As the telecom industry heads to Barcelona, it is clear that one of the most pressing issues for most executives is the challenging landscape CSPs find themselves in today. They are all looking for new sources of revenue – and that transcends beyond just connectivity and into new areas where they can expand, bring differentiated products and offer new value to customers. Those that can achieve this will be well positioned for the future, while others who don’t invest in the new strategies and business models needed to make that transition will be relegated to being just a utility company with no room for growth and expansion.
With this overarching theme in mind, we curated what we think will be the hottest trends at the show.
#1: The impact the economic and labor climate is having on CSPs
The economic and labor climate has been having a significant impact on the communications industry at a time when their costs are already rising. CSPs are major employers and now more than ever, labor costs are being driven upward by low unemployment, continued labor shortages and the significant bargaining that creates. Energy costs are also still high, which is an important factor since telecom networks account for 2-3% of global energy use.
Without the ability to increase prices for customers (i.e., pricing power), revenue growth has stalled. When all these other costs are rising, it essentially means CSPs are in a margin squeeze and that’s a problem for them. At the same time, they have to build 5G and roll out fiber across their footprints. The road ahead will be tough, but there are areas where CSPs can look for growth:
- SMB: SMBs need IT support and CSPs can work with their ecosystem to provide packaged connectivity, IT services and software.
- Enterprise: Most major companies are pivoting their businesses to provide new, advanced products, businesses and services using new methods of connectivity. There is an opportunity for CSPs to play a broader role than just provide connectivity, but rather offer IT services more broadly.
- Consumer: There is an opportunity for CSPs to better use their ecosystem and data to create a greater set of products and services such as broadband, security, smart home, and advertising. For example, physical retail stores haven’t been updated in the last two decades and they are in dire need of more personalized experiences, using technology such as the Metaverse to bring digital experiences to the customer.
- Business transformation: CSPs are starting to rethink their businesses and a number of telecoms have started to spin out parts of their businesses and to attract outside investors. So far, investors have loved these efforts, and telcos have been able get the finances they need to create advanced networks needed to succeed in the long-term.
- Technology reinvention: The path towards the future is all about more connectivity, more services, more devices and interactivity – and this increases the need for faster, better networks.
#2: 5G: Moving from an evolution to a revolution?
5G has been the core theme of MWC for several years now, and this year we’re going to hear more about the progress that’s been made. This includes:
- Densification of the networks. Now that the networks are in place, CSPs will expand coverage, particularly mid-band.
- Success to date. Discussions about how FWA has been one of the major success stories and has enabled broadband connectivity to rural areas.
- New partnerships. This year, CSPs will look at multi-access edge computing (MEC) to advance in the enterprise market, so expect to hear about new and expanded partnerships with hyperscalers.
- New operating models. The adoption of 5G combined with cloud technology, AI/ML, security, and open interfaces will define new operating models.
- Monetizing 5G. In the consumer space, conversations will centralize on monetization of 5G. We expect to see demos in the areas of gaming and retail at the show, where businesses can begin making steps to benefit from the Metaverse.
- Managing increasingly complex environments. As 5G environments open up to new multi-vendor technologies in 5G, cloud and edge, and ecosystems become even more complex, it’s critical that while all parties are pulling in the same direction, that there is one party managing all others.
#3: Moving sustainability up the CSP agenda
CSPs are faced with the pressure to reduce their energy consumption and waste at the same time as making massive investments in new spectrum and infrastructure. They must consider five priority areas for investment in energy management and operations:
- Green energy management & green networks - Energy management is critical in managing cost, reducing carbon emission and energy consumption. Having holistic views of energy sources with data driven tools in pricing, and utilization helps generate insights about the overall organization of the network, network operating expenses, and help to find ways to integrate more renewables, remedy inefficiencies, and optimize buying schemes.
- Green operations with deep tech know-how in AI & ESG platform –CSPs need to prioritize key operations levers to drive efficiencies in their day to day operations model from technology & IT, real estate, business operations and product & services beyond just energy management. They need to leverage software and hardware skills to leverage more efficient chips, cloud network infrastructure, and other ESG software management platforms that can help integrate sustainability into daily business decisions powered by AI.
- Green investment & circular operations -Investment in products, procurement, innovation, and supply chain can help to infuse sustainability in the full lifecycle of a product. A comprehensive analysis of these areas will help to create the strongest business case for sustainable transformation and innovation.
- Green culture and transformative ways of working -To maximize investments, there must be a comprehensive cultural shift within the organization. This starts with internal leadership, focused on building new capabilities, guiding teams, and championing investments in new tools, data management and processes so the workforce is equipped to implement change.
- Green scorecard -By building the transparency of a data-driven approach, CSPs around the world will drive impactful change towards their net zero journey in integrating the “green” into their build their core business, deepen customer relationships, and position themselves for sustainable innovation in the future.
#4: Industry restructuring: are the parts more valuable than the whole?
Given the substantial pressures occurring as margins are squeezed, joined with the need to roll out fiber and 5G networks, some CSPs have launched efforts to structurally separate parts of their businesses. Many others have chosen to spinout their tower businesses to help CSPs find a cost-effective way to roll out their 5G network. Other CSPs have made more fundamental changes in which they have undertaken splits of their network and services business into NetCo/ServCo. Alternatively, others may go the route of consolidating their digital service business and cutting non-core activities into separate businesses or eliminating them entirely. Benefits include higher asset utilization, opportunities to attract investors and increased management focus.
#5: The future of networks
Virtualization, cloudification, disaggregation and open interfaces are driving significant shifts in how networks are designed, deployed, and operated. High-speed, low-latency data connectivity and rich, immersive digital content is influencing and shaping the future of societies and industries. Today’s networks must be able to meet a wide, rapidly changing set of needs as well as provide employees with seamless connectivity to data, applications and platforms from anywhere and everyone.
CSPs must transform and build capabilities across customer experience, technology stacks and network, plus have operating models capable of supporting cloud-native public networks, NaaS, private network deployments and new edge services. At the same time, CSPs need to think about the networks even further into the future.
The metaverse will be a competitive advantage to companies, and they need to have the network and 5G in place to support it. The network must be symmetrical, with extremely low latency, and be software defined and programmable to scale up and down as needed. So, it’s important that CSPs aren’t just thinking about the networks they need today, tomorrow or next year, but where future demand will come from and prepare now so they are ready.
The future is here and we look forward to seeing it discussed in Barcelona! See you there!
