Facing a potentially toxic set of challenges, the telecoms industry is going through a profound transformation. Market saturation, technical and business legacy created during years of rapid growth, and fast-changing customer expectations have placed continuous pressure on operating costs and operational agility. At the same time, communication service providers (CSPs) find themselves caught in a paradox: demand for the core product of connectivity is growing exponentially, yet hyper-competition, saturated customer wallets and the continuous investment required to satisfy that demand means organic growth options are limited.
By 2035, 5G will enable $13.2 trillion of global economic output1. The next 15 years are predicted to be so impactful, that they will bring a fundamental change in the way we live, work and relate to one another; and the COVID-19 pandemic will only accelerate this change. For the consumer market, this will of course mean faster internet speeds and universal high-speed access through services such as fixed mobile broadband, but these opportunities hold limited growth potential for CSPs. The real potential of 5G is centered on the enterprise and B2B2x market. Everything-as-a-Service (XaaS) offers vital growth opportunities, which Bain predicts could be worth as much as a $400 billion plus by 20252. CSPs could win a healthy slice of this opportunity, but in order to do so, they must emulate and collaborate with each other as well as with hyperscale players like Google, Amazon, Microsoft, Alibaba and Tencent; and also with new nimble insurgents who are better placed in the customer’s eyes to deliver the digital services of the future.
To emulate and collaborate with the hyperscale and more nimble players, CSPs need to fundamentally rethink their operating model and processes; speed of decision-making, culture, ways of working, and the systems that support them – a holistic business transformation. In simple terms, this means evolving traditional connectivity to products fit for the ‘-as-a-Service’ future, and adding new products, services and capabilities to go beyond connectivity and become a digital service provider (DSP). While service providers recognize the need to urgently move away from over-complex, rigid and siloed processes and technologies, progress to date has been too slow to enable the flexibility, agility and innovation needed to capture the potential value of new 5G services and business models. In short, CSPs are transforming too slowly to capture the new value they are helping to create.
Legacy processes and technologies are a systemic part of the problem. Progress to address these challenges is so slow that Gartner predicts that by 2025, technical debt will consume more than 40% of operators’ current IT budgets3. CSPs often struggle to balance “quick fix” changes to meet short-term business needs (which only increase their technical debt) with investing in sustainable long-term transformation of the business and the software that runs it. IT is no longer the concern of the CIO alone; it is now a strategic capability that is highly visible in the Boardroom. This has come to prominence as CSPs risk being left behind by the enterprise customers they are targeting for growth. Gartner predicts, in the same timeframe (by 2025) that 75% of enterprise workloads will be moved out of traditional data centers to the edge and central cloud.
A rapid and radical shift to an open, modern, software-based technology architecture that enables new operating and business models is therefore needed; one which is loosely coupled, cloud native, data and AI-driven; made up of standard components which can be easily procured and deployed, without the need for customization. To achieve the required concept-to-cash cycles, service providers and their suppliers need to embrace combining development, security and operations (DevSecOps), continuous integration/continuous deployment (CI/CD) and agile ways of working across their organizations. Together with partners, they must also deliver ‘zero-touch’ agility to achieve operating cost objectives.
This new architectural and software approach has already delivered spectacular and disruptive results, especially with new greenfield operators such as Reliance Jio in India and high expectations for Rakuten in Japan. Notably, the ambitions of these companies go far beyond connectivity, seeking to become end-to-end digital platform providers. Since launching in September 2016, Jio has become one of the world’s fastest growing technology companies and is now the number one mobile carrier in India with over 376 million subscribers4, and most recently attracting substantial investment from companies such as Facebook.
Achieving these goals will require a fundamental, holistic change in how software is architected, built, procured, licensed, and maintained. Pivoting towards a ‘software-first’ solution will not be easy – it creates significant changes for both buyers and sellers.
Traditional silos between business, operations and network expertise must be overcome. Equally, a rich history of customization, rigid integration and static processes must be left behind.
To address these challenges, TM Forum members are leading an industry initiative to build the Open Digital Framework (ODF). ODF includes the target Open Digital Architecture (ODA); incorporating a modern, flexible integration fabric (Open APIs), together with the infrastructure for binary testing of conformance for interoperability and end-to-end management. ODF also provides tools to support migration from legacy systems to ODA’s modular, cloud native architecture with software components enabling IT and network capabilities over time. In short, ODF is a future-proof blueprint for service providers to deliver intelligent operations fit for the 5G and IoT era, leveraging Artificial Intelligence (AI).
The adoption of ODF enables a new style of a software market for CSPs as they evolve to become digital service providers (DSPs) – one where the procurement and assembly of interoperable solutions is easier and where these solutions are substantially cheaper to deploy, integrate and upgrade. Made up of industry standard, self-describing components, they will enable systems designers to discover solutions that can be used to accelerate innovation in a “try and buy, fail fast and cheap” approach.
Open Digital Framework marks a significant change for the DSP software market, simplifying the solutions and removing the need for large-scale customization and integration. Service providers will prioritize investment in software and technology that differentiates their business, not in the customization and integration of non-differentiating solutions. This creates opportunities for new market entrants and established vendors to unlock value-added partnerships.
Collaboration across the industry will be vital to this effort. Service providers will drive the demand for these new, flexible solutions, while software vendors and solution providers will bring their essential expertise. Only through collaboration can the industry attain the required knowledge and agree the required standards and common code assets such as APIs. Working closely with the relevant standards bodies, TM Forum is the platform to drive rapid innovation in these developments and will play a critical role in igniting the market.
The foundations are now in place – now is the time to scale.