Tag: automation

Telco digital twins: Cool tech or real value?

Definition of a digital twin

Digital twin is a familiar term with a well-known definition in industrial settings. However, in a telco setting it is useful to define what it is and how it differs from a standard piece of modelling. This research discusses the definition of a digital twin and concludes with a detailed taxonomy.

An archetypical digital twin:

  • models a single entity/system (for example, a cell site).
  • creates a digital representation of this entity/system, which can be either a physical object, process, organisation, person or abstraction (details of the cell-site topology or the part numbers of components that make up the site).
  • has exactly one twin per thing (each cell site can be modelled separately).
  • updates (either continuously, intermittently or as needed) to mirror the current state of this thing. For example, the cell sitescurrent performance given customer behavior.

In addition:

  • multiple digital twins can be aggregated to form a composite view (the impact of network changes on cell sitesin an area).
  • the data coming into the digital twin can drive various types of analytics (typically digital simulations and models) within the twin itself – or could transit from one or multiple digital twins to a third-party application (for example, capacity management analytics).
  • the resulting analysis has a range of immediate uses, such as feeding into downstream actuators, or it can be stored for future use, for instance mimicking scenarios for testingwithout affecting any live applications.
  • a digital twin is directly linked to the original, which means it can enable a two-way interaction. Not only can a twin allow others to read its own data, but it can transmit questions or commands back to the original asset.

Enter your details below to download an extract of the report

What is the purpose of a digital twin?

This research uses the phrase “archetypical twin” to describe the most mature twin category, which can be found in manufacturing, operations, construction, maintenance and operating environments. These have been around in different levels of sophistication for the last 10 years or so and are expected to be widely available and mature in the next five years. Their main purpose is to act as a proxy for an asset, so that applications wanting data about the asset can connect directly to the digital twin rather than having to connect directly with the asset. In these environments, digital twins tend to be deployed for expensive and complex equipment which needs to operate efficiently and without significant down time. For example, jet engines or other complex equipment. In the telco, the most immediate use case for an archetypical twin is to model the cell tower and associated Radio Access Network (RAN) electronics and supporting equipment.

The adoption of digital twins should be seen as an evolution from today’s AI models

digital-twins-evolution-of-todays-ai-models-stl-partners

*See report for detailed graphic.

Source: STL Partners

 

At the other end of the maturity curve from the archetypical twin, is the “digital twin of the organisation” (DTO). This is a virtual model of a department, business unit, organisation or whole enterprise that management can use to support specific financial or other decision-making processes. It uses the same design pattern and thinking of a twin of a physical object but brings in a variety of operational or contextual data to model a “non-physical” thing. In interviews for this research, the consensus was that these were not an initial priority for telcos and, indeed, conceptually it was not totally clear whether the benefits make them a must-have for telcos in the mid-term either.

As the telecoms industry is still in the exploratory and trial phase with digital twins, there are a series of initial deployments which, when looked at, raise a somewhat semantic question about whether a digital representation of an asset (for example, a network function) or a system (for example, a core network) is really a digital twin or actually just an organic development of AI models that have been used in telcos for some time. Referring to this as the “digital twin/model” continuum, the graphic above shows the characteristics of an archetypical twin compared to that of a typical model.

The most important takeaway from this graphic are the factors on the right-hand side that make a digital twin potentially much more complex and resource hungry than a model. How important it is to distinguish an archetypical twin from a hybrid digital twin/model may come down to “marketing creep”, where deployments tend to get described as digital twins whether they exhibit many of the features of the archtypical twin or not. This creep will be exacerbated by telcos’ needs, which are not primarily focused on emulating physical assets such as engines or robots but on monitoring complex processes (for example, networks), which have individual assets (for example, network functions, physical equipment) that may not need as much detailed monitoring as individual components in an airplane engine. As a result, the telecoms industry could deploy digital twin/models far more extensively than full digital twins.

Table of contents

  • Executive Summary
    • Choosing where to start
    • Complexity: The biggest short-term barrier
    • Building an early-days digital twin portfolio
  • Introduction
    • Definition of a digital twin
    • What is the purpose of a digital twin?
    • A digital twin taxonomy
  • Planning a digital twin deployment
    • Network testing
    • Radio and network planning
    • Cell site management
    • KPIs for network management
    • Fraud prediction
    • Product catalogue
    • Digital twins within partner ecosystems
    • Digital twins of services
    • Data for customer digital twins
    • Customer experience messaging
    • Vertical-specific digital twins
  • Drivers and barriers to uptake of digital twins
    • Drivers
    • Barriers
  • Conclusion: Creating a digital twin strategy
    • Immediate strategy for day 1 deployment
    • Long-term strategy

Related research

Enter your details below to download an extract of the report

MWC 2023: You are now in a new industry

The birth of a new sector: “Connected Technologies”

Mobile World Congress (MWC) is the world’s biggest showcase for the mobile telecoms industry. MWC 2023 marked the second year back to full scale after COVID disruptions. With 88k visitors, 2,400 exhibitors and 1,000 speakers it did not quite reach pre-COVID heights, but remained an enormous scale event. Notably, 56% of visitors came from industries adjacent to the core mobile ecosystem, reflecting STL’s view that we are now in a new industry with a diverse range of players delivering connected technologies.

With such scale It can be difficult to find the significant messages through the noise. STL’s research team attended the event in full force, and we each focused on a specific topic. In this report we distil what we saw at MWC 2023 and what we think it means for telecoms operators, technology companies and new players entering the industry.

Enter your details below to download an extract of the report

STL Partners research team at MWC 2023

STL-Partners-MWC23-research-team

The diversity of companies attending and of applications demonstrated at MWC23 illustrated that the business being conducted is no longer the delivery of mobile communications. It is addressing a broader goal that we’ve described as the Coordination Age. This is the use of connected technologies to help a wide range of customers make better use of their resources.

The centrality of the GSMA Open Gateway announcement in discussions was one harbinger of the new model. The point of the APIs is to enable other players to access and use telecoms resources more automatically and rapidly, rather than through lengthy and complex bespoke processes. It starts to open many new business model opportunities across the economy. To steal the words of John Antanaitis, VP Global Portfolio Marketing at Vonage, APIs are “a small key to a big door”.

Other examples from MWC 2023 underlining the transition of “telecommunications” to a sector with new boundaries and new functions include:

  • The centrality of ecosystems and partnerships, which fundamentally serve to connect different parts of the technology value chain.
  • The importance of sustainability to the industry’s agenda. This is about careful and efficient use of resources within the industry and enabling customers to connect their own technologies to optimise energy consumption and their uses of other scarce resources such as land, water and carbon.
  • An increasing interest and experimentation with the metaverse, which uses connected technologies (AR/VR, high speed data, sometimes edge resources) to deliver a newly visceral experience to its users, in turn delivering other benefits, such as more engaging entertainment (better use of leisure time and attention), and more compelling training experiences (e.g. delivering more realistic and lifelike emergency training scenarios).
  • A primary purpose of telco cloud is to break out the functions and technologies within the operators and network domains. It makes individual processes, assets and functions programmable – again, linking them with signals from other parts of the ecosystem – whether an external customer or partner or internal users.
  • The growing dialogues around edge computing and private networks –evolving ways for enterprise customers to take control of all or part of their connected technologies.
  • The importance of AI and automation, both within operators and across the market. The nature of automation is to connect one technology or data source to another. An action in one place is triggered by a signal from another.

Many of these connecting technologies are still relatively nascent and incomplete at this stage. They do not yet deliver the experiences or economics that will ultimately make them successful. However, what they collectively reveal is that the underlying drive to connect technologies to make better use of resources is like a form of economic gravity. In the same way that water will always run downhill, so will the market evolve towards optimising the use of resources through connecting technologies.

