October 23, 2023
What happens when you put telco execs in a room to discuss the future?
You get lots of talk about diversification, going beyond connectivity and, these days, a heavy focus on the cloud, APIs and automation.
The numbers behind the cloud push are stark. A deep dive by deep dive by Omdia – Light Reading's sister company – from earlier this year found just nine of 28 telcos tracked had reduced opex over the period 2009-21, and only three had done so in an efficient way.
Across the industry, opex had grown in most key areas, with the network share of total opex growing from 15.9% to 18.4% and the IT share from 2.9% to 6.2%.
It concluded that operators "may have transformed operationally, but it has not transformed their financial fundamentals."
Omdia forecast that "moderate cloud adoption" – meaning cloud BSS, network management and analytics, and partial cloud 5G core – would reduce opex from about 57% of revenue in 2022 to 46% in 2030.
At the Futurenet event in Singapore last week, the GSMA Open Gateway initiative, or Network as a service (NaaS), got a lot of airing.
Shanthi Ravindran of Appledore Research said the key aspect to NaaS was that services had to be dynamic, or "composable."
Everything is API gateways
She said NaaS breaks down into three types of service. One is allowing customers to directly access services through an automated touchpoint, another is serving up a network slice to an industry vertical, while a third is providing data that enables a service through an API, as in the way Google Maps serves up location services.
A good deal of activity is taking place in telcos around the world, but it is too early to be making any visible impact on business.
Thomas Hundt, Axiata chief strategy and technology officer, said the API gateways were the opportunity that offered the most. "Everything is API gateways, exposing APIs, and we're very upbeat about it. If the API is available then the partner ecosystem system can take advantage of it," he said.
Eugene Teh Yee, a senior VP and head of partnerships at Telenor Asia, said a shift in mindset was underway. "More and more telcos are thinking like solution companies, not product companies."
Such a change needs leadership from the top. Henry Calvert, head of network at GSMA, estimated the Open Gateway initiative has the strong support of 80% of the CEOs on the GSMA board.
APIs are already being built and activated in the marketplace, he says, and he thinks the strength of Open Gateway is that it is in software code, rather than in industry-agreed specs, making it faster and easier to adopt.
So there are green shoots, but this is a huge culture change.
One admittedly unscientific survey of conference attendees found 43% thought people issues were the biggest obstacle, with 29% pointing to business issues.
This frames the task for telcos. Their challenge is not so much to introduce a new technology but being able to transition to new skill sets and services and financial models with a minimum of pain.
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