If the pandemic taught the Telecom industry anything, it’s that a digital transformation is the key to their future survival. With the sheer number of new digital services coming onto the market and the subsequent demand that it will place on the mobile network, 2022 will be a year of network transformation, service innovation and security advancements.
#1: Digital Transformation at the Network Edge
While the concept of moving compute and service to the networks edge is certainly not new, with the arrival of 5G, MNOs will be faced with the need to redesign their network infrastructure in order to support the superior performance, advanced security and new services that are necessary for future relevancy and growth. To take full advantage of the opportunities presented by 5G, moving from standard virtual network function (VNF) to a true cloud-native, distributed architecture is essential. While VNF has helped move MNOs closer to digital transformation, it does not provide the agility needed to deliver new 5G services.
A cloud-native, microservices solution evolves the standard virtualized network architecture by introducing service-based architecture (SBA) in the core to optimize resources and deliver exceptional service performance. Using multi-access edge computing (MEC), traffic and services can then easily be moved from a centralized cloud to the edge(s) of the network to provide subscribers with personalized experiences and services, as well as superior network performance.
For operators, there is an opportunity to deploy MEC so that it concurrently distributes a management and orchestration layer to provide network efficiency and responsiveness, while also supporting the needs of enterprises. By 2025, Gartner predicts that three-quarters of enterprise-generated data will be created and processed at the edge – outside a traditional centralized data center or cloud [1]. With this shift, enterprise needs have become substantially more important to the MNO business. For example, over 23% of Verizon’s Q3 2021 revenues were attributable to this business segment ($7.7B of $32.9B total) [2].
As data usage continues to surge and demand for advanced mobile services increases multi-fold, network transformation is crucial for MNOs to realize the 5G use cases that will enable them to drive new revenue-generating business models.
#2: Acceleration of Enterprise Omni-Channel Messaging
During the last two decades we’ve seen a sharp rise in the availability of messaging channels like WhatsApp, Facebook Messenger, Skype, RCS, Apple Business Messaging, etc. The easy accessibility of these channels has created an expectation among consumers for omni-channel business messaging. Consumers want to interact seamlessly with businesses on all messaging channels and businesses are seeing the value in reaching them where they are. In fact, 83% of consumers want personalized product and service recommendations and shopping experiences that span multiple channels [3].
With enterprise omnichannel, the goal is to provide exceptional customer experiences by enabling seamless interactions with businesses across digital channels. MNOs know that they need new ways to increase profitability and provide exceptional customer service, and the pandemic has only accelerated the need to think beyond the traditional SMS channel. Although SMS is still the most well-known and ubiquitous messaging channel available, it is by far the least capable when it comes to features compared to other messaging channels available today.
Mobile commerce via smartphone now accounts for 79.1% of all online shopping in the US, compared with 49% during 2019. These are staggering numbers and a major shift in consumer habits that were undoubtedly driven, at least in part, by the pandemic. This shift provides MNOs with an opportunity to take advantage of the growth in mobile commerce and omni-channel messaging by applying it to their own business strategies. If MNOs are successful at delivering products and services seamlessly between messaging channels, they will be able to improve churn, grow brand loyalty and ultimately drive revenue.
#3: Securing the Short Message Service (SMS) Channel
No matter where you live in the world, if you own a mobile phone, then you’ve experienced issues related to messaging fraud and security. Attacks on the SMS channel have proliferated in the form of spam, smishing, access hacking, grey routes, SIM farms and several more. While these threats have occurred since the launch of SMS P2P (person-to-person) messaging, as the channel has evolved to include A2P (application-to-person) messaging, the channel has become more exploited by fraudsters.
With an average message open rate above 98%, businesses recognize that the operator-controlled SMS channel is still the most ubiquitous way to communicate with their customers. As digital technology advances and more 5G ‘connected things’ come into the market, operator revenues from global A2P messaging traffic are expected to increase from $39.6 billion in 2020 to $50 billion by 2025, representing a growth rate of 26 percent [4]. If MNOs want to gain back the revenue they’ve lost from illegitimate activity in the SMS channel, then they must get serious about securing it.
One of the ways that we will see MNOs improve SMS security, reduce SMS fraud, and capitalize on the monetization of enterprise messaging is by investing in a next-generation SMS firewall. Using the latest technologies in AI and machine learning algorithms for messaging intelligence, next generation firewalls block unwanted SMS traffic and help safeguard subscribers from the fraudulent attacks mentioned earlier.
Another way that MNOs can combat SMS fraud is to utilize blockchain to ensure that sensitive information in messaging transactions are never stored on just one database; blockchains utilize individual blocks linked by cryptography to store sensitive data. As the new data is received, it is placed in a new block and then linked to the previous block to ensure the information remains in sequential order. The main benefit of blockchain is that it ensures that these transactions are unalterable, permanent, and secure. However, in the near future we will most likely see blockchain provide additional opportunities for MNOs beyond fraud management and process efficiency in adjacent services such as 5G enablement and IoT connectivity.
Digital Transformation is absolutely critical to the success and evolution of the Telecom industry. Driven by overall market trends and conditions, not the least of which is the pandemic, digital transformation will manifest itself in a number of ways including a continued push of services and capabilities to the network edge, the acceleration of the omni-channel space for A2P traffic, and the securing of the tried-and-true SMS channel.
[1] Gartner. What edge computing means for infrastructure and operations leaders.
[2] Verizon. Financial earnings summary.
[3] McKinsey & Company, Issue 2, Winter 2020: Future of retail operations: Winning in a digital era.
[4] Juniper Research. SMS traffic fraud to drop by 75 percent.
