Businesses the world over have been faced with needs to constantly adjust to digital innovations and total industry transformations. This has become especially applicable to living and working under pandemic-related conditions – and, now, post-pandemic. Communications and other service needs have evolved, along with consumption models in what is rapidly turning into a cloud-first world.
The network represents opportunities to build new revenue models and explore growth opportunities to leverage emerging technology and customer needs. What service providers are faced with is the challenge of combining the multiple opportunities that lie ahead into packaged, consumable solutions for their customers. Providers can’t be one-trick ponies – they need a stable of services and solutions to maximize the value of their networks and drive new revenue streams. In light of what CSPs are seeing take place and how that effects the tech landscape, Oracle has outlined a number of likely scenarios it sees playing out in the CSP (News - Alert) market in 2023 and beyond.
More CSPs will develop strategies to become platform companies in order to monetize their networks more innovatively.
5G, cloud and programmable networks are transforming how CSPs build and operate networks and services. Provided these networks are layered on top of modern business and operations systems, CSPs will finally have a powerful telco cloud and application stack that truly enables them to offer on-demand network services. For example, Vodafone (News - Alert) is already working on its Network as a Platform vision, and T-Mobile has launched IoT Developer Kit, leveraging Network as a Platform for innovation. As platform companies, CSPs will be able to offer on-demand network services, enabling enterprises to consume network services much in the same way that infrastructure, platform, and software applications are offered and consumed as services, and are paid for on a consumption basis. Most critically, the success of this transition can only be achieved with a modern automated orchestration and operations solution, along with charging and billing capabilities to monetize those services.
Costs will increasingly come under the scanner as CSPs maneuver through economic headwinds.
Expected economic uncertainties, geo-political issues, rising energy prices and higher inflation will likely cause consumers and enterprises to rein in expenses and cut costs. As a result, the overall telco ecosystem is likely to experience topline and cost pressures. There’s also an increased likelihood of CSPs increasing prices and deferring new, major investment decisions. However, many CSPs are also likely to accelerate existing transformation projects that deliver long-term operational efficiencies and cost-savings to safeguard themselves against current and future economic events.
More CSPs will reassess strategies to align for a Metaverse-focused future.
It will likely take years for the Metaverse’s vision to fully materialize, but some CSPs are already jostling for lucrative revenue opportunities. For example, SKTelecom has already launched Metaverse-based experiences, Ifland. On September 29, Telefonica conducted its first Metaverse Day, where it presented a strategy for journeying to the Metaverse. McKinsey estimates the total economic impact of the Metaverse will reach approximately $5 trillion by 2030. With this context in mind, more CSPs will assess their strategic plans from the perspectives of network investments, platform play and, even more importantly, the potential to fill an expanded role in bringing Metaverse-based services and solutions to consumers and enterprises.
The big cloud migration will accelerate, especially in the private cloud realm, as CSPs look for ways to balance competing priorities.
CSPs are in the midst of a significant to-the-cloud journey, and all indicators point to this accelerating in the coming years. However, CSPs also face an interesting conundrum when choosing the right type of cloud – public, private, or hybrid. The public cloud has been a very popular model for many IT workloads, but hybrid and homegrown private clouds have addressed a niche set of requirements. In 2023, CSPs are projected to increasingly consider private cloud options (like the Oracle Cloud@Customer) for OSS/BSS workloads as they try to balance sustaining high levels of agility, performance and scale (plus autonomous operations and the reduced infrastructure’s TCO of a public cloud) while also addressing the pressing requirements of data sovereignty, residency, and connectivity concerns.
Transformation programs that enable the journey to autonomous operations, in particular, will see accelerations of activity.
Higher levels of operations automation will be essential to not only transform the economics of operations, but also as critical parts of successful strategic goals such as platform company transitions, increasing service and business agility, and delivering superior customer experiences. The ultimate goal to achieve zero-touch, lights-out, autonomous operations provides a North Star, in a way, and any programs that facilitate and accelerate this journey are sure to see increased traction. Oracle Unified Operations has been conceived precisely to enable this vision, bringing together key solution pillars, Unified Orchestration, Unified Assurance and Unified Inventory and Topology.
Network digital twins enabled by real-time topology will start to become a reality in order to drive automation and efficiencies across the business.
Digital twins have been employed in other industries, such as automotive and manufacturing, to great effect. CSPs have a semblance of a network digital twin in their inventory systems, but the sheer number of systems, siloed data, poor data quality and frequency of updates have given them a bad reputation. However, with the emergence of technologies such as network telemetry, advanced data analytics based on ML and AI, and cloud-based data platforms, there is now a real opportunity to create a more unified, accurate, and near real-time network and service topology of the dynamic network and the services that ride on top of them. With this capability, CSPs will be able to create a true network digital twin, which will supercharge a plethora of use cases, such as intelligent network investments, efficient network design and planning, advanced service impact analysis, and automated operations.
CSPs will get creative with 5G pricing to improve ARPU.
Now that CSPs have launched 5G (with many planning 5G SA commercial launches), they’ll likely employ charging as an innovation platform to pioneer new pricing strategies for 5G in efforts to drive ARPU growth. In some regions (e.g., mature JPAC markets), the initial 5G ARPU bump has waned as network penetration has increased. As a result, CSPs in the region have begun embracing new 5G pricing strategies (such as speed tiers) in order to improve ARPU. This trend is likely to become more widespread as 5G SA and modern CCS enabling new pricing levers, enabling pricing based on 5G speeds and quality of services or experiences.
CSPs will reassess their billing solution roadmaps as they look to capitalize on 5G B2B monetization opportunities.
CSPs will gradually come to grips with the fact that existing billing solutions and the B2B customer experience do not entirely fit the complex requirements of enterprise customers, and are therefore a hindrance to 5G monetization. To mitigate these challenge, CSPs will need to put in place plans to transform their billing systems. Key areas of investment will include supporting new and more flexible B2B pricing and billing capabilities, improving partner settlement to enable B2B2X business models, supporting complex B2B account hierarchies, and moving to cloud-native architecture to improve scalability while increasing operational efficiency.
CSPs will accelerate partnerships with vertical industry players on use cases that go beyond connectivity, creating a springboard from which to leap towards becoming Industry Service Providers.
Enterprises have always been a lucrative market for CSPs, with most (if not all) of the Fortune 500 companies procuring connectivity services from leading CSPs. Some of these CSPs have made solid progress in enhancing their relationships by providing additional services with IoT, managed connectivity and security services, and more recently with mobile private networks. In most cases, though, these value-added services have still been connectivity-oriented, albeit while providing good revenue growth and margins. In 2023, CSPs will look to further expand their relationships to truly go beyond connectivity and assess how they can offer industry-specific solutions. Innovative CSPs will take initial steps towards becoming Industry Service Providers by combing the telco cloud, communications networking and monetization and operations applications, and industry applications, as well.
On the whole, while specifics are subject to change, CSPs are projected to generate greater value from their networks in 2023. More than ever, the idea of layering on value-added services to connectivity (e.g., being much more than merely a dumb pipe), must be part of every CSP’s strategy. In doing so, they’ll be positioned to deliver more to customers as fine-tuned solutions are leveraged and benefits are further maximized as they drive digital trasnsformation.
Edited by
Erik Linask
