Communications service providers (CSPs), including mobile network operators, have invested heavily in the digital transformation of their networks to support three main business outcomes: increased operational efficiency, improved subscriber experience and higher revenue growth.
The mobile industry, for example, has seen especially intense transformation activity with the commercialization of 5G and network virtualization through SDN and NFV. According to a recent Heavy Reading survey, co-sponsored by A10 Networks, 5G core (5GC) will see a 93% implementation rate over the next three years, a remarkably fast commitment level within the industry.
However, for many CSPs, the question remains: How well have digital transformation initiatives achieved desired business outcomes for efficiency, subscriber experience and revenue growth?
Harder than expected
According to analysts, digital transformation initiatives have struggled to achieve desired outcomes and expected return on investment. Network virtualization, for example, has proven far more challenging than hoped due to the scope, complexity and difficulty of transforming a high-scale network with many interdependent elements without impacting performance and subscriber experience. Adding even more to the challenge is the reality that all network transformation initiatives must move forward while the existing network is still rapidly growing. To this end, Gartner estimates that through 2023, only 1% of mobile service providers will be able to boost revenue from 5G services.
In these very large and complex networks, operators are often hampered by the limitations of available vendor technology, causing uneven development and integration of vendors' carrier-grade solutions. Many critical network functions, positioned in line with traffic, perform compute-intensive packet inspection and need very high performance and low latency. This is often only achieved through purpose-built hardware.
For example, there may be specific use cases or areas of the network where complete conversion to virtual or cloud-native technology doesn't make economic or practical sense. This results in the continued management of hybrid architectures. This flies in the face of an overall strategy towards network virtualization or cloud-native 5GC architectures. Often, operators need to bend to the technology realities of the moment while continuing the march towards a longer-term vision. In those cases, the eventual conversion of those physical elements to software-based solutions must be heavily considered so that operational consistency is maintained and service uninterrupted.
There has been some success. AT&T has publicly touted its commitment to moving to a software-defined network for years, targeting 75% network virtualization by year-end 2020. AT&T recently credited its ability to rapidly respond to the 20-30% surge in traffic from the pandemic to its implementation of NFV and SDN in its network.
The global pandemic has permanently raised the bar on subscriber expectations for network availability, performance and security. The pandemic has exposed the criticality and vulnerability of networks. The public and governmental agencies will likely demand higher levels of accountability with higher levels of security and network availability from service providers.
Operators have long been subjected to cyberattacks, especially DDoS attacks. A recent HardenStance Report on Telco Security Incidents describes the breadth of attacks that service providers experience against their networks and cautions that in many cases, service providers are not fully taking advantage of available security solutions. This is partly because threat and competitive landscapes have changed since mobile standards were developed, becoming increasingly sophisticated and automated and driving higher and higher volumes of attacks. Security, once baked into the standards of mobile networks or accomplished through an assortment of security appliances in a central data center, now must become front and center of the revenue value proposition with 5G, high revenue potential enterprise customers now demanding tighter levels of protection and stronger SLAs.
New revenue requires a new approach
Previously, new revenue growth initiatives have often been accomplished through siloed technology implementations. This approach is now proving to be a barrier to digital transformation at scale and adds to overall technology complexity.
CSPs that have already made significant investments in transformation technologies are now shifting their focus towards leveraging that investment for revenue growth. Operators are exploring enterprise use cases leveraging networking slicing, multi-access edge computing (MEC), and private 5G/LTE and new network-as-a-service models, including functions such as DDoS protection/scrubbing services and others. There is a shift to closer align technology investments with revenue opportunities.
Consider BT Global, the managed network/IT infrastructure services wing of the UK-based telco, restructuring its business to complement the core network infrastructure of its parent. Two new operating units, "DigiCo" and "ThreatCo," will drive services that complement BT Global's core network services ("NetCo").
BT's ThreatCo develops, sells and markets cybersecurity services to enterprise customers and is also responsible for protecting BT itself, which has had to develop the capability to withstand nation-state-grade cyberattacks against its network infrastructure and data. This is an effective way to leverage carrier-grade capabilities that reassure customers that they too can be equally protected.
Operators are highly skilled at building and re-architecting networks and have proven that expertise repeatedly through 2G-5G migration and other digital transformation initiatives. They will no doubt succeed in overcoming the many technical and operational challenges that still remain. However, business success from those investments requires a more fundamental shift of skills and attitude in multiple non-network areas of the business. These include redefining the value proposition beyond "speed and coverage," intensifying the depth of security offered to customers and restructuring organizations to meet a more demanding subscriber base and varied ecosystem. The upside: operators are making inroads towards these changes, with more work to come.
— Terry Young, Director of 5G and Service Provider Solutions, A10 Networks