Table of contents

  • Executive Summary
    • The birth of a new sector: ‘Connected technologies’
    • Old gripes remain
    • So what if you are in a new industry?
    • You might like it
    • How to go from telco to connected techco
    • Next steps
  • Introduction
  • Strategy: Does the industry know where it’s going?
    • Where will the money come from?
    • Telcos still demanding their “fair share”, but what’s fair, or constructive?
    • Hope for the future
  • Transformation leadership: Ecosystem practices
    • Current drivers for ecosystem thinking
    • Barriers to wider and less linear ecosystem practices
    • Conclusion
  • Energy crisis sparks efficiency drive
    • Innovation is happening around energy
    • Orange looks to change consumer behaviour
    • Moves on measuring enablement effects
    • Key takeaways
  • Telco Cloud: Open RAN is important
    • Brownfield open RAN deployments at scale in 2024-25
    • Acceleration is key for vRAN workloads on COTS hardware
    • Energy efficiency is a key use case of open RAN and vRAN
    • Other business
    • Conclusion
  • Consumer: Where are telcos currently focused?
    • Staying relevant: Metaverse returns
    • Consumer revenue opportunities: Commerce and finance
    • Customer engagement: Utilising AI
  • Enterprise: Are telcos really ready for new business models?
    • Metaverse for enterprise: Pure hype?
    • Network APIs: The tech is progressing
    • …But commercial value is still unclear
    • Final takeaways:
  • Private networks: Coming over the hype curve
    • A fragmented but dynamic ecosystem
    • A push for mid-market adoption
    • Finding the right sector and the right business case
  • Edge computing: Entering the next phase
    • Telcos are looking for ways to monetise edge
    • Edge computing and private networks – a winning combination?
    • Network APIs take centre stage
    • Final thoughts
  • AI and automation: Opening up access to operational data
    • Gathering up of end-to-end data across multiple-domains
    • Support for network automations
    • Data for external use
    • Key takeaways

Enter your details below to download an extract of the report

The state of telco transformation

There are two possible interpretations of the phrase “the state of transformation”:

  1. How is transformation going at telcos, i.e. where are telcos on the path to transformation
  2. The condition of transformation, i.e. what does it mean to be in the process of transforming.

Over the summer of 2022, STL Partners carried out nine in-depth interviews with telco employees that were involved in influencing, coordinating, or implementing large change projects at their organisations. These change makers came from various disciplines: Strategy, HR, Transformation project management, Networks, Technology, as well as Research. Our first intention was to illuminate the first interpretation (where are telcos on the path to
transformation), but our findings suggest that transformation paths (and indeed end states) are unique to each operator, making it difficult to compare progress between telcos.

No one path – overlapping changes in multiple areas

Source: STL Partners

We have mainly come away with findings on the latter point – identifying the types of change initiatives underway and the challenges that change-makers are encountering on their journeys.

This report brings together insights from our interviews, contextualised with further information from secondary sources and ongoing conversations with operators, to give a sense of what telcos mean when they talk about transformation and what their challenges are in becoming more adaptable as organisations to find growth.

Enter your details below to download an extract of the report

Why is Transformation important to telcos

Far from being an irrelevant or out-dated concept, telcos continue to transform internally. Transformation is understood as a deep change initiative that might involve a shift in foundational technology or a broad-based change in the way an organisation does things, i.e. the culture, processes and the people required – or both.

Most commonly, transformation involves the integration of digital technologies/tools (e.g. cloud, automation, data analytics) into organisational processes to improve business outcomes – with an impact on ways of working (“digital transformation”).

Some telcos talk about transformation in terms of functional initiatives (e.g. IT modernisation), ostensibly affecting a subset of the business, while others talk about transformation from an organisation-wide perspective (e.g. a change in culture like Lean Six Sigma).

The common feature between telco narratives about transformation is that they are motivated by
trying to improve the organisation’s ability to achieve their future vision. This could involve:

  • Making the business more efficient,
  • Creating new value/finding new revenues,
  • Improving outcomes for customers.

Transformations are also undertaken when the vision changes (e.g. when a new leader takes the helm). STL observes that interview respondents described technology-led transformations as aligned to efficiency benefits in the first instance, while organisation-led change was more aligned to responsiveness, particularly in relation to customer needs (improving outcomes). Respondents tended to describe combined technology- and organisation-led change initiatives when there was an ambition to do new things/create new value for customers.

The meaning of transformation – activities cited in interviews

Source: STL Partners

Respondents also mentioned:

  • Transformation in the context of the industry, particularly the possibility that new technologies may change the shape of an industry (e.g. tech companies may find it easier to enter telecoms with their technology capabilities, while telcos may find it difficult to extend services up the technology value chain).
  • The enterprise opportunity represented by digital transformation services.

These were not topics for further exploration in our interviews. Industry transformation is a topic for STL’s Executive Briefing Service – however the threat of industry disruption can and should be an inspiration for corporate transformation. Digital transformation services are covered in our Enterprise stream.

Table of contents

  • Executive Summary
  • Introduction
  • Why is Transformation important to telcos
    • Different change trajectories
  • The condition of transformation – being in the process of it
    • Where do telcos have transformation efforts underway
    • How are transformation projects approached at telcos?
    • Who is responsible for transformation?
  • Barriers to transformation
    • Change leadership issues
    • People challenges
    • Execution difficulties
  • What is holding telcos back from being future-ready organisations?
    • Out with the old…
    • …In with the new
  • Conclusion
    • Recommendations

Related Research

Enter your details below to download an extract of the report

Capturing the 5G SA opportunity: towards a multi-vendor approach

The 5G SA opportunity

5G SA is an exciting prospect for telecoms operators. With many operators’ revenues from traditional connectivity beginning to stagnate, or even decline, there is increased pressure for operators to create differentiation and offer new services, including by expanding across the value chain from connectivity-only providers.

STL Partners has described this new era, whereby operators must shift their business models to adapt to the new demands, as the Coordination Age 2. From the 1850s until around 1990, the Communications Age enabled people to communicate over long distances via telephony. Next came the Information Age, in which people could directly access content and applications, increasingly provided by non-telecommunications players. In the Coordination Age, ‘things’ are increasingly connecting to other ‘things’, leading to an exponential increase in volumes of data, but thanks to advanced analytics and artificial intelligence (AI) we can also address some of the most pressing issues facing the world today: ensuring resource efficiency and improving productivity to help us to do more with less.

Operators need to define their role in the emerging coordination age


Source: STL Partners

Transitioning to the Coordination Age requires operators to shift their goals and business models accordingly. Operators will need to offer or enable tightly coupled network services and applications to different industries, and continue to refresh, optimise and scale at an unprecedented rate.

Enter your details below to download an extract of the report

The transformative potential of 5G SA

5G SA, in comparison to its NSA counterpart, is the evolution of 5G that can deliver on the promises associated with the next generation of cellular networking. 5G SA is intended to be cloud native and adopt cloud-native principles. Without SA, 5G networks are less able to quickly launch new services, enable new use cases, or introduce more scalable, automated operating models.

The opportunities to which 5G SA is expected to give rise have been explored extensively in previous STL research. The ‘full potential’ of 5G SA includes promises around higher throughput, greater capacity, the ability to leverage enhanced mobile broadband (eMBB), ultra-reliable low latency communications (URLLC), and massive machine type communications (mMTC). In summary; do more (including enabling more connections at any given time), faster (down to a latency of a few milliseconds) and at a lower cost (through a variety of actors, including lower power consumption than 4G). These new capabilities are exciting for operators: enabling operators to develop powerful new applications for their customers with truly differentiated use cases.

One particular opportunity that 5G SA represents is network slicing. Slicing can be defined as ‘a mechanism to create and dynamically manage functionally discrete, virtualised networks over a common infrastructure,’ and has been the subject of several STL reports. The increased flexibility and agility of network slicing can enable operators to provide unique policies and differentiated services to their enterprise customers and recoup the substantial investments that rolling out 5G SA requires. However, the benefits and opportunities of 5G SA have implications far beyond the new services it can enable. For the first time, 5G is cloud-native by design, with modular service-based architecture giving
rise to greater flexibility and programmability. Furthermore, it leverages IT concepts of virtualization, cloudification, and DevOps processes. This does not so much enable as actively encourage a more agile operating model. Some of the exciting features of 5G SA include:

  • Automation – Increased automation throughout the network, including deployment, orchestration, assurance, and optimisation can give rise to “zero touch” networks that do not require human intervention, and can self repair and update autonomously on an ongoing basis. The aim of network automation is to reduce human error and the time taken to resolve issues through closed-loop network assurance.
  • Disaggregation – Relies on an open standard network operating system whereby different functional components of networking equipment can be deployed individually and then combined in a modular, fit for purpose way, to suit the requirements of an operator’s network. This architecture relies on the interworking between the multi-vendor components within the 5G core. Disaggregation can allow vendors to offer best in class capabilities for each individual component, providing operators with unprecedented choice and customizability.
  • Avoiding vendor lock-in through a diversified supply base – One of the key benefits of a disaggregated approach to the 5G core is to break vendor lock-in that has tended to dominate legacy approaches. Vendor lock-in can be a key limitation on the speed of innovation and service deployment.
  • Agility – Adopting a continuous improvement and development means accelerated innovation and speed of deployment. A software-orientated infrastructure can enable changes in business processes such as product development management to happen at a greater pace and speed time to market for new revenue generating products and features.
  • Scalability through adopting ‘hyperscale economics’ – Explored by STL Partners in previous research, this term describes the emulation of business and software practices developed by hyperscalers to deliver service innovation at scale whilst simultaneously reducing the level of capex relative to revenue.

Cloud native is the only way to truly unlock the benefits of 5G thanks to the automation, efficiency,
optimisation and mode of delivery that it enables. Ultimately, it allows operators to maximise the
opportunity of 5G to develop differentiated services to consumer and enterprises customers.

