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:

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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

 

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Growing the Digital Economy: Lessons from Brazil, Mexico, and Iran

Introduction

Recent data on the growth of the Internet shows that different public policies have dramatically different impacts. In Latin America, two nations following very similar policies are achieving spectacular success, both in terms of raw quantity and in terms of deeper qualitative improvement, while other countries, sometimes with higher per-capita GDP, pursue different policies and see radically worse results.

In the Middle East, there is evidence of a similar breakout to development in some surprising countries, which turn out to be adopting key elements of the policy mix that has been successful in Latin America.

Renesys, a US company which provides software tools to monitor Border Gateway Protocol BGP routing activity, also collects large amounts of data on the structure of the Internet as a by-product of this activity. In May 2013, they issued a fascinating blog post, which drew attention to the dramatic development gap emerging between – for example – Brazil and Argentina on one hand, and Mexico on the other.

AS numbers: a key metric for Internet participation

What Renesys was looking at was the count of ASNs (Autonomous System Numbers) over time, a measure that we believe gives an excellent and profound indication of the development of the internet.

ASNs identify networks that control their own routing policy and IP address block. The voluntary interconnection of autonomous systems through BGP routing, which is based on AS numbers, makes up the fundamental structure of the Internet. In this sense, counting ASNs is a better metric than counting subscribers, domain names, Web sites, or IP addresses, because it is a measurement of participation in the Internet, not just consumption of cat videos and Google adverts. The creation of new ASNs is evidence that new businesses, organisations, content providers, hosting and cloud computing providers, and ISPs are emerging. It is evidence that technical competence is diffusing through society.

Because an ASN is the entry ticket to Internet peering, it’s also evidence of growing direct interconnection between networks, the fundamental purpose of the Internet, and the source of reliable, resilient, and high-performance service. In important ways, more AS numbers shows not just quantitative growth, but also qualitative improvement.

So how does the scoreboard look?

Figure 1: Brazil & Argentina Lead The Way
Latin America: New ASNs Feb 2014

Source: Renesys data, STL Partners visualisation

Argentina is doing well; Brazil is doing incredibly well; Mexico is either stable, or stagnant. We’ve labelled the chart selectively, so you can also see that among the poorer and smaller Latin American nations, Costa Rica is doing very well while Venezuela is doing poorly.

Mexico’s per-capita GDP at purchasing-power parity was calculated at $15,312 in 2012 dollars by the IMF, whereas Argentina’s was $18,112. But this gap doesn’t explain what’s going on here. Brazil’s was $11,875, and the Brazilian Internet is doing even better. Clearly, money is not enough. Every year, Brazil adds as many ASNs as there are in the whole of Mexico. This is a reflection of vastly different government policy and market structure. Similarly, there doesn’t seem to be any reliable link between population, ASN growth, or how many citizens there are for each ASN, as the following chart shows. Even GDP is a very weak predictor.

Figure 2: Policy, not population or GDP, drives Internet growth
It's not population nor GDP Feb 2014

Source: STL, IMF data, ANATEL

 

  • Executive Summary
  • What did Brazil get right?
  • A More Democratic Internet: Understanding the Problem from a Latin American Viewpoint
  • A Policy Mix That Supports Innovators
  • What did Mexico and others do wrong?
  • Monopolies lead to inertia
  • State Telecoms: not a great strategy either
  • Taking A Similar View On The Middle East
  • Censorship and Internet Development
  • Wholesale Transit as a Weapon
  • Conclusions
  • About STL Partners

 

  • Figure 1: Brazil & Argentina Lead The Way
  • Figure 2: Policy, not population or GDP, drives Internet growth
  • Figure 3: Brazil has been adding 700+ new local ISPs a year
  • Figure 4: The Middle East by ASN count
  • Figure 5: Iran’s Internet Flourishes Behind the Firewall
  • Figure 6: In the Middle East, it’s policy that matters too

Digital Economy: who will prosper in ‘The Great Compression’?

Summary: Value is squeezed out of industries as they become increasingly digital – i.e. accessed by mobile and online, driven by data and defined by software. We call the collective economic impact of this pressure ‘The Great Compression’. But which companies will survive and prosper – and how? 90% of the Execs at our Silicon Valley brainstorm identified ‘management mindset’ as a key factor in Telecoms, Media, Finance and Retail. (May 2013, Executive Briefing Service, Transformation Stream).

