Industry must identify the "crown jewels" of most value to OTT providers
Telecoms service providers must adapt to a "new ecosystem" or face going "under the floor", according to Martin Creaner, CEO of the TM Forum.
In a speech that Mobile Europe understands will be widely similar to his address to Management World next week, Creaner said that competition and the arrival of new service delivery and business models means that the industry is facing a radical restructuring. Only those who understand the value they can bring to the new ecosystem will survive.
Creaner said that the TM Forum had simplified the future market to three general layers: a core computing and communications infrastructure layer, a digital services provision layer, and a retail layer.
There will be only a very limited number of players who can hope to operate in a vertically integrated manner across all three layers. Everyone else will need to decide where they fit, Creaner said.
He likened the new environment to a land grab – with telecoms operators, service providers, "OTT" players and retailers all rushing to stake their claims. Telcos must assess their own strengths, or core competencies, and decide where to plant their stake, Creaner said.
"It's about staking a claim and working out what plot you want to go after and how you're going to get there," he said.
So where will operators look to place their stakes? Some, but not many (Creaner posited 20-25) will become pure infrastructure providers, effectively becoming the "dumb pipe". This promises "reasonable margins if you can get the economies of scale," Creaner said. Certainly, having 1,200 service providers owning and operating networks is "unsustainable", he added.
Others will be forced into a B2B model somewhere else in the new "value web" (not value chain) as a result of being cut out of direct retail/service relationships with consumers. This is the vision that sees operators take advantage, in partnership, of what many now call the OTT players. An example could be an operator providing its billing system, customer care, or revenue assurance processes for third party use, and taking a share of those third party revenues as a result.
This vision means that operators need to "have a core set of crown jewels they can offer," Creaner said. "It's an old saying, but it's still true. If you want to take part in the value chain, then you need to provide value," Creaner said.
The TM Forum outlines the six core competencies that CSPs require in this "emerging ecosystem" as security, big data management and analytics (in real time), CEM, product lifecycle management, revenue management and infrastructure management.
In many of these areas, operators actually hold an advantage, Creaner said. For example, "Even though we beat the industry up about CEM, we [telcos] are actually not that bad at it," he said. "I think this industry will will dominate this area [CEM] – it has invested a huge amount in it and is on an upward curve in terms of how it manages the customer experience."
To that end, Creaner also warned against operators "de-skilling" themselves too much. "Operators are facing the prospect of deskilling themselves so far that they risk becoming essentially a bank that funds services other deliver. They need ask themselves what are the key processes that they need to retain as a core competency. If your retail business is being stripped away and you are offloading core competencies, what do you have? Be careful."
Creaner was speaking to an audience of operators from over 30 countries at a customer event being held by revenue and business assurance software provider WeDo Technologies.
His theme accorded with a product development roadmap given by WeDo's Joao Resende, VP for Product Development, Management & Support. Resende outlined five key trends in the industry – mobile money, M2M, cloud services, M2M and LTE – and said that each of them added complexity and scale in terms of the number of players in the market and the number of possible transactions.
That meant there is going to be a need for validation, mediation and assurance across a much wider number of parties, with operators processing a far greater number of events and tranactions.
These five market drivers would themselves create three main business process challenges for operators. The first of these is the need to make sense of data, similar to the big data analytics competency that Creaner referenced. Resende said operators will be searching for "perishable needles" of valuable data in an ever growing haystack of data. The second business need is for risk management that takes account of the fact that control of services will move away from being a centralised process. OTT competition in particular relocates the control of service delivery away from an operators' core, whereas mobile money and M2M services both introduce a much longer chain of service providers and stakeholders. These new risk profiles for operators to take account of, Resende said. The third area of business process challenge is in business efficiency. This is about having information where and when you need it, to the right people.
This vision is driving WeDo Technologies' product development, Resende said.