 

Table of Contents:

  • Executive Summary
    • Recommendations
  • Preface
  • The 5G SA opportunity
    • The transformative potential of 5G SA
    • 5G SA requires operators to develop and foster a new set of skills
    • Some open questions remain around 5G SA
  • The early adopter 5G SA landscape
    • Orange
    • Vodafone
    • Dish
  • Tier 2 and Tier 3 operator approaches to 5G SA
    • Adherents to a single vendor approach
    • Proponents of a multi-vendor approach
    • Several factors can influence an operators’ vendor strategy
  • Recommendations

Related research

Enter your details below to download an extract of the report

Building a green network: Sustainability game changers

Carbon emissions: At the heart of the corporate strategy for SPs

At the core of all service provider businesses is their network. Customers expect from these networks a service which is fast, reliable, customisable and cost-effective. For service providers to continue to meet these expectations, they are investing in new technologies that help to improve their performance. This investment includes but is not limited to 5G (SA) core, cloudification, AI and automation capabilities, edge computing, vRAN and O-RAN, fibre to the home and more.

However, at the same time as making these network advancements, service providers are also focused on reducing their carbon emissions. Never before has this been such an important part of the corporate strategy of many large companies, not the least the service providers. Becoming greener has become a top priority politically, economically and socially and is increasingly encompassing all parts of the business, from reducing the use of electricity to trying to increase the amount of recycled and refurbished equipment in use.

In many instances efforts to become more sustainable have been accelerated because of the wave of commitments from service providers to become net-zero companies in the next 10-30 years.1 Achieving these commitments will require changes in operating practices across service providers’ businesses, but particularly, changes in the way that they rollout, operate, manage, maintain and upgrade their networks.

Enter your details below to request an extract of the report

The single biggest contributor: Green networks

Figure 1 indicates why the networks are such an important element in reducing carbon emissions – because they are by far the most energy-hungry part of a service providers’ business. Last year, the Belgian service provider Proximus reported than more than 75% of their electricity consumption came from their networks.

More than 75% of Proximus’ electricity consumption last year came from its fixed and mobile networks

Green networks - Proximus electricity consumption emissions carbon

There are technological advancements that are both improving network performance and helping to reduce carbon emissions. One such of these is “Moore’s Law” – the observed phenomenon from the co-founder of Intel that while compute speed and power doubles every two years, the cost of the computers is halved. Making smaller, more powerful equipment helps to reduce the embedded carbon of a network and while we expect generally that this trend will continue, it will not be enough alone for service providers to reach their net-zero goals.

Instead, more radical action must be taken. Service providers must accelerate their efforts to prioritise sustainability just as much as performance when it comes to their networks and data centre infrastructure. In this report we discuss five key steps that could be sustainability gamechangers in building green networks. The insights from the report have largely been formed through an interview programme with service providers globally to understand their current efforts and future ambitions.

Table of Contents

  • Executive Summary
    • Five sustainability gamechangers to build a greener network
  • Introduction
    • Carbon emissions: At the heart of the corporate strategy for SPs
    • The single biggest contributor: Why the focus on green networks
  • Re-evaluate the gold standard for network KPIs
    • Impact on carbon emissions
    • Evidence of adoption by service providers
  • Develop best-in-class AI and automation capabilities
    • Impact on carbon emissions
    • Evidence of adoption by service providers
  • Simplify the network to achieve emission benefits today
    • Impact on carbon emissions
    • Evidence of adoption by service providers
  • Ensure workloads are running on green energy as much as possible
    • Impact on carbon emissions
    • Evidence of adoption by service providers
  • Target a power usage effectiveness rating of 0.5 through innovative waste heat solutions
    • Impact on carbon emissions
    • Evidence of adoption by service providers
  • Conclusion

 

Enter your details below to request an extract of the report

 

Four goals for the data-driven telco

Becoming a data-driven telco

There have been many case studies over the last five years demonstrating the disruption caused by “data-driven businesses”, i.e. those using insights to understand customers, automate processes, change their business models and drive new revenues. In the future, this concept will become an integral part of what it takes to compete successfully, allowing organisations to understand and run all parts of their operations, work with their customers and partners and take part in external activities in new ecosystems. This applies to telecoms operators as much as any other industry.

This research builds on a range of reports STL Partners has previously published on strategic topics related to telcos’ use of data, including:

This research turns to the practical topics of delivering on these strategic goals. The diagram below offers an overview of the drivers and barriers affecting delivery areas such as telco data management and machine learning (ML) in the short and longer term.

Drivers and barriers to being a data-driven telco

Source: STL Partners

Enter your details below to request an extract of the report

What capabilities should telcos develop?

Telcos are reasonably sophisticated users of data, but their particularly complex web of legacy systems requires a good deal of work around data management and governance to enable the extraction of data sets to give 360-degree view of the customer – and increasingly to provide training data for algorithms.

In the mid-term, telcos that are successful in selling IoT and becoming ecosystem players will require new A3 to deal with the increasing number of services, devices, price points and parties involved in providing service to a customer. Our research suggests that there is a range of new A3 technologies that can provide the automation and intelligence for this, as well as for the underlying data management processes.

In the longer-term, A3 will speed up decision making, impacting company strategy, new product and service creation, and customer experience. Humans will increasingly be supported by AI-, ML- and automation-powered tools in their decision-making. A similar progression will occur among competitors in telecoms, and in adjacent markets, increasing the complexity and speed of doing business. Besides integrating A3 into human workflows, working at increasing speed will depend on getting richer insights out of the available data with techniques such as small data and creation of synthetic data.

Capabilities for a data-driven telco

Source: STL Partners

 

Table of contents

  • Executive Summary
    • Capabilities telcos should develop over the medium term
    • What will telcos focus on in the mid-term?
    • Next steps
  • Becoming a data-driven telco
    • Short term drivers
    • Barriers in the short term
    • Long term drivers
    • Barriers in the long term
  • Availability of data
    • Use of data fabrics
    • Better data labelling
    • Rise of synthetic data
    • More intelligent data selection
    • Telco strategies for cloud usage
  • Equipping people
    • Augmented analytics and business intelligence
    • Decision intelligence
  • Work on governance
    • Governance across the telco
    • Agility in governance
    • Governance for AI and machine learning
    • Ethical governance
    • Improved measurement of governance
    • Governance in ecosystems
  • Index

MWC 2022: Sensing the winds of change

What did STL’s analysts find at MWC 2022?

This report is a collection of our analyst’s views of what they saw at the 2022 Mobile World Congress (MWC 2022). It comprises our analysts’ perspectives on its major themes:

  • How the industry is changing overall
  • The impact of the metaverse
  • New enterprise and consumer propositions
  • Progress towards telco cloud
  • Application of AI, automation and analytics (A3)

We would like to thank our partners at the GSMA for a good job done well. The GSMA say that there were 60,000 attendees this year, which is down from the 80-100k of 2019 but more than credible given the ongoing COVID-19 situation. It was nonetheless a vibrant and valuable event, and a great opportunity to see many wonderful people again face to face, and indeed, meet some great new ones.

Enter your details below to request an extract of the report

MWC 2022 in context of its time

It is impossible to write about MWC 2022 without putting it context of its time. It has taken place three days after the Russian invasion of Ukraine started on February 24th, 2022.

Speakers made numerous direct and indirect mentions of the war, and it was clear that a sense of sadness was felt by everyone we spoke to. This slightly offset the enthusiasm and warmth that we and many others felt on being back together in person, with our clients and the industry.

Broad support for the Ukraine was visible among many delegates and there was no Russian delegation. While totally appropriate, the Fira was a little poorer for that as one of the joys of MWC is its truly global embodiment of a vibrant industry.

We all hope for a speedy and peaceful resolution to that situation, and to see our Russian and Ukrainian colleagues again in peace soon. Sadly, as we write from and just after Barcelona, bombs and shells are falling on civilians on the same continent and the route to peace is not yet evident.

As this new and shocking war has come in Europe while COVID is still in a pandemic phase it is a reminder that change and challenge never ends. The telecoms industry responded well to COVID, and now it must again for this and all the challenges it will face in the future, which include further geopolitical risks and shocks and many more opportunities too.

The biggest opportunity for telecoms, and telcos in particular, is to build on the momentum of change rather than rest on its laurels. The threat is that it will settle for a low risk but ultimately lower value path of sticking to the same old same.  We look at the evidence for telcos successfully changing their mindset in New enterprise business: Opening, if not yet changed mindsets.

Connecting technologies

This is my 11th MWC. I came looking for what’s changed and what it means. This is what I found. Andrew Collinson, Managing Director, STL Partners Research.

Cross-dressing and role play

Trying to leave the war at the door, what else did we find at the Fira? One of the mind-bending tasks of walking through the cacophony of sights and sounds of a huge industry ecosystem on display is trying to make sense of what is going on. Who is here, and what are they trying to tell me?

First impressions count. The simple things about how companies present themselves initially mean a great deal. They often show the identity they are trying to project – who or what they are trying to be seen as more than all the detail put together. The first impression I got at MWC 2022 was that almost everyone was trying to dress like someone else.

Microsoft showed photos of cell towers on its stand while all the telco CEOs talked about the “new tech order” and becoming techcos. McKinsey talked about its ‘old friends’ in the telecoms industry and talked about sustainability on its hard-edged stand, while AWS had an advert on the frontage of the Fira and a stand in the “Four Years from Now” zone.

We’re all telcos / techcos now

We're all telcos techcos now

Source: STL Partners, AWS, Microsoft, McKinsey

It’s all about “connecting technologies”

Regular readers of STL’s material will have heard of the Coordination Age: our concept that there is a universal need for better use of resources which will be met in part by the application of connecting technologies (e.g. fibre, mobile, 5G, AI, automation, etc.).

Once upon a time, it was simply people that needed to be connected to each other. Now a huge variety of stuff needs connecting: e.g., devices, computer applications, business processes, business assets and people.

A big question in all this is whether operators have really understood how outdated their traditional operator centric view of the world has become as the industry has changed. Sure, new telecoms networks still need to be built and extended. But it isn’t just operators using licensed technologies that can do this anymore, and the value has increasingly moved to the players that can make all the stuff work: systems integrators and other technology and software players. We’ll cover operators’ mindsets more in the section titled New enterprise business: Opening, if not yet changed mindsets.

Private matters

Private networks was also a big area of focus at MWC 2022, and understandably so too as there is a lot of interest in the concept in various sectors, especially in ports and airports, mining, and manufacturing. Much of the interest for this comes from the hype around 5G which has attracted other industries to look at the technology. However, while there are some interesting developments in practice (for example Huawei and others at Shenzen port in China), many of the applications are at least as well served, and in some cases, better served by other connectivity technologies, e.g. Wi-Fi, wired connections, narrow-band IoT, and 3G / 4G, edge computing and combinations thereof. So 5G is far from the only horse in the race, and we will be looking closely at the boundary conditions and successful use cases for Private 5G in our future research.

Would you pay for “unexpected benefits”?

One great stumbling block for telcos and other business used to traditional business thinking has been “how do you make a business case for new technology?”

The classic telecoms route is to dig around for a cost-saving and revenue enhancement case and then try to bend the CFO’s ear until they give you some money to do your thing. This is fair enough, to a point.

The challenge is, what do you do when you don’t know what you are going to find and/or you can’t prove it? Or worse still, you can only prove it after everybody else in the market has proven it for you and you are then at a competitive disadvantage.

One story I saw and see elsewhere repeated endlessly is that of “unexpected benefits”. This was a phrase that Alison Kirkby, CEO Telia, used to describe what happened when the value of its population movement data was recognised by the Swedish Government during the COVID crisis. It had pulled together the data for one set of reasons, and suddenly this very compelling use came to light.

Another I heard from Qualcomm, which told of putting IoT driven shelf price signs in retail. Originally it was developed to help rapid repricing for consumers in store, then COVID struck a few weeks after installation. This meant people switched to online shopping and the stores were then mainly used by  pickers assembling orders for delivery. The retailer found that by using the signs to help the pickers assemble their loads faster they could make the process about a third more productive. That’s a lot in retail.

This is the reality of transformational business models and technologies. It is incredibly hard to foresee what is really going to work, and how. Even after some time with a new way of working new uses continue to emerge. That’s not to say that you can’t narrow it down a bit – and this is something we spend a lot of our time working on. However, a new thing I will be asking our analysts to help figure out is “how can you tell when and where there are likely to be unexpected benefits?”

 

Table of Contents

  • Executive Summary
  • Introduction
    • MWC 2022 in context of its time
  • MWC 2022: Connecting technologies
    • Cross-dressing and role play
    • Would you pay for “unexpected benefits”?
    • Getting physical, getting heavy
    • Glasses are sexy (again)
    • Europe enviously eyes eastwards
  • New enterprise business: Opening, if not yet changed mindsets
    • Customer centricity: Starting to emerge
    • Becoming better partners: Talking the talk
    • New business models: Not quite there
  • The Metaverse: Does it really matter?
    • Can the Metaverse be trusted?
    • Exploding supply, uncertain quality
    • The non-fungible flexibility paradox
    • A coordinating role for telcos?
    • Don’t write it off, give it a go
  • Consumers: XR, sustainability and smarthome
    • Operators: Aiming for smart and sustainable
    • Vendors and techcos: Would you like AI with that?
    • More Metaverse, VR and AR
    • Other interesting finds: Commerce, identity, video
  • Telco Cloud: The painful gap between theory and practice
    • Brownfield operators are still on their virtualisation journey
    • Greenfield operators: Cloud native and automated from day one
    • Telcos on public could: Shall I, shant I?
  • AI and automation: Becoming adaptive
    • Looking out for good A3 use cases / case studies
    • Evidence of a maturing market?
    • Welcome signs of progress towards the Coordination Age

 

Enter your details below to request an extract of the report

The Future of Work: How AI can help telcos keep up

What will the Future of Work look like?

The Future of Work is a complex mix of external and internal drivers which will exert pressure on the telco to change – both immediately and into the long-term. Drivers include government policy, general changes in cultural attitudes and new types of technology. For example, intelligent tools will see humans and machines working more closely together. AI and automation will be major drivers of change, but they are also tools to address the impact of this change.

AI and automation both drive and solve Future of Work challenges

Futuore of work AI automation analytics

Source: STL Partners

This report leverages secondary research from a variety of consultancies, research houses and academic institutions. It also builds on STL Partners’ previous research around the use of A3 and future new technologies in telecoms, as well as organisational learning to increase telco ability to absorb change and thrive in dynamic environments:

Enter your details below to request an extract of the report

The Future of Work

We begin by summarising secondary research around the Future of Work. Key topics we explore are:

Components of the Future of Work

Future of work equation

Source: STL Partners

  1. The term Fourth Industrial Revolution is often used interchangeably with the technologies involved in Industry 4.0. However, this report uses a broader definition (quoted from Salesforce):
    • “The blurring of boundaries between the physical, digital, and biological worlds. It’s a fusion of advances in artificial intelligence (AI), robotics, the Internet of Things (IoT), 3D printing, genetic engineering, quantum computing, and other technologies.” 
  2. Societal and cultural change includes changes in government and public attitude, particularly around climate change and issues of equality. It also includes changing attitudes of employees towards work.
  3. Business environment change encompasses a variety of topics around competitive dynamics (e.g. national versus global economies of scale) and changing market conditions, in particular with relation to changing corporate structures (hierarchies, team structures, employees versus contractors).
  4. Pandemic-related change: The move towards homeworking and hastening of some existing/new trends (e.g. automation, ecommerce).

Content

  • Executive Summary
  • Introduction
  • The Future of Work
    1. The Fourth Industrial Revolution
    2. Societal and cultural change
    3. Business environment change
    4. Pandemic-related change
  • How will FoW trends impact telcos in the next 5 to 10 years?
    • Expected market conditions
    • Implications for telcos’ strategic direction
    • Workforce and cultural change
  • Telco responses to FoW trends and how A3 can help
    • Strategic direction
    • Skills development
    • Organisational and cultural change
  • Appendix 1
  • Index

Related Research

 

Enter your details below to request an extract of the report

AI & automation for telcos: Mapping the financial value

This is an update to STL Partners report A3 for telcos: Mapping the financial value, published in May 2020, which estimated the financial value of automation, AI and analytics (A3) through bottom up analysis of potential capex/opex savings or revenue uplift from integrating A3 into 150+ processes across a telco’s core operations.

The value is measured on an annual basis in dollar terms and as a proportion of total revenue for a “standard telecoms operator”. Access to the full methodology and definition of a standard telco is available in the report Appendix.

We categorise the value of automation, AI and analytics (A3) in telecoms across operational area, as well as type and purpose of A3 technology. Our graphic below summarises the value of A3 across the following six types of technology:

  1. Making sense of complex data: Analytics and machine learning used to understand large, mostly structured data sets, looking for patterns to diagnose problems and predict/prescribe resolutions.
  2. Automating processes: Intelligent automation and RPA to enable decision making, orchestration and task completion within telco processes.
  3. Personalising customer interactions: Analytics and machine learning used to understand customer data, create segmentation, identify triggers and prescribe actions to be taken.
  4. Support business planning: Analytics and machine learning used in forecasting and optimisation exercises.
  5. Augmenting human capabilities: AI solutions such as natural language processing and text analytics used to understand human intent or sentiment, to support interactions between customers or employees and telco systems.
  6. Frontier AI solutions: A number of individual AI solutions which have particular, specialist uses within a telco.

