The year 2017 has the potential to be a game changer for telcos and technology providers who take advantage of the opportunities in hand and collaborate for a connected, and secure world.
As operators and internet service providers make great headway in giving subscribers the ultimate user experience with faster, more qualitative and cost-effective voice and data services, Daniel Kurgan, CEO of BICS, believes that 2017 – despite its imminent challenges – could prove to be a turning point for the industry as a whole, with new revenue opportunities and partnerships to be reaped for those who have readied themselves to take advantage.
Looking back at the year 2016, it was good for telecoms. While operators struggled with finding newer sources of revenue generation, technology vendors made sure to maintain the spark of innovation to drive digital transformation. While voice remains one of the biggest revenue streams for MNOs, the digital revolution has sparked a new age for communication. New digital experiences like messaging apps, chat bots and even the Internet of Things have pervaded mobile devices globally, as consumers expect instant connectivity and seamless services, wherever they are in the world. As we enter the new year, CommsMEA spoke to several industry experts to forecast the trends for communications technology for the year that lies ahead of us.
Trends that are going to rule 2017
Increasing smartphone adoption
This has led to a tremendous increase in the data traffic. This trend will continue through 2017. Operators will need to make the network infrastructure ready for such traffic growth. Operators in MEA have already launched LTE-Advanced 4.5G networks in the last couple of years to cater to the tremendously increasing data traffic. Further, Aji Ed, head of technology, MEA, Nokia believes that operators will look to launch the ultra-fast LTE 4.5G Pro and 4.9G networks in 2017 and beyond and carry out 5G tests to prepare themselves for the data deluge in the coming years.
Rainer Schnepfleitner, regulation affairs and competition department manager, CRA Qatar says: “Currently the industry is faced with a mega trend ‘fast data everywhere’. This trend has enabled completely different life styles and new business models, where international players provide excellent services to the end customer. I see this trend continuing and accelerating in 2017”.
Fuelled by streaming applications like Netflix, bigger smartphone screens, and a drive by social media to integrate video, accompanied by the sheer speed of 4G, consumers clearly can’t get enough of mobile video content. Ericsson said in its most recent Mobility Report that video will account for two thirds of all mobile data traffic and will grow by around 55 per cent annually through to 2021, with social networking forecast to grow 41 per cent.
The need and pressure for digital transformation is definitely going to be a defining trend of 2017. Digital will continue to expose both new opportunities and risks. The pressure to eradicate costs, standardise processes, reduce variables and reshape the business to run more efficiently make digitisation even more urgent, says Wael El Kabbany, vice president for the Middle East and North Africa at BT.
He further adds that more organisations have started to fully embrace cloud services, recognising the cost-cutting and agility-improving benefits that they provide. “We expect to see an increase in the uptake of such services in the coming year, with the cloud becoming the universally accepted new normal. In a bid to differentiate, cloud providers have recognised that they must have the right partners embedded in their cloud. We’re going to see more cloud providers take steps to attract new partners to their communities.”
Security will continue to remain a prime threat, especially given the increasing exposure induced by digitisation. El Kabbany says: “Looking ahead, we’ll benefit from more intelligent networks that are literally ‘security aware’, able to independently detect and deal with vulnerabilities, and alert adjacent networks.”
Hackers are motivated by various factors these days and securing an organisation’s vital data assets will continue to be a major issue in the years to come. “A robust cyber strategy, centred on threat intelligence and penetration testing, to check for weak points in the IT ecosystem, will undoubtedly help in combating the latest generation of cyberthreats”, says El Kabbany.
Operators have started realising the importance of public safety solution in MEA, and some leading operators and government agencies have already deployed the LTE for public safety system.
Smart City technology
Smart city concept has been gaining momentum in MEA especially in countries like the UAE, Saudi, Qatar, and South Africa.
Internet of Things (IoT)
GSMA estimates that there will be nearly 20 billion M2M connections needed for IoT by 2020. Developments toward 5G commercialisation are paving the way for IoT. Eid expects to see IoT deployments picking up in the region from 2017.
2017 will witness more convergence across the telecoms space as service providers develop cross-platform propositions to support content services, and also look to diversify in order to target vertical markets, according to Daniel Kurgan, CEO of BICS. “The IoT will be a key driver of this transformation, as an increasing number of industries become reliant on mobile to provide the connectivity and infrastructure needed to support IoT implementations.”
