#1: 5G - investment will breathe life back into the industry
2019 will be a year of industry resuscitation. I’m going to take a wild guess here, but I’d say that 5G messaging will be on just about every stand at Mobile World Congress 2019. And rightly so. The telecoms market has taken a bit of a beating in the last couple of years and many operators and vendors alike will be pinning their hopes on 5G.
The early motivators for operators to make these substantial investments in rolling out 5G are numerous. These include, but are not limited to, the need to keep up with the competition and extending to rolling out use cases like enhanced mobile broadband (eMBB) to fixed-wireless access (FWA), and providing the foundation for enterprise and consumer IoT. From a Digital BSS view point the main opportunities here will include enabling management and monetisation of the new services enabled by 5G, which can include new pricing options based on QoS and/or latency.
#2: 5G will mean operators get serious about the enterprise IoT market - but they’ll need partnerships for scale
The enterprise market has been woefully underserved by operators for years. However, the arrival of 5G will open a gigantic new market opportunity in 2019. Our recent industry survey revealed that IoT services (from enterprise, smart home and consumer) enabled by digital transformation and 5G will make up the top three revenue earners for future providers. New digital services will be key to unlocking these new sources of revenue and turning “basic” operators into true digital service providers (DSPs). Over time, digital services revenue will replace traditional telecoms revenues, with current estimations that service providers will generate $294 billion from digital services in 2019. This will increase to $462 billion in 2022.
Most service providers have started their digital transformation projects for this very reason - but there is still a long way to go and a lot to play for. Delivering on the business case for any new product or service needs a monetisation solution that can incorporate it easily and with much less cost than the revenue the product or service will provide. If operators are to be able to access this slice of the pie in 2019, they must be ready to partner to build the scale that this market will need.
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Partnering as part of IoT eco-systems in 2019 will require a very different mindset related to how partners are integrated. It will require standard and open APIs, to on-board partners and their catalogue of products - along with the ability to settle and share revenue across a partner eco-system; with elements of service assurance and the ability to identify and counter fraud thrown in for good measure.
#3: Open Source and Dev-Ops will drive the emergence of partnership models in Digital BSS
Operator and vendor co-development will move up a gear next year, as network transformation driven by open source, DevOps & Microservices continues apace. In 2019, this open approach to developing functions will provide the environment to turn traditional telecoms software development models on their head, working themselves towards the OSS/BSS layer.
Some large operators will develop their own bespoke solutions in-house using open source, employing agile development methodologies, which will see them increasing their developer headcount. However, many will not then benefit from the economies of scale afforded by working with vendors and will have to content with a high level of failure. Smart vendors will start to partner with operators instead, working with their developer teams to provide solutions that take advantage of open source, DevOps & Microservices through cloud native, Open Digital Architecture and digital APIs. This will give service providers the freedom from being constrained by a vendor’s rigid roadmap and release dates, and offer smaller providers cost effective, best of breed digital OSS/ BSS platforms.
#4: Digital assistants become mainstream - accelerating the use of AI for voice activated customer care and service management
IDC predicts that by 2020, 40% of commerce transactions will be enabled by conversational AI solutions. But we’d be even more bullish than that. In 2019 demand for voice activated virtual assistant systems will continue apace, driven by rising applications in sectors such as banking (especially useful for fraud and security) and automotive. Consumers will become even more comfortable digital assistants like Telefónica Aura, in turn accelerating the use of AI for voice activated customer care and service management in telecoms.
We’ll increasingly start to see AI tools that connect directly to the core of the network and BSS systems. These will allow customers to engage directly with the operator without other human interaction, and without the need for the customer to contact customer care or find the information in an app or on the website. We expect this to lead to significant cost savings for the service provider through a reduction in reliance on call centres and play a hugely important role in improving NPS/customer experience.
#5: As consumers become more aware about mis-use of personal data and security concerns, trust becomes an increasingly important attribute for operators - not just in selling digital services, but also in The consumer IOT/smart home market
Consumer trust is becoming more fragile by the day. The Facebook/Cambridge Analytica scandal took a surprising toll on consumer trust around the globe earlier this year and thrust digital companies and their use of personal data firmly into the limelight. This is going to have lasting effects on trust in OTT players and digital services in 2019.
Operators have traditionally protected subscriber data, while also collecting vast amounts of information - safely guarded - to understand the behaviors of each individual customer. This faltering consumer trust has created a window of opportunity for mobile operators around the world, as a direct result of their traditional role as the gatekeeper to their customer’s data - all the while OTTs have been intent on its monetisation.
This will throw up important considerations for mobile operators in offering their own digital services, as they must keep the protection of individuals’ personal data as a top priority. One area of paramount importance will be the Smart Home. Revenues currently make up a small portion of telecom operator revenue, but it is predicted that revenues will increase by 21.6% in 2019. Higher smart home device purchases will be the main driver of this and will lead to better engagement with operator services. Operators that offer compelling services while also staying true to their role as the gatekeeper will have the most success in this area.