Scale of Transformation Needed April 2013

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Below are the high-level analysis and detailed contents from a 62 page Telco 2.0 Briefing Report that can be downloaded in full in PDF format by members of the Premium Telco 2.0 Executive Briefing service and the Telco 2.0 Transformation Stream here. The Digital Economy, and the changes needed to ‘management mindset’, organisation, technology, and products, will also be explored further at the EMEA Executive Brainstorm in London, 5-6 June, 2013. Non-members can find out more about subscribing here, or find out more about this and/or the Brainstorm by emailing contact@telco2.net or calling +44 (0) 207 247 5003.

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Introduction

Part of the New Digital Economics Executive Brainstorm series, the Silicon Valley 2013 event took place at the InterContinental Hotel in San Francisco on the 19th and 20th of March, 2013. This report covers the Digital Economy track on the first day.

Summary Analysis: who will prosper in ‘The Great Compression’?

Telecoms, telco vendors, entertainment, device makers, financial services, retailers, entertainment services, and brands in developed economies are experiencing the ‘Digital Hunger Gap’ – a shortfall of revenues versus past levels as industries become increasingly digital i.e. accessed by mobile and online, driven by data and defined by software.

Other industries are also feeling pain from the process of becoming digitised which both changes the model and the dynamics of competition. Others, like consumer goods and car manufacturing, see opportunities to enhance services with digital connectivity to build loyalty and new value. Government services and healthcare face huge cost challenges. Digital services can be of huge value here, but the challenge for third parties is how to make money when money needs to be saved.

According to the participants in the Silicon Valley brainstorm, almost every industry faces massive changes in every area of its business model, with management mindsets most in need of a dramatic overhaul, and customer relationships marginally ahead in the total of partipants thinking a dramatic or significant change is needed.

Scale of Transformation Needed April 2013

New markets are emerging rapidly, particularly in Asia. However, many companies from North America and EMEA lack depth in local knowledge and face skills, cultural and political barriers to entry, and the mindset challenge of operating in a radically different economic environment.

As a result of the combined difficulties of growth in home markets and expansion abroad, there will be massive consolidation among traditional industry leaders in developed economies over the coming years. Those that are successful will continue to innovate as they consolidate, but it will be a huge struggle to survive for many.

We’re calling the collective economic impact of these pressures ‘The Great Compression’ as value is squeezed from existing industries. Those best positioned to profit through it have built defensible global or major regional strengths in horizontal areas with large-scale application and high barriers to entry, and/or that serve as ‘arms dealers’ to the rest of the digital economy. For example, chip makers and IP companies (e.g. ARM, Intel, Qualcomm), very large-scale / sophisticated IT manufacturers (e.g. Microsoft, Oracle, SAP), and ‘platforms’ (e.g. Apple, Google, Visa).

However, being well positioned is no guarantee of success, and all companies will face significant challenges requiring innovation and transformation. This in turn will require immediate and ongoing action by leadership teams in every company.

Digital innovation is increasingly itself becoming a little like the entertainment industry in that it is constantly seeking hits and highly vulnerable to hype. There are centres of innovation such as Silicon Valley and elsewhere, and there can only be a small number of highly successful ‘hits’ among the many thousands if not hundreds of thousands of attempts to make a hit. Finding, gaining a share in, nurturing, and ultimately profiting from these hits is a massive industry in itself. The recognised difficulty of doing this is a further barrier to success for many of the established players. Yet those that are to survive will need to overcome it.

Next steps for STL Partners

  • To define and detail the practical actions needed to drive cross-industry transformation and innovation (in terms of ‘management mindset’, organisation, technology, products, etc.) at our Executive Brainstorms in:
    • Europe, London, 5-6 June 2013; MENA, Dubai, 14-15 November 2013; APAC, Singapore, 5-6 December 2013; Silicon Valley, San Francisco, 19-10 March 2014.
  • To publish 150+ page ‘Strategy Reports’ on:
    • The detailed benchmarking of leading players’ Telco 2.0 strategies; Digital Commerce; The Future of voice and Messaging Services.
  • To publish c.15-30 page ‘Executive Briefings’ covering:
    • Software Defined Networks (SDN); The business case for personal data; ‘Show me the (mobile) money’ – an Executive Briefing on the business case for Digital Commerce.


To read the Digital Economy note in full, including the following sections detailing additional analysis…

  • Session 1: Digital Transformation
  • Strategic Growth Opportunities for a Hyper-Connected World
  • Stimulus presentations
  • Voting, feedback, discussions
  • Questionstorming: how to overcome the blockers?
  • Key takeaways
  • Session 2: Digital Consumer
  • The New Mobile Battleground
  • Stimulus presentations
  • Voting, feedback, discussions
  • STL Partners’ next steps
  • Session 3: Digital Infrastructure
  • The Impact of 4G, Software Defined Networks  & the Cloud
  • Stimulus presentations
  • Voting, feedback, discussions
  • Brainstorm Output: What new opportunities could new forms of digital infrastructure create? For whom? How?
  • STL Partners’ next steps
  • Session 4: The ‘Digital Me’
  • The role and value of ‘digital identity’
  • Stimulus presentations
  • Voting, feedback, discussions
  • STL Partners’ next steps

…and the following figures…

  • Figure 1 – Concurrent disruption in multiple lines of business
  • Figure 2 – Music since 1997, a case study
  • Figure 3 – Consolidation is a consequence of disruption
  • Figure 4 – Reviving the album format
  • Figure 5 – The future is brutal indeed
  • Figure 6 – The hunger gap, 2013-2017
  • Figure 7 – Measuring the impact of social…
  • Figure 8 – The bottom line impact of social at Bloomberg
  • Figure 9 – How realistic is the ‘Hunger Gap’?
  • Figure 10 – How accurate is the market sizing?
  • Figure 11 – How accurate is the forecast breakdown?
  • Figure 12 – What is the scale of the transformation needed?
  • Figure 13 – The ‘Telco 2.0’ opportunities for CSPs
  • Figure 14 – Learning about your customer from Amazon recommendations
  • Figure 15 – 80% are already engaged with BYOD
  • Figure 16 – Customer-centric commerce
  • Figure 17 – Mobile web user engagement takes off
  • Figure 18 – Are app stores that good for developers?
  • Figure 19 – Making mobile Web “more like apps”?
  • Figure 20 – What are the downsides of native apps?
  • Figure 21 – Would iOS users  benefit from alternative app stores?
  • Figure 22 – when should you give data back to customers?
  • Figure 23 – How long before the ‘data surveillance backlash’?
  • Figure 24 – Will voluntarily provided info be better than surveillance?
  • Figure 25 – The media industry is static, the Web/tech players gain at telcos’ expense
  • Figure 26 – The evolution of connectivity products
  • Figure 27 – Integration between industrial, enterprise, and public network domains
  • Figure 28 – Key issues for an “elastic operator”
  • Figure 29 – Verizon’s enterprise platform
  • Figure 30 – Defining SDN – with Star Trek!
  • Figure 31 – Strategic conclusions on SDN
  • Figure 32 – Impact of SDN?
  • Figure 33 – Digital feudalism, enlightenment, or something else?

Members of the Telco 2.0 Executive Briefing Subscription Service and the Telco 2.0 Transformation Stream can download the full 62 page report in PDF format here. Non-Members, please subscribe here. The Digital Economy will also be explored in depth at the EMEA Executive Brainstorm in London, 5-6 June, 2013. For this or any other enquiries, please email contact@telco2.net / call +44 (0) 207 247 5003.

Background & Further Information

Produced and facilitated by business innovation firm STL Partners, the Silicon Valley 2013 event overall brought together 150 specially-invited senior executives from across the communications, media, retail, banking and technology sectors, including:

  • AT&T, Bain & Co, Beecham Research, Bloomberg, Blumberg Capital, BMW, Buongiorno, Cablelabs, CenturyLink, Cisco, CITI Group, Cordys, Cox Communications, CSG International, EMC, Ericsson, Experian, GE, GI Partners, Group M, GSMA, IBM, Intel, Kore Telematics, MADE Holdings, Merchant Advisory Group, Microsoft, MIT Media Lab, Motorola, MTV, Nokia, Oracle, Orange, Panasonic, Placecast, Qualcomm, Rainmaker Capital, Reputation.com, SalesForce, Samsung, SAP, Sasktel, Sprint, Telus, The Weather Channel, T-Mobile USA, UnboundID, University of California Davis, US Cellular Corp, Verizon, Visa, Vodafone.

The Brainstorm used STL’s unique ‘Mindshare’ interactive format, including cutting-edge new research, case studies, use cases and a showcase of innovators, structured small group discussion on round-tables, panel debates and instant voting using on-site collaborative technology.

We’d like to thank the sponsors of the Brainstorm:
Silicon Valley 2013 Sponsors