For further detail on this categorisation methodology, see STL Partners report The telco A3 application map

Enter your details below to request an extract of the report

What’s new in 2022

The colouring of the use case categories in the graphic below remains largely unchanged from May 2020. Some uses of A3 were reasonably mature in that timeframe and already rolled out in a typical telco, so their value was already well understood.

We estimate that the most valuable use case categories, primarily in networks and operations, deliver over $50 millions in annual benefits – and sometimes up to hundreds of millions. Throughout this report we express the value in dollar terms and as a percentage of savings within each domain. This is because while $50 million is clearly a significant sum, it accounts for just 0.33% of total revenues for our standard operator, so showing values for unique use case categories as a proportion of total revenues undermines the potential value A3 can add to individual teams, and in turn contribute to significant aggregate value across an operator.

Overview of the financial value of A3

financual-value-A3

Source: STL Partners, Charlotte Patrick Consult

In our May 2020 research, many of the more sophisticated uses of A3 were understood in theory but yet to be implemented. Researching these various newer uses cases throughout 2021 has revealed that many are now, at least partly, rolled out (although some are still waiting for cleaner data or more orchestration capabilities).

However, there were a few new case studies with financial benefits that necessitated more than small changes to the 2020 financial value calculations. Summarising the changes illustrated in the graphic above:

  • ​The most noticeable change in uptake for A3 was in the BSS domain. Vendors and telcos were not discussing much beyond RPA and basic analytics in 2020, but there are now a whole range of potential uses for ML (typically in the box labelled “Revenue management” in the graphic above). The question of how much additional financial value to assign to this is interesting – some of the A3 will ensure that the rating and charging systems can cope with the additional volume and complexity around 5G and IoT billing, so an allocation of revenue uplift has been assigned. However, this revenue benefit only accounts for around 6% of the additional $83 million in value from A3 in networks and operations estimated in this update.
  • We have added partner management as a new use case category, within operations. This is to allow A3 value to be added as telcos work with more partners and in new ecosystems, and accounts for 6% of additional value in networks and operations in this update.
  • An increase in the assumed value of A3 within marketing programs, owing to the addition of ML to improve the design of new offers.
  • The value of a previous use case category labelled “Troubleshooting” has been subsumed into “Unassisted channels”, as telcos find it difficult to implement troubleshooting tools for customers.
  • Some increase in financial benefit around customer chatbots and field services, due to new case studies showing financial value.

Our report includes a section for each of the first three columns of the graphic above (Networks and operations, customer channels, marketing and sales). The final column (other functions) doesn’t currently have financial calculations underpinning it as values are thought to be insubstantial in comparison to the first three columns.

Table of contents

  • Executive summary
  • Overview of the financial value of automation, AI and analytics (A3)
  • Financial value by business unit
    • BSS, OSS and networks
    • Customer channels
    • Sales and marketing
  • Appendix
    • Methodology for Calculating Financial Value
    • Augmented Analytics Capabilities

Related Research

Enter your details below to request an extract of the report

A3 in customer experience: Possibilities for personalisation

The value of A3 in customer experience

This report considers the financial value to a telco of using A3 technologies (analytics, automation and AI) to improve customer experience. It examines the key area which underpins much of this financial value – customer support channels – considering the trends in this area and how the area might change in future, shaping the requirement for A3.

Calculating the value of improving customer experience is complex: it can be difficult to identify the specific action that improved a customer’s perception of their experience, and then to assess the impact of this improvement on their subsequent behaviour.

While it is difficult to draw causal links between telcos’ A3 activities and customer perceptions and behaviours, there are still some clearly measurable financial benefits from these investments. We estimate this value by leveraging our broader analysis of the financial value of A3 in telecoms, and then zooming in on the specific pockets of value which relate to improved customer experience (e.g. churn reduction).

Enter your details below to request an extract of the report

The diagram below illustrates that there are two parts of the customer journey where A3 will add most value to customer experience:

  1. The performance of the network, services, devices and applications is increasingly dependent on automation and intelligence, with the introduction of 5G and cloud-native operations. Without A3 capabilities it will be difficult to meet quality of service standards, understand customer-affecting issues and turn up new services at speed.
  2. The contact centre remains one of the largest influencers of customer experience and one of the biggest users of automation, with the digital channels increasing in importance during the pandemic. Understanding the customer and the agent’s needs and providing information about issues the customer is experiencing to both parties are areas where more A3 should be used in future.

Where is the financial benefit of adding A3 within a typical telco customer journey?

A3 customer experience

Source: STL Partners, Charlotte Patrick Consult

As per this diagram, many of the most valuable uses for A3 are in the contact centre and digital channels. Improvements in customer experience will be tied with trends in both. These priority trends and potential A3 solutions are outlined the following two tables:
• The first shows contact centre priorities,
• The second shows priorities for the digital channels.

Priorities in the contact centre

A3 Contact centre

Priorities in the digital channel

A3 Digital channel

Table of Contents

  • Executive Summary
  • The value of A3 in customer experience
  • Use of A3 to improve customer experience
  • The most important uses of A3 for improving the customer experience
    • Complex data
    • Personalisation
    • Planning
    • Human-machine interaction
    • AI point solution
  • Conclusion
  • Appendix: Methodology for calculating financial value
  • Index

Related Research:

Enter your details below to request an extract of the report

Driving the agility flywheel: the stepwise journey to agile

Agility is front of mind, now more than ever

Telecoms operators today face an increasingly challenging market, with pressure coming from new non-telco competitors, the demands of unfamiliar B2B2X business models that emerge from new enterprise opportunities across industries and the need to make significant investments in 5G. As the telecoms industry undergoes these changes, operators are considering how best to realise commercial opportunities, particularly in enterprise markets, through new types of value-added services and capabilities that 5G can bring.

However, operators need to be able to react to not just near-term known opportunities as they arise but ready themselves for opportunities that are still being imagined. With such uncertainty, agility, with the quick responsiveness and unified focus it implies, is integral to an operator’s continued success and its ability to capitalise on these opportunities.

Traditional linear supply models are now being complemented by more interconnected ecosystems of customers and partners. Innovation of products and services is a primary function of these decentralised supply models. Ecosystems allow the disparate needs of participants to be met through highly configurable assets rather than waiting for a centralised player to understand the complete picture. This emphasises the importance of programmability in maximising the value returned on your assets, both in end-to-end solutions you deliver, and in those where you are providing a component of another party’s system. The need for agility has never been stronger, and this has accelerated transformation initiatives within operators in recent years.

Enter your details below to request an extract of the report

Concepts of agility have crystallised in meaning

In 2015, STL Partners published a report on ‘The Agile Operator: 5 key ways to meet the agility challenge’, exploring the concept and characteristics of operator agility, including what it means to operators, key areas of agility and the challenges in the agile transformation. Today, the definition of agility remains as broad as in 2015 but many concepts of agility have crystallised through wider acceptance of the importance of the construct across different parts of the organisation.

Agility today is a pervasive philosophy of incremental innovation learned from software development that emphasises both speed of innovation at scale and carrier-grade resilience. This is achieved through cloud native modular architectures and practices such as sprints, DevOps and continuous integration and continuous delivery (CI/CD) – occurring in virtuous cycle we call the agility flywheel.

The Agility Flywheel

agility-flywheel

Source: STL Partners

Six years ago, operators were largely looking to borrow only certain elements of cloud native for adoption in specific pockets within the organisation, such as IT. Now, the cloud model is more widely embraced across the business and telcos profess ambitions to become software-centric companies.

Same problem, different constraints

Cloud native is the most fundamental version of the componentised cloud software vision and progress towards this ideal of agility has been heavily constrained by operators’ underlying capabilities. In 2015, operators were just starting to embark on their network virtualisation journeys with barriers such as siloed legacy IT stacks, inelastic infrastructures and software lifecycles that were architecture constrained. Though these barriers continue to be a challenge for many, the operators at the forefront – now unhindered by these basic constraints – have been driving a resurgence and general acceleration towards agility organisation-wide, facing new challenges around the unknowns underpinning the requirements of future capabilities.

With 5G, the network itself is designed as cloud native from the ground up, as are the leading edge of enterprise applications recently deployed by operators, alleviating by design some of the constraints on operators’ ability to become more agile. Uncertainty around what future opportunities will look like and how to support them requires agility to run deep into all of an operators’ processes and capabilities. Though there is a vast raft of other opportunities that do not need cloud native, ultimately the market is evolving in this direction and operators should benchmark ambitions on the leading edge, with a plan to get there incrementally. This report looks to address the following key question:

Given the flexibility and driving force that 5G provides, how can operators take advantage of recent enablers to drive greater agility and thrive in the current pace of change?

Enter your details below to request an extract of the report

 

Table of Contents

    • Executive Summary
    • Agility is front of mind, now more than ever
      • Concepts of agility have crystallised in meaning
      • Same problem, different constraints
    • Ambitions to be a software-centric business
      • Cloudification is supporting the need for agility
      • A balance between seemingly opposing concepts
    • You are only as agile as your slowest limb
      • Agility is achieved stepwise across three fronts
      • Agile IT and networks in the decoupled model
      • Renewed need for orchestration that is dynamic
      • Enabling and monetising telco capabilities
      • Creating momentum for the agility flywheel
    • Recommendations and conclusions

A3 for enterprise: Where should telcos focus?

A3 capabilities operators can offer enterprise customers

In this research we explore the potential enterprise solutions leveraging analytics, AI and automation (A3) that telcos can offer their enterprise customers. Our research builds on a previous STL Partners report Telco data monetisation: What’s it worth? which modelled the financial opportunity for telco data monetisation – i.e. purely the machine learning (ML) and analytics component of A3 – for 200+ use cases across 13 verticals.

In this report, we expand our analysis to include the importance of different types of AI and automation in implementing the 200+ use cases for enterprises and assess the feasibility for telcos to acquire and integrate those capabilities into their enterprise services.

We identified eight different types of A3 capabilities required to implement our 200+ use cases.

These capability types are organised below roughly in order of the number of use cases for which they are relevant (i.e. people analytics is required in the most use cases, and human learning is needed in the fewest).

The ninth category, Data provision, does not actually require any AI or automation skills beyond ML for data management, so we include it in the list primarily because it remains an opportunity for telcos that do not develop additional A3 capabilities for enterprise.

Enter your details below to download an extract of the report

Most relevant A3 capabilities across 200+ use cases

9-types-of-A3-analytics-AI-automation

Most relevant A3 capabilities for leveraging enterprise solutions

People analytics: This is the strongest opportunity for telcos as it uses their comprehensive customer data. Analytics and machine learning are required for segmentation and personalisation of messaging or action. Any telco with a statistically-relevant market share can create products – although specialist sales capabilities are still essential.

IoT analytics: Although telcos offering IoT products do not immediately have access to the payload data from devices, the largest telcos are offering a range of products which use analytics/ML to detect patterns or spot anomalies from connected sensors and other devices.

Other analytics: Similar to IoT, the majority of other analytics A3 use cases are around pattern or anomaly detection, where integration of telco data can increase the accuracy and success of A3 solutions. Many of the use cases here are very specific to the vertical. For example, risk management in financial services or tracking of electronic prescriptions in healthcare – which means that a telco will need to have existing products and sales capability in these verticals to make it worthwhile adding in new analytics or ML capabilities.

Real time: These use cases mainly need A3 to understand and act on triggers coming from customer behaviour and have mixed appeal to telcos. Telcos already play a significant role in a small number of uses cases, such as mobile marketing. Some telcos are also active in less mature use cases such as patient messaging in healthcare settings (e.g. real-time reminders to take medication or remote monitoring of vulnerable adults). Of the rest of the use cases that require real time automation, a subset could be enhanced with messaging. This would primarily be attractive to mobile operators, especially if they offer broader relevant enterprise solutions – for example, if a telco was involved in a connected public transport solution, then it could also offer passenger messaging.

Remote monitoring/control: Solutions track both things and people and use A3 to spot issues, do diagnostic analysis and prescribe solutions to the problems identified. The larger telcos already have solutions in some verticals, and 5G may bring more opportunities, such as monitoring of remote sites or traffic congestion monitoring.

Video analytics: Where telcos have CCTV implementations or video, there is opportunity to add in analytics solutions (potentially at the edge).

Human interactions: The majority of telco opportunities here relate to the provision of chatbots into enterprise contact centres.

Human learning: A group of low feasibility use cases around training (for example, an engineer on a manufacturing floor who uses a heads-up augmented/virtual reality (AR/VR) display to understand the resolution to a problem in front of them) or information provision (for example, providing retail customers with information via AR applications).

 

Table of Contents

  • Executive Summary
    • Which A3 capabilities should telcos prioritise?
    • What makes an investment worthwhile?
    • Next steps
  • Introduction
  • Vertical opportunities
    • Key takeaways
  • A3 technology: Where should telcos focus?
    • Key takeaways
    • Assessing the telco opportunity for nine A3 capabilities
  • Verizon case study
  • Details of vertical opportunities
  • Conclusion
  • Appendix 1 – full list of 200 use cases

 

Enter your details below to download an extract of the report

Telecoms priorities: Ready for the crunch?

The goal of this research is to understand how telecoms operators’ investment priorities and investments are likely to change as the COVID-19 crisis recedes.  To do this, we collected 144 survey responses from participants in telecoms operators, telecoms vendors, and analysts and consultants and other groups. All responses are treated in strict personal and company confidence. Take the survey here.

This research builds on our previous content on the impact of the pandemic to the telecoms industry: COVID-19: Now, next and after (March 2020), COVID-19: Impact on telco priorities (May 2020), based on a survey undertaken in April and early May 2020 and Recovering from COVID: 5G to stimulate growth and drive productivity (August 2020).  STL Partners has also hosted three webinar on the topic (March to July 2020).

This deck summarises the findings of our industry research on telecoms priorities at the start of 2021.

We explored the research in our webinar,  State of the Industry: 2021 Priorities (click on the link to view the recording).

Background to the telecoms priorities survey – January 2021

The respondents were fairly evenly split between telcos, vendors, and ‘others’ (mainly analysts and consultants). This sample contained a higher proportion of European and American respondents than industry average, so is not fully globally representative. The split of company types and geography was broadly similar to the May 2020 survey, with the exception of the MENA region, where there were less than half the prior respondents – a total of 7. However those respondents were senior and well known to STL.

Who took the survey?

telco industry breakdown

Source: STL telecoms priorities survey, 144 respondents, 31st January 2021

48% of respondents were C-Level/VP/SVP/Director level. Functionally, most respondents work in senior HQ and operational management areas. Compared to May 2020, there were proportionally slightly more senior respondents, and slightly less in product and strategy roles.

What are their roles?

Senior participants

Source: STL telecoms priorities survey, 144 respondents, 31st January 2021

How respondents perceive priorities, as the COVID threat recedes

There were increases in respondent confidence in almost every category we surveyed from May 2020 to Jan 2021.

  • Telecoms automation and agility remain top priorities across the industry – and transformation has moved up the agenda.
  • Appetite for 5G investments increased the most of all areas surveyed in the last 8 months.
  • The ‘consumerisation’ of enterprise continues, although security and work from home (WFH) services have overtaken conferencing and VPNs in priority.
  • Healthcare remains the most accelerated vertical / application opportunity of all those impacted in the current crisis.
  • The priority of consumer services has significantly increased yet confidence in making any additional money in the sector is low.
  • Leadership and transformation: COVID 19 has empowered an industry-wide belief that change is possible.
  • Transformation and innovation are high priorities, and appetite for sustainability and recruitment has returned, but there are doubts about some telco leaders’ commitment and ability to grasp and invest in new opportunities.

STL Partners assesses the telecoms industry to be at a crunch point: COVID has injected further pace to the rapid evolution of the world economy. Telcos that have been focused on responding to immediate pandemic-induced challenges, will emerge from the crisis faced with an urgency to respond to this evolution – key choices that telcos might have had 5-10 years to ponder are being crunched into the next 0-3 years.

Our findings suggest that most telcos are only partly ready for this disruptive opportunity.

Enter your details below to request an extract of the report

Notes on interpreting the research findings

  • The way research respondents perceive any given question is generally dependent on their current situation and knowledge. To get relevant answers, we asked all respondents if they were interested or involved in specific areas of interest (e.g. ‘consumer services’), and to not answer questions they couldn’t (e.g. for confidentiality reasons) or simply didn’t know or have a clear opinion.
  • We saw no evidence that respondents were ‘gaming’ the results to be favourable to their interests.
  • Results need to be seen in the context that telcos themselves vary widely in size, profitability and market outlook. For example, for some, 5G seems like a valid investment, whereas for others the conditions are currently much less promising. COVID-19 has clearly had some impact on these dynamics, and our analysis attempts to reflect this impact on the overall balance of opinions as well as some of the specific situations to bring greater nuance.
  • In December 2020 / January 2021, the worldwide impact of COVID-19 is increasingly well understood and less of a shock than was the case in May / June 2020. Vaccines are beginning to be rolled out but it is an early stage in the process, and new variants of COVID-19 have evolved in the UK, South Africa and Brazil (and possibly elsewhere). There are geo-political wrangles on vaccine distribution, and varying views on effectiveness and the most appropriate responses. Nonetheless, respondents appear overall more optimistic, although there is still considerable uncertainty.
  • We’ve interpreted the results as best we can given our knowledge of the respondents and what they told us, and added in our own insights where relevant.
  • Inevitably, this is a subjective exercise, albeit based on 144 industry respondents’ views.
  • Nonetheless, we hope that it brings you additional insights to the many that you already possess through your own experiences and access to data.
  • Finally, things continue to change fast. We will continue to track them.

