Guest Editorial: Fulfil the Service Provider Destiny

February 11, 2021

Written by Akil Chomoko

By Akil Chomoko, CMO, MDS Global

I’m not sure when the term ‘service provider’ came into common usage in the communications industry.  It probably dates to the rise of the Internet and the realisation among telcos that they did not want to be seen purely as ‘operators’ or ‘carriers’ any longer. The term Internet Service Provider had come into common currency and being a Communications Service Provider seemed a much better place to be from an investment point of view.

But the truth is that, although the description was gaining currency, the reality was lagging behind. In fact, in the vast majority of cases, the only ‘service’ the communications provider was delivering was simple connectivity.  Sure, connectivity could come in different flavours of speed, or different bundles of time, but the reality was the ‘service’ was largely just a connection.

Without rehashing the tired old arguments about dumb pipes and ‘over-the-top’ application providers, a lot of the excitement around what you could do with this connectivity – as well as the bulk of the incremental service revenue – was going to application service providers who were not telcos but could ride on the back of the telco infrastructure investment.

Put simply, if you were a business such as Skype or Spotify, every time the operator invested in improving the network, your service got better, your appeal got broader and your business benefitted. Users of those services just needed a connection.  Sure, operators could take a service like Spotify and bundle it into a special tariff at a higher price and call Spotify a partner, but all we are really talking about is Spotify looking to expand its base using the operator’s network and giving up some revenue to make that happen.

But the advent of 5G can change that dynamic.

A Fresh Start

With 5G, and later 6G, the mobile operators can finally and truly become service providers.  They can transition from simply being network operators to being companies that operate a network of different services. The reason for this is simple – 5G and 6G will be new breeds of network that can provide different types and standards of services to different customers at the same time and even in the same place.

When the network service is highly configurable and can be tailored to an exact requirement and precise location, the operator becomes fully entwined with the service itself and not simply the connection. Especially in the enterprise market environment.

This ability of the network to be exactly what each of its individual enterprise customers want it or need it to be should be the catalyst that completely changes the service provision business, from the operator’s perspective, forever. These advanced networks will require operators to rethink how, and to whom, they sell their services. In addition, rather than simply selling advanced connectivity, they will need to really work with a partner community to co-create and commission 5G services that will meet the needs of specific industries and individual vertical market customers.

This is not simply a revenue sharing partnership model or a process of selling discrete building blocks for customers or third parties to integrate into finished services – this is about an opportunity to sell complete, tailor-made services built for an identified market sector purpose. It’s no longer selling a standard network connection; it’s about providing an end-to-end service requiring specialist network configuration and managing the customer relationship.

There has been a lot of talk about digital transformation among businesses and the operator community over the last few years, but this is actually what digital transformation should look like – being able to software configure your network to meet a specific need, being able to give your partners and your enterprise customers the ability to software configure the services they require, and being able to software configure your business support systems so that you can make the most of all the revenue opportunities.

What’s more, this change shouldn’t just be about future networks because it can also deliver results today. Last year we commissioned a report from researchers at STL Partners to look at the impact switching to digital BSS systems could have on operator profitability today.  

Among a host of findings, STL discovered that a digital BSS solution which allowed automated service configuration – controlled but open access to the system for customers or partners to self-select and personalise the level of service they require – could save operators some 9.1 per cent in sales and general admin costs, as well as delivering a revenue boost of around 2.4 per cent. 

Even with today’s relatively standardised network services, where the opportunities for customisation are more limited than they will be in a 5G world, tailoring solutions for each enterprise customer without automation is grossly inefficient and labour intensive. It therefore can’t be sensibly offered. Switching to an automated, self-service solution, enables this flexibility today and lays the groundwork for the advanced services made possible by 5G and 6G networks.

In total, STL found that switching to digital BSS solutions and implementing greater use of AI and machine learning to analyse and understand enterprise customer behaviour could contribute to a 30 per cent hike in operator profitability over a three-year period.

Partnership and Curation

But perhaps the most important element of digitising BSS systems would be that ability to more easily integrate third party specialist partners into the operator’s ecosystem.  For some of the key, potentially high value, markets that they will want to address, service providers will need to identify partners that we are calling ‘business curators’. These curators are likely to be stakeholders within that market that operators can work with in a true partnership to co-create solutions that will appeal to that sector.

This type of approach builds on the digital BSS philosophy of opening up and automating Configure Price Quote (CPQ) systems so that partners can choose and build their own services.  However, it adds further market expertise and specialist support into the mix to create better business services.

There’s a multi-level example of this happening right now in Mexico. It begins with a company called VADSA setting themselves up as an enabler of mobile virtual network operators (MVNOs).  VADSA has the airtime capacity to sell on a physical network, and it can provide the digital business and operational control systems the MVNO requires.  This means the new operator can simply concentrate on its brand and its sales proposition and get to market quickly and with little fuss.

Exis Telecom is a new Mexican MVNO that has taken advantage of the VADSA set-up. But rather than simply enter the country’s crowded operator market, Exis has identified specific services it wants to sell, and the specialist business partners required to build and deliver them.  As a result, Exis Telecom enters the Mexican market as a specialist provider of a range of consumer services that include wireless home security systems, fintech-based digital payments and mobile banking solutions. Exis is launching these solutions initially on its 4G network, but the lessons are there for all to see – they are not selling network connectivity, they are selling specific services built on the network. 

The advent of 5G and 6G networks will add even more momentum and market incentive to this changing operator service proposition. This is the final destination of the journey through the Gs of mobile technology – the mobile network as the enabler for a range of operator designed, configured, and provisioned services.  And how ready operators are for that destination, will be determine by the steps they are taking on the journey right now.

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