Telecom companies are under increasing pressure from all sides – growing data usage and requirement for unlimited, high speed data puts their revenues under pressure, the OTT onslaught puts their business model under pressure, increasing regulatory costs and the need to roll out the latest network means increased capital expenditure.
To ward off these challenges, cash rich MNOs across the globe have already embarked on acquisitions, mergers and changing of business models in order to increase their revenues. With a strategy to monetize content, Comcast bought over Universal studios, Verizon bought Yahoo and Reliance Jio is making a big bang with its complete suite of content based products – some home grown, some acquired through the years. However, here is a contrarian point of view – slightly dated (2011) which talks about how content\entertainment won’t be enough to make a significant difference to telecom companies’ revenues going forward.
There is no silver bullet to solve all the problems faced by CSPs. Multiple strategies need to be implemented to help telecom companies generate more revenues. The business model of telecom companies is bound to change which will in turn impact their business and application architecture. While change is inevitable, for most large organizations, gradual change is desirable vis a vis complete, complex transformations.
One of the strategies to increase revenues should be to leverage TMForum’s OpenAPIs by using the different products available in the market like Apigee, OCSG etc.
Network as a Service
One overarching strategy could be to use the network of a CSP and provide it to B2B customers as a service. As Dr. Lester Thomas, Chief Systems Architect, Vodafone Group, commented,
“One lesson from hyper-scale Internet companies is that APIs and platforms allow the creation of a standards-based ecosystem, while enabling innovation in the implementation. A critical advantage of platforms and APIs is that they provide an evolutionary path from the current telco operating model to the future Network-as-a-Service model.” With the maturing of SDN and NFV technologies it will soon be more easier to provide Network as a Service. Implementing technologies like blockchain to implement smart contracts might necessitate a huge change in the telecom industry. It is also important that telecom operators get together to break the device manufacturers’ hegemony of putting the cart before the horse. A redesigning of smartphones could possibly revolutionize the telecom industry. Redesigned communication devices, coupled with smart contracts and SDN might help change the telecom world forever.
IT as a Service
Telecom companies can also earn by providing their IT infrastructure as a service – primarily to MVNOs – though there could be better use cases too. Cloud billing, cloud CRM applications can help enable network agnostic prepaid\real time billing for service providers. Currently it is MVNEs which are filling this gap and providing for the requirements of quickly and easily enabling MVNOs on their or other MNO networks. If telecom companies’ IT departments could become more agile and efficient, they might be able to provide services to more MVNOs, thereby earning revenues for their company.
Leveraging certain functionality of the overall IT infrastructure by exposing APIs is also another method to increase revenues. TMForum has detailed out OpenAPIs which could be leveraged for the same.
Here are a few use cases:
Authentication and authorization services: User authentication and identity management services could be leveraged by operators to provide different types of services to customers. Detailed customer data and KYC information can become the moat which separates the telecom companies from competition.
Identity validation helped Telenor Pakistan in increasing their revenues from Microfinance Services. Identity Management services implemented by using the Aadhar card in India helped Reliance Jio onboard nearly $$100 million customers in less than 6 months
since launch. $$ The Govt. of India is asking smartphone manufacturers to manufacture devices with inbuilt biometric functions at cheaper costs.
Billing APIs: A lot of services provided through the telecom partners are billed directly to the customer by enabling billing APIs. WiFi access using Ozone in India, streaming services like iFlix and Yonder in South East Asia, Netflix, Spotify in the US and Europe etc.
Messaging APIs: Allowing different applications to use the messaging services of the service provider and send SMSes to their target audiences. This can be further expanded to include USSD based push and pull messaging too. Some WiFi service providers can use the location API and messaging APIs and send messages to a user to use their WiFi connection which in turn will be billed in his\her phone bill.
TMForum’s OpenAPI standard also lists out other APIs for functions such as Trouble Ticket, Customer Management, Product Catalog, Product Inventory, Product Ordering, Billing Management, Party Management, SLA Management, Usage Management and Performance Management.
Telecom Companies as Platforms
Another method of increasing revenues is to act as a platform for willing partners and consumers. In their book, Platform Revolution, Geoffrey G. Parker, Marshall W. Van Alstyne and Sangeet Paul Choudary, define a platform as:
“a business based on enabling value-creating interactions between external producers and consumers. The platform provides an open, participative infrastructure for these interactions and sets governance conditions for them. The platform’s overarching purpose is to consummate matches among users and facilitate the exchange of goods, services or social currency, thereby enabling value creation for all participants.” Telecom companies are best positioned to become the defacto platform for many products as well as services since they already have a captive user base and simplified billing facilities. This can be anything from location based delivery services, parking services, content hosting and billing services etc.
Best Operators are those who are the Best Partners
A simple way to look at platform as a service by telcos currently is to look at video and audio streaming services
like iFlix, Amazon Prime, Netflix etc. Telcos gain from partnering with these OTT providers by providing them access to their billing APIs apart from their marketing reach to customers and cloud data capabilities. The end user benefits due to easier and sometimes cheaper access to these services resulting in customer loyalty. The ability to partner easily with OTT providers is the only way that telcos can really hope to ride the wave of OTT success globally. This is exactly what Klaus Newen writes in his article on how to survive the OTT invasion – “In the near future the best operators are those who are the best partners”
Exposing APIs, creating platforms and partnering with OTTs are the themes that should drive the telecom market in the near future. All these initiatives aren’t fundamentally disruptive but rather incremental in nature. And at the basis of all these initiatives is a single architectural pattern: microservices. Microservices can be implemented in different ways and we will try and understand the different design patterns which could help drive this change for telecom architectures.