Customer is king
Customer experience management is a crucial area among operators in this year and coming years as customer experience decides customer loyalty. CEM came to the fore as the highest priority for operators going forward, according to Mahindra Comviva’s The business of tomorrows report. 27 per cent of respondents putting this ahead of other key metrics like big data, cloud computing, network function virtualisation and BSS/OSS transformation.
IT Trends for the coming years, including 2017, will be focused on how to further empower employees to use the tools they find best and most convenient at work, according to Charbel Khneisser, regional pre-sales consultant manager, Middle East, Turkey & Africa at Riverbed Technology. “As technology has become an integral part of our personal lives, peoples’ mindsets and demands have shifted drastically and their expectations from ICT infrastructures is that they need to be application driven.”
Challenges or opportunities?
Many countries in MEA have started to deploy LTE. However, according to Eid of Nokia, low-cost LTE capable smart phones are quite crucial for the success of LTE in emerging markets. “Indoor coverage is an issue that is faced by all operators in the region. This is where Nokia can support with best-in-class Nokia Flexi Zone small cells for solving indoor coverage issues.”
Spectrum scarcity is another topic that telcos need to take care of together with regulatory authorities. In order to meet the capacity needs of the future, additional spectrum is mandatory. Especially, while looking at 5G, more spectrum is needed to be made available in cmwave bands like 24.5GHz – 27.5GHz.
The surge in the demand for mobile internet will create remarkable opportunities for telecom operators. The challenge that telco’s will face however is in behaviour shift of customer base centred around end-user experience. Customers’ loyalty to their telco provider will be strongly tied in to the quality of service for their mobile data access.
Khneisser says: “Carriers will have to rethink their network architecture for better coverage, quality, and capacity. This can only be achieved via the adoption of technologies such as Software Defined Networking (SDN) and Network Function Virtualization (NFV).”
The Business of Tomorrows survey by Mahindra Comviva found that one-third of the operators are concerned about future CAPEX and OPEX related issues, associated with new technology investments and network upgrades. According to a recent report by PwC, telcos could be wasting up to 20 per cent (the equivalent of $65 billion) a year in capex, with the process internally deeply flawed. Customer retention (31 per cent) was cited as the second major concern, ahead of spectrum availability, issues related to backhaul and fronthaul networks, and network availability.
Growth forecast for 2017
Many operators in Middle East have already deployed LTE. Aji Ed, head of technology, MEA, Nokia believes this will evolve further with 4.5G which will improve the throughput to around 600mbps with carrier aggregation of up to 3 LTE carriers. “In 2017, the major growth will be driven by data and further, operators need to increase the throughput more by deploying 4.5G Pro with up to 3 carrier aggregation with 4X4 MIMO. This will enable the speed of 1Gbps per base station. Nokia’s 5G ready AirScale base station is the most efficient platform to deploy 4.5G network. In 2018 and beyond, we expect to see 4.9G picking up with a speed of 2.5Gbps and above. 4.9G will have upto 5 carriers aggregated with massive MIMO. Nokia’s AirScale platform is designed to support 4.9G.”
Though, 5G commercial availability is expected around 2020, telcos have already started 5G planning and tests. In 2018, Korea winter Olympics will see the first mobility use cases of 5G implemented using pre-standard systems. 5G commercial systems are expected to be operational by 2020 Tokyo Olympics. In the Middle East, telcos are making plans for 5G deployments in 2020 and beyond. First deployments of 5G in the region are expected to be around major events like Expo 2020 in UAE and world cup event in Doha in 2022. Vendors like Nokia, Ericsson and Huawei are already collaborating with all the major operators in the Middle East to help them getting ready for 5G.
Needless to say, as the popularity and usage of internet communication tools such as WhatsApp, Viber, Skype, keep rising, will dramatically impact the traditional voice and SMS revenue streams of telecom operators. In order to maintain their profitability in such a market, telcos wil need to redefine their approach.
Khneisser of Riverbed Technology explains with an analogy. “This is reminiscent of what happened to the banking sector in the 1970s when their revenue generating income was mostly from various types of loans. They managed to adapt to new spending models through innovation. Credit cards are still a form of loan but packaged to meet 21st century users demand. Telcos need to replicate such innovation as currently, they have failed to repackage their legacy services.”
The driving strategy for telcos should be around data usