Prioritising automation: Creating a successful building block strategy

Automation, AI and data analytics are driving telco strategy

STL Partners has been at the forefront of identifying network and service automation opportunities for telcos since 2016. Our report Network AI: The state of the art outlined the telco automation journey as a continuum of four stages: from business intelligence, to fixed-policy and ML-supported (or augmented intelligence) automation, and finally to fully autonomous systems. In Telcos and AI: What it will take to create an AI-driven telecoms industry, we discussed the state of AI in the telecoms industry and took a deep dive into the specific technologies available.

The telecoms industry can no longer rely on manual operations. Automation is a necessity for operators to manage business and technological complexities in creating new digital services and B2B2X business models. Operators are expected to provision best-in-class connectivity services, while managing underlying network complexities with quality, resiliency, and speed.

In this report, we focus specifically on automation within network and service operations (See image below). While rules-based automation has been around for decades and is well embedded into network processes, AI is at a more nascent stage where most implementations are in small pockets or proofs of concept (POC). For the purpose of this report, we have regarded “automation” as an umbrella term encapsulating rules-based automation and AI and ML assisted automation.

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Key automation use cases in network and service operations

key telco automation use cases

Source: STL Partners

The report discusses findings from a research programme conducted by STL Partners between December 2020 and February 2021, consisting of an online survey of 100 individuals working at telecoms operators and an in-depth interview programme with 15 leading operators. Drawing on insights from this research, we will discuss the current state of the industry and operators’ future ambitions for automation in network and service operations, and highlight regional nuances between operators from the Americas, APAC, Europe, and Middle East & Africa.

Network and service operations are the critical domains for operators to consider automation, as the payoff for being highly automated in these areas will be game-changing. We predict implementing automation technologies in network and service operations can deliver greater financial value than all other domains combined. For an average operator, this is equivalent to 5.7% of its total annual revenues, or $850 million, from revenue uplift, CapEx and OpEx savings.

The current state of automation in network and service operations

Automating network and service operations will deliver the largest financial impact for a telecoms operator

automating telecoms network and service financial impact

Source: STL Partners, Charlotte Patrick Consult

Over the past decade, all operators have made progress in adopting automation within the network and service operations domains. Results from our survey show that operational areas where operators can leverage mature, pre-existing vendor solutions tend to be the most highly automated. For instance, operators report greater degrees of automation for network fault detection and root cause analysis – an area where pretrained models from vendors are widely available – than for network function lifecycle management, where vendor solutions are still nascent.

  • In our survey, less than 10% of operators reported being fully automated in any single network or service domain. The majority of operators indicate they are still in the mid-stages of automation with a mix of automated and manual processes.
  • Our data show that operators on average have achieved around 40% of “intra-process” automation, i.e., automating processes within a single domain, while very few achieved “inter-process” automation linking across different domains.

Despite this, the industry still has a long way to go to achieve “full automation”. Operators are automating individual functional units at different speeds, depending on their geography, network focus, and maturity. In fact, for most operators, the network and service domains are lagging behind, and higher levels of automation are being seen in domains like HR and sales and marketing.

Some flagship automation use cases are gaining maturity, but none are close to being fully automated

level-of-telco-automation-across-domain

Source: STL Partners telecoms survey, March 2021, 100 respondents

Not all telco automation journeys are the same: Ambitions, region and maturity all impact adoption

Impact of changing ambitions

The ongoing conversation about automation within network and service operations will be shaped by operators’ changing attitudes towards how critical network and service domains are to their business. Our data indicates that operators are becoming increasingly divergent in their approach.

  • There are two main camps: those who believe that the network will always be their main differentiator versus those who are increasingly exploring new network agnostic opportunities. These could include platforms, applications and solutions.

Both camps are pursuing automation – this bolsters our claim that automation is not a choice, but a requirement for all operators to remain commercially competitive. However, differing end goals does present different priorities.

Changing ambitions in the telecoms industry bring automation to the fore

changing telco ambitions automation two camps beyond connectivity

Source: STL Partners telecoms survey, March 2021, 100 respondents

Impact of different regions and market position

These aspirations are shaped by market positioning; new entrants will not have to undergo as significant a journey as incumbents who need to reshape their employees, technical capabilities and operating model. For new-entrant operators, automation is often at the core of their business strategy, enabling them to quickly build out, scale, and manage a cloud-native network with a limited workforce. One APAC challenger operator described automation and a DevOps approach as being essential to their ability to roll out a greenfield network and accelerate 4G site commissioning from 3-4 days to 8 minutes.

Operators’ ambitions in Europe are more diverged than in other regions

telco operator ambitions european divergence other regions

Source: STL Partners telecoms survey, March 2021, 100 respondents

Operators must adopt a building block strategy to account for their current state of automation in network and service operations, in order to successfully cross over from “connectivity” to “beyond”. This means taking a pragmatic, incremental approach in designing and implementing intelligent automation initiatives, starting with modernising existing and legacy networks.

Table of Contents

  • Executive Summary
    • Automation: How to get there faster
    • Achieving automation: The building block strategy
  • Automation, AI and data analytics are driving telco strategy
    • Network and service operations: The current state of automation
    • Not all automation journeys are the same: Ambitions, region and maturity all impact adoption
  • Defining, evaluating, prioritising: Creating a successful building block strategy
    • Step one: Defining automation domains
    • Step two: Evaluating the importance of domains
    • Step three: Prioritising automation domains
  • Making automation bitesize: How to innovate
    • Changing people, processes and culture
    • Building trust in automated systems
    • Automation chaining and managing domain interfaces
  • Recommendations for the industry
  • Appendix: Breakdown of telecoms survey respondents

 

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The changing consumer landscape: Telco strategies for success

Winning in the evolving “in home” consumer market

COVID-19 is accelerating significant and lasting changes in consumer behaviours as the majority of the population is being implored to stay at home. As a result, most people now work remotely and stay connected with colleagues, friends, and family via video conferencing. Consumer broadband and telco core services are therefore in extremely high demand and, coupled with the higher burden on the network, consumers have high expectations and dependencies on quality connectivity.

Furthermore, we found that people of all ages (including non-digital natives) are becoming more technically aware. This means they may be willing to purchase more services beyond core connectivity from their broadband provider. At the same time, their expectations on performance are rising. Consumers have a better understanding of the products on offer and, for example, expect Wi-Fi to deliver quoted broadband speeds throughout the house and not just in proximity to the router.

As a result of this changing landscape, there are opportunities, but also challenges that operators must overcome to better address consumers, stay relevant in the market, and win “in the home”.

This report looks at the different strategies telcos can pursue to win “in the home” and address the changing demands of consumers. It draws on an interview programme with eight operators, as well as a survey of more than 1100+ consumers globally . As well as canvassing consumers’ high level views of telcos and their services, the survey explores consumer willingness to buy cybersecurity services from telcos in some depth.

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With increasing technical maturity comes an increasingly demanding market

Consumers are increasing in technical maturity

The consumer market as a whole is becoming much more digital. Over the past decade there has been a big shift towards online and self-service models for B2C services (e.g. ecommerce, online banking, automated chatbots, video streaming). This reflects the advent of the Coordination Age – connecting people to machines, information, and things – and the growing technical maturity of the consumer market.

COVID-19 has been a recent, but significant, driver in pushing consumers towards a more digital age, forcing the use of video conferencing and contactless interactions. Even people who are not considered digitally native are becoming increasingly tech savvy and tech capable customers.

Cisco forecasts that, between 2018 and 2023, the number of Internet users globally will increase from 51% to 66% . It has also forecast an increase in data volumes per capita per month from 1.5GB in 2017 to 9.7GB in 2022 . Depending on the roll out of 5G in different markets, this number may increase significantly as demand for mobile data increases to meet the potential increases in supply.

Furthermore, in our survey of 1,100+ consumers globally, 33% of respondents considered themselves avid users and 51% considered themselves moderate users of technology. Only 16% of the population felt they were light users, using technology only when essential for a limited number of use cases and needing significant support when purchasing and implementing new technology-based solutions.

Though this did not vary significantly by region or existing spend, it did vary (as would be expected) by age – 51% of respondents aged between 25 and 30 considered themselves avid users of technology, while only 18% of respondents over 50 said the same. Nevertheless, even within the 50+ segment, 55% considered themselves moderate users of technology.

Self-proclaimed technical maturity varies significantly by age

Source: STL Partners consumer survey analysis (n=1,131)

The growing technical maturity of consumers suggests a larger slice of the market will be ready and willing to adopt digital solutions from a telco, providing an opportunity for potential growth in the consumer market.

Consumers have higher expectations on telco services

Coupled with the increasing technical maturity comes an increase in consumer expectations. This makes the increasing technical maturity a double edged sword – more consumers will be ready to adopt more digital solutions but, with a better understanding of what’s on offer, they can also be more picky about what they receive and more demanding about performance levels that can be achieved.

An example of this is in home broadband. It is no longer sufficient to deliver quoted throughput speeds only within proximity to the router. A good Wi-Fi connection must now permeate throughout the house, so that high-quality video content and video calls can be streamed from any room without any drop in quality or connection. It must also be able to handle an increasing number of connected devices – Cisco forecasts an increase from a global average of 1.2 to 1.6 connections per person between 2018 and 2023 .

Consumers are also becoming increasingly impatient. In all walks of life, whether it be dating, technology or experiences, consumers want instant gratification. Additionally, with the faster network speeds of 4G+, fibre, and eventually 5G, consumers want (and are used to) continuous video feeds, seamless streaming, and near instant downloads – buffering should be a thing of the past.

One of our interviewees, a Northern European operator, commented: “Consumers are not willing to wait, they want everything here, now, immediately. Whether it is web browsing or video conferencing or video streaming, consumers are increasingly impatient”.

However, these demands extend beyond telco core services and connectivity. In the context of digital maturity, a Mediterranean operator noted “There is increasing demand for more specialized services…there is more of a demand on value-added, rather than core, services”.

This presents new challenges and opportunities for operators seeking growth “in the home”. Telcos need to find a way to address these changing demands to stay relevant and be successful in the consumer market.

Table of Contents

  • Executive summary
  • Introduction
  • Growing demand for core broadband and value-added services
    • COVID-19 is driving significant, and likely lasting, change
    • With increasing technical maturity comes an increasingly demanding market
  • Telcos need new ways to stay relevant in B2C
    • The consumer market is both diverse and difficult to segment
    • Should telcos be looking beyond the triple play?
  • How can telcos differentiate in the consumer market?
    • Differentiate through price
    • Differentiate through new products beyond connectivity
    • Differentiate through reliability of service
  • Conclusions and key recommendations
  • Appendices
    • Appendix 1: Consumer segments used in the survey
    • Appendix 2: Cybersecurity product bundles used in the conjoint analysis

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End-to-end network automation: Why and how to do it?

Automation, analytics and AI: A3 unlocks value for operators

STL Partners has been writing about automation, artificial intelligence (AI) and data analytics for several years. While the three have overlapping capabilities and often a single use case will rely upon a combination, they are also distinct in their technical outcomes.

Distinctions between the three As

Source: STL Partners

Operators have been heavily investing in A3 use cases for several years and are making significant progress. Efforts can be broadly broken down into five different domains: sales and marketing, customer experience, network planning and operations, service innovation and other operations. Some of these domains, such as sales and marketing and customer experience, are more mature, with significant numbers of use cases moving beyond R&D and PoCs into live, scaled deployments. In comparison, other domains, like service innovation, are typically less mature, despite the potential new revenue opportunities attached to them.

Five A3 use case domains

Source: STL Partners

Use cases often overlap across domains. For example, a Western European operator has implemented an advanced analytics platform that monitors network performance, and outputs a unique KPI that, at a per subscriber level, indicates the customer experience of the network. This can be used to trigger an automated marketing campaign to customers who are experiencing issues with their network performance (e.g. an offer for free mobile hotspot until issues are sorted). In this way, it spans both customer experience and network operations. For the purpose of this paper, however, we will primarily focus on automation use cases in the network domain.  We have modelled the financial value of A3 for telcos: Mapping the financial value.

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The time is ripe for network automation now

Network automation is not new. In fact, it’s been a core part of operator’s network capabilities since Almon Strowger invented the Strowger switch (in 1889), automating the process of the telephone exchange. Anecdotally, Strowger (an undertaker by profession) came up with this invention because the wife of a rival funeral parlour owner, working at the local community switchboard, was redirecting customers calling for Strowger to her own husband’s business.

Early advertising called the Strowger switch the “girl-less, cuss-less, out-of-order-less, wait-less telephone” or, in other words, free from human error and faster than the manual switchboard system. While this example is more than 100 years old, many of the benefits of automation that it achieved are still true today; automation can provide operators with the ability to deliver services on-demand, without the wait, and free from human error (or worse still, malevolent intent).

Despite automation not being a new phenomenon, STL Partners has identified six key reasons why network automation is something operators should prioritise now:

  • Only with automation can operators deliver the degree of agility that customers will demand. Customers today expect the kind of speed, accuracy and flexibility of service that can only be achieved in a cost-effective manner with high degrees of network automation. This can be both consumer customers (e.g. for next generation network services like VR/AR applications, gaming, high-definition video streaming etc.) or enterprise customers (e.g. for creating a network slice that is spun up for a weekend for a specific big event). With networks becoming increasingly customised, operators must automate their systems (across both OSS and BSS) to ensure that they can deliver these services without a drastic increase in their operating costs.
    One  wholesale operator exemplified this shift in expectations when describing their customers, which included several of the big technology companies including Amazon and Google: “They have a pace in their business that is really high and for us to keep up with their requirements and at the same time beat all our competitors we just need to be more automated”. They stated that while other customers may be more flexible and understand that instantiating a new service takes time, the “Big 5” expect services in hours rather than days and weeks.
  • Automation can enable operators to do more, such as play higher up the value chain. External partners have an expectation that telcos are highly skilled at handling data and are highly automated, particularly within the network domain. It is only through investing in internal automation efforts that operators will be able to position themselves as respected partners for services above and beyond pure connectivity. An example of success here would be the Finnish operator Elisa. They invested in automation capabilities for their own network – but subsequently have been able to monetise this externally in the form of Elisa Automate.
    A further example would be STL Partners’ vision of the Coordination Age. There is a role for telcos to play further up the value chain in coordinating across ecosystems – which will ultimately enable them to unlock new verticals and new revenue growth. The telecoms industry already connects some organisations and ecosystems together, so it’s in a strong position to play this coordinating role. But, if they wish to be trusted as ecosystem coordinators, they must first prove their pedigree in these core skills. Or, in other words, if you can’t automate your own systems, customers won’t trust you to be key partners in trying to automate theirs.
  • Automation can free up resource for service innovation. If operators are going to do more, and play a role beyond connectivity, they need to invest more in service innovation. Equally, they must also learn to innovate at a much lower cost, embracing automation alongside principles like agile development and fast fail mentalities. To invest more in service innovation, operators need to reallocate resources from other areas of their business – as most telcos are no longer rapidly growing, resource must be freed up from elsewhere.
    Reducing operating costs is a key way that operators can enable increased investment in innovation – and automation is a key way to achieve this.

A3 can drive savings to redistribute to service innovation

Source: Telecoms operator accounts, STL Partners estimates and analysis

  • 5G won’t fulfil its potential without automation. 5G standards mean that automation is built into the design from the bottom up. Most operators believe that 5G will essentially not be possible without being highly automated, particularly when considering next generation network services such as dynamic network slicing. On top of this, there will be a ranging need for automation outside of the standards – like for efficient cell-site deployment, or more sophisticated optimisation efforts for energy efficiency. Therefore, the capex investment in 5G is a major trigger to invest in automation solutions.
  • Intent-based network automation is a maturing domain. Newer technologies, like artificial intelligence and machine learning, are increasing the capabilities of automation. Traditional automation (such as robotic process automation or RPA) can be used to perform the same tasks as previously were done manually (such as inputting information for VPN provisioning) but in an automated fashion. To achieve this, rules-based scripts are used – where a human inputs exactly what it is they want the machine to do. In comparison, intent-based automation enables engineers to define a particular task (e.g. connectivity between two end-points with particular latency, bandwidth and security requirements) and software converts this request into lower level instructions for the service bearing infrastructure. You can then monitor the success of achieving the original intent.
    Use of AI and ML in conjunction with intent-based automation, can enable operators to move from automation ‘to do what humans can do but faster and more accurately’, to automation to achieve outcomes that could not be achieved in a manual way. ML and AI has a particular role to play in anomaly detection, event clustering and predictive analytics for network operations teams.
    While you can automate without AI and ML, and in fact for many telcos this is still the focus, this new technology is increasing the possibilities of what automation can achieve. 40% of our interviewees had network automation use cases that made some use of AI or ML.
  • Network virtualisation is increasing automation possibilities. As networks are increasingly virtualised, and network functions become software, operators will be afforded a greater ability than ever before to automate management, maintenance and orchestration of network services. Once networks are running on common computing hardware, making changes to the network is, in theory, purely a software change. It is easy to see how, for example, SDN will allow automation of previously human-intensive maintenance tasks. A number of operators have shared that their teams and/or organisations as a whole are thinking of virtualisation, orchestration and automation as coming hand-in-hand.

This report focuses on the opportunities and challenges in network automation. In the future, STL Partners will also look to more deeply evaluate the implications of network automation for governments and regulators, a key stakeholder within this ecosystem.

Table of Contents

  • Executive Summary
    • End-to-end network automation
    • A key opportunity: 6 reasons to focus on network automation now
    • Key recommendations for operators to drive their network automation journey
    • There are challenges operators need to overcome
    • This paper explores a range of network automation use cases
    • STL Partners: Next steps
  • Automation, analytics and AI: A3 unlocks value for operators
    • The time is ripe for network automation now
  • Looking to the future: Operators’ strategy and ambitions
    • Defining end-to-end automation
    • Defining ambitions
  • State of the industry: Network automation today
    • Which networks and what use cases: the breadth of network automation today
    • Removing the human? There is a continuum within automation use cases
    • Strategic challenges: How to effectively prioritise (network) automation efforts
    • Challenges to network automation– people and culture are key to success
  • Conclusions
    • Recommendations for vendors (and others in the ecosystem)
    • Recommendations for operators

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