Table of contents

  • Executive summary: Opportunities are in overdrive, but can telcos catch them?
  • High-level findings
  • Research background
  • Technology impacts: Automation, cloud and edge come of age
  • Network impacts: 5G is back
  • Enterprise sector impacts: Healthcare still leads
  • Consumer sector impacts: Mojo aplenty, money – not so much
  • Leadership impacts: good talking, but enough walking?

Enter your details below to request an extract of the report

Telco A3: Skilling up for the long term

Telcos must master automation, analytics and AI (A3) skills to remain competitive

A3 will permeate all aspects of telcos’ and their customers’ operations, improving efficiency, customer experience, and the speed of innovation. Therefore, whether a telecoms operator is focused on its core connectivity business, or seeking to build new value beyond connectivity, developing widespread understanding of value of A3 and disseminating fundamental automation and AI skills across the organisation should be a core strategic goal. Our surveys on industry priorities suggest that operators recognise this need, and automation and AI are correspondingly rising up the agenda.

Expected technology priority change by organisation type, May 2020

technology investment priorities telecoms May 2020

*Updated January 2021 survey results will be published soon. Source: STL Partners survey, 222 respondents.

Enter your details below to request an extract of the report

Key findings on operators’ A3 strategies

Based on deep dive interviews with 8 telcos, as well as insights from 8 more telcos gathered from previous research programmes.

  • Less advanced telcos are creating a set of basic structures and procedures, as well as beginning to develop a single view of the customer
  • Having a single version of the truth appears to be an ongoing issue for all – alongside continued work on data quality
  • As full end-to-end automation is not a realistic goal for the next few years, interviewees were seeking to prioritise the right journeys to be automated in the short term
  • Reskilling and education of staff was an area of importance for many but not all
  • Just one company had less ambitious data-related aims due to the specialist nature of their services and smaller size of the company – saying that they worked with data on an as-needed basis and had no plans to develop dedicated data science headcount

Preparing for the future: There are four areas where A3 will impact telcos’ businesses

four A3 areas impacting telcos

Source: Charlotte Patrick Consult, STL Partners

In this report we outline the skills and capabilities telcos will need in order to navigate these changes. We break out these skills into four layers:

  1. The basic skillset: What operators need to remain competitive over the short term
  2. The next 5 years: The skills virtually all telcos will need to build or acquire to remain competitive in the medium term (exceptions include small or specialist telcos, or those in less competitive markets)
  3. The next 10 years: The skills and organisational changes telcos will need to achieve within a 10 year timeframe to remain competitive in the long term
  4. Beyond connectivity (5–10 year horizon): This includes A3 skills that telcos will need to be successful strategic partners for customers and suppliers, and to thrive in ecosystem business models. These will be essential for telcos seeking to play a coordination role in IoT, edge, or industry ecosystems.

Table of contents

  • Executive Summary
  • Telcos’ current strategic direction
    • Deep dive into 8 operator strategies
    • Overview of 8 more operator strategies
  • How A3 technologies are evolving
    • Deep dive into 40 A3 applications that will impact telcos’ businesses
    • Internal capabilities
    • Customer requirements
    • Technology changes
    • Organisational change
  • A timeline of telco A3 skills evolution
    • The basic skillset
    • The next 5 years
    • The next 10 years
    • Beyond connectivity

Enter your details below to request an extract of the report

Growing B2B2X: Taking telcos beyond connectivity and 5G

==================================================================================

Download the additional file on the left for the PPT chart pack accompanying this report

==================================================================================

The telecoms industry is looking to revive growth

Telecoms operators have enjoyed 30 years of strong growth in all major markets. However, the core telecoms industry is showing signs of slowing. Connectivity revenue growth is declining and according to our research, annual growth in mobile operator revenues pre-COVID were converging to 1% across Asia Pacific, North America, and Western Europe. To help reverse this trend, telecoms operators’ have been investing in upgrading networks (fibre, 4G, 5G), enabling them to offer ever-increasing data speeds/plans to gain more customers and at least sustain ARPUs. However, this has resulted in the increasing commoditisation of connectivity as competitors also upgrade their networks. The costs to upgrade networks coupled with reducing margins from commoditisation have made it difficult for operators to invest in new revenue streams beyond core connectivity.

While connectivity remains an essential component in consumer and enterprises’ technology mix, on its own, it no longer solves our most pressing challenges. When the telecoms industry was first founded, over 150 years ago, operators were set up to solve the main challenge of the day, which was overcoming time and distance between people. Starting in the 1990s, alongside the creation of the internet and development of more powerful data networks, today’s global internet players set out to solve the next big challenge – affordable access to information and entertainment. Today, our biggest challenge is the need to make more efficient use of our resources, whether that’s time, assets, knowledge, raw material, etc. Achieving this requires not only connectivity and information, but also a high level of coordination across multiple organisations and systems to get it to the right place, at the right time. We therefore call this the Coordination Age.

Figure 1: New challenges for telecoms in the Coordination AgeThe coordination age overview

Source: STL Partners

In the Coordination Age, ‘things’ – machines, products, buildings, grids, processes – are increasingly connecting with each other as IoT and cloud-based applications become ubiquitous. This is creating an exponential increase in the volume of data available to drive development of advanced analytics and artificial intelligence, which combined with automation can improve productivity and resource efficiency. There are major socioeconomic challenges that society is facing that require better matching of supply and demand, which not only needs real-time communications and information exchange, but also insights and action.

In the Coordination Age, there is unlikely to be a single dominant coordinator for most ecosystems. While telecoms operators may not have all the capabilities and assets to play an important coordination role, especially compared to the Internet giants, they do have the advantage of being regulated and trusted in their local markets. This presents new opportunities for telecom operators in industries with stronger national boundaries. As such, there is a role for telcos to play in other parts of the value chain which will ultimately enable them to unlock new revenue growth (e.g. TELUS Health and Elisa Smart Factory).

New purpose, new role

The Coordination Age has added increased complexity and new B2B2X business model challenges for operators. They are no longer the monopolies of the past, but one of many important players in an increasingly ecosystem-based economy. This requires telcos to take a different approach: one with new purpose, culture, and ways of working. To move beyond purely connecting people and devices to enabling coordination, telcos will need a fundamental shift in vision. Management teams will need to embrace a new corporate purpose aligned with the outcomes their customers are looking for (i.e. greater resource efficiency), and drive this throughout their organisations.

Historically, operators have served all customers – consumers, small and medium-sized enterprises (SMEs), larger enterprises from all verticals and other operators – with a set of horizontal services (voice, messaging, connectivity).  If operators want to move beyond these services, then they will need to develop deep sector expertise. Indeed, telcos are increasingly seeking to play higher up the value chain and leveraging their core assets and capabilities provides an opportunity to do so.

However, in order to drive new revenues beyond connectivity and add value in other parts of the solution stack, telcos need to be able to select their battles carefully because they do not have the scale, expertise or resources to do it all.

Figure 2: Potential telco roles beyond traditional connectivity

Source: STL Partners

Enter your details below to request an extract of the report

Clearer on the vision, unclear on the execution

Many telcos have a relatively clear idea of where they want to drive new streams of revenue beyond traditional connectivity services. However, they face various technical, strategic and organisational challenges that have inhibited this vision from reaching fruition and have unanswered questions about how they can overcome these. This lack of clarity is further evident by the fact that some telcos have yet to set explicit revenue targets or KPIs for non-connectivity revenue, and those that have set clear quantifiable objectives struggle to define their execution plan or go-to-market strategy. Even operators that have been most successful in building new revenue streams, such as TELUS and Elisa, do not share targets or revenues for their new businesses publicly. This is likely to protect them from short-term demands of most telecoms shareholders, and because, even when profitable, they may not yet be seen as valuable enough to move the needle.

This report focuses not just on telco ambitions in driving B2B2X revenues beyond core connectivity and the different roles they want to play in the value chain, but more importantly on what strategies telcos are adopting to fulfil their ambitions. Within this research, we explore what is required to succeed from both a technological and organisational standpoint. Our findings are based on an interview programme with over 23 operators globally, conducted from June to August 2020. Our participant group spans across different operator types, geographies, and types of roles within the organisation, ensuring we gain insight into a range of unique perspectives.

In this report, we define B2B2X as a business model which supports the dynamic creation and delivery of new services by multiple parties (the Bs) for any type of end-customer (the X), whether they be enterprises or consumers. The complexity of the value chains within B2B2X models requires more openness and flexibility from party providers, given that any provider could be the first or second ‘B’ in the B2B2X acronym. This research is primarily focused on B2B2X strategies for serving enterprise customers.

In essence, our research is focused on answering the following key question: how can operators grow their B2B2X revenues when traditional core connectivity is in decline?

Table of Contents

  • Executive Summary
  • Introduction
    • The telecoms industry is looking to revive growth
    • New purpose, new role
    • Clearer on the vision, unclear on the execution
  • Beyond connectivity, but where to?
    • “Selling the service sandwich”
    • Horizontal play: Being the best application enabler
    • The vertical-specific digital services provider
    • There is no “best” approach: Some will work better for different operators in different situations
    • 5G is a trigger but not the only one
  • Accelerating the shift towards partnerships and ecosystems
    • Some operator ‘ecosystems’ look more like partnerships
    • Not all telcos define ‘ecosystems’ the same way
    • Most telcos focusing on ecosystems want to orchestrate and influence the proposition
    • Many see ecosystems as a key potential route but ecosystems come with new requirements
  • The market is ripe for telco ecosystems
    • The interest in network intelligence is not new but this time is different
    • Telcos can provide unique value by making their networks more accessible
    • But so far, telcos have not fully embraced this vision yet
  • Conclusions and recommendations

Enter your details below to request an extract of the report

The future of assurance: How to deliver quality of service at the edge

Why does edge assurance matter?

The assurance of telecoms networks is one of the most important application areas for analytics, automation and AI (A3) across telcos operations. In a previous report estimating the potential value of A3 across telcos’ core business, including networks, customer channels, sales and marketing, we estimated that service assurance accounts for nearly 10% of the total potential value of A3 (see the report A3 for telcos: Mapping the financial value). The only area of greater combined value was in resource management across telecoms existing networks and planned deployments.

Within service assurance, the biggest value buckets are self-healing networks, impact on customer experience and churn, and dynamic SLA management. This estimate was developed through a bottom up analysis of specific applications for automation, analytics and AI within each segment, and their potential to deliver cost savings or revenue uplift for an average sized telecoms operator (see the original report for the full methodology).

Breakdown of the value of A3 in service assurance, US$ millions

Breakdown of the value of A3 in service assurance (US$ millions)

Source: STL Partners, Charlotte Patrick Consult

While this previous research demonstrates there is significant value for telcos in improving assurance on their legacy networks, over the next five years edge assurance will become an increasingly important topic for operators.

What we mean by edge assurance is the new capabilities operators will require to enable visibility across much more distributed, cloud-based networks, and monitoring of a wider and more dynamic range of services and devices, in order to deliver high quality experience and self-healing networks. This need is driven by operators’ accelerating adoption of virtualisation and software-defined networking, for example with increasing experimentation and excitement around open RAN, as well as some operators’ ambitions to play a significant role in the edge computing market (see our report Telco edge computing: How to partner with hyperscalers for analysis of telcos’ ambitions in edge computing).

To give an idea of the scale of the challenge ahead of operators in assuring increasingly distributed network functions and infrastructure, STL Partners’ expects a Tier-1 operator will deploy more than 8,000 edge servers to support virtual RAN by 2025 (see Building telco edge infrastructure: MEC, private LTE and vRAN for the full forecasts).

Forecast of Tier 1 operator edge servers by domain

Forecast of Tier-1 operator edge servers by domain

Source: STL Partners

Given this dramatic shift in network operations, without new edge assurance capabilities:

  • A telco will not be able to understand where issues are occurring across the (virtualised) network and the underlying infrastructure, and diagnose the root cause
  • The promises of cost saving and better customer experience from self-healing networks will not be fully realised in next-generation networks
  • Potential revenue generators such as network slicing and URLLC will be of limited value to customers if the telco can’t offer sufficient SLAs on reliability, latency and visibility
  • It will not be possible to make promises to ecosystem partners around service quality.

Despite the significant number of unknowns in the future of telco activities around 5G, IoT and edge computing, this research ventures a framework to allow telcos to plan for their future service assurance needs. The first section describes the drivers affecting telcos decision-making around the types of assurance that they need at the edge. The second sets out products and capabilities that will be required and types of assurance products that telcos could create and monetise.

Enter your details below to request an extract of the report

Table of contents

  • Executive Summary
    • The three main telco strategies in edge assurance
    • What exactly do telcos need to assure?
  • Why edge assurance matters
  • Factors affecting edge assurance development
    • What are telcos measuring?
    • Internal assurance applications
    • Location of measurement and analysis
    • Ownership status of equipment and assets being assured
    • Requirements of external assurance users
    • Requirements from specific applications
    • Telco business model
  • The status of edge assurance and recommendations for telcos
    • Edge assurance vendors
    • Telco assurance products
  • Appendix

Enter your details below to request an extract of the report

Recovering from COVID: 5G to stimulate growth and drive productivity

For the accompanying PPT chart pack download the additional file on the left

————————————————————————————————————–

Related webinar: How will 5G transform transport and logistics?

In this webinar, we share learnings from 100+ interviews and surveys with industry professionals. During the presentation we will look to answer:

  • How will 5G accelerate digital transformation of the transport and logistics industry?
  • What are the key 5G-enabled use cases and what benefits could these deliver?
  • What must change within the industry to unlock this transformation?
  • What is the role for telcos – how can they work with industry leaders to increase adoption of 5G and build new revenues beyond core communication services?

Date: Thursday 10th September 2020
Time: 4pm BST

View the webinar recording

————————————————————————————————————–

The 5G opportunity and value to verticals

In October 2019, STL Partners published research highlighting the benefits 5G-enabled use cases could unlock for industries. Our forecast predicted a potential $1.4 trillion increase in global GDP by 2030 across eight key industries.

In this short paper we look to update these numbers and explore new insights and conclusions based on two key factors:

  1. STL Partners has produced new research on the impact of 5G on the transport and logistics industry. This has led to more granular insight on the unique benefits and use cases for this vertical.
  2. COVID has changed the global landscape. It has increased demand for some 5G use cases, such as remote patient monitoring or video analytics solutions that determine if the public are respecting social distancing, but has also brought about economic uncertainty. We reflect these nuances in our updated figures.

5G enabled use cases could increase GDP by $1.5 trillion by 2030 – an increase from our original forecast

Source: STL Partners

5G’s impact on transport and logistics: Fresh analysis and new use cases

In 2019, we deep-dived into the 5G opportunity within two key verticals: healthcare and manufacturing. We have since performed a similar deep-dive on the transport and logistics industry, consisting of primary research with experts in the industry. We interviewed 10 enterprises, solutions providers, and members of 5G testbeds who were focused on transport and logistics, as well as surveying 100+ individuals who work in the industry to test the impact they predicted for three key 5G use cases. We will shortly be publishing a full report on these findings in detail.

We have revised our estimation on the impact of 5G on the transport and logistics industry. In 2019, we predicted 5G enabled use cases could increase the GDP value of the transport and logistics industry by 3.5% in 2030. We now believe the impact could be as high as 6%, though importantly some of these benefits are indirect rather than direct.

New forecasts show a bigger impact to the transport and logistics industry

Source: STL Partners

The three 5G-enabled solutions newly explored in detail in our study were:

  • Real-time routing and optimisation: Sensors collect data throughout the supply chain to improve visibility and optimise processes through real-time dynamic routing and scheduling;
  • Automated last 100 metres delivery: Using drones or automated delivery vehicles for the last ‘hundred yards’ of delivery, where the delivery van acts as a mobile final distribution point;
  • Connected traffic infrastructure: Smart sensors or cameras are integrated into traffic infrastructure to collect data about oncoming traffic and trigger real-time actions such as rerouting vehicles or changing traffic lights.

Benefits from these use cases include fewer traffic jams, more efficient supply chains, less fuel required and fewer accidents on the roads.

COVID has changed the landscape and appetite for 5G services

COVID-19 has caused a global economic slowdown. There has been a widespread fall in output across services, production, and construction in all major economies. Social distancing and nationwide lockdowns have led to a significant fall in consumer demand, to business and factory closures, and to supply chain disruptions. The pandemic’s interruption to international trade has far exceeded the impact of the US-China trade war and had a major impact on national economies. Lower international trade, coupled with a precipitous fall in passenger air travel, has also caused the air industry to enter a tailspin.

Table of Contents

  • Preface
  • The 5G opportunity: Updated forecast on value to verticals
  • 5G’s impact on transport and logistics: Fresh analysis and new use cases
    • Increased productivity through more efficient roads: An impact beyond transport and logistics
  • COVID has changed the landscape and appetite for 5G services
    • COVID has impacted the GDP of every country – and outlook for recovery is still unclear
    • Operators’ 5G strategies and roll out have also been impacted
    • Appetite for 5G-enabled healthcare services has been accelerated
  • Conclusion: Where next for the industry?