factors contribute the present unprecedented change and we can expect nothing but more change in the future. More new concepts and technologies in addition to the ones available today, will be introduced and CSP/DSPs will be expected to adopt quickly and change themselves. More interesting times will surely be ahead and we also need to keep our eyes wide open.

Note: This article was originally appeared on INSPIRE (The MBA Magazine) of MBA Association Peradeniya, Sri Lanka on 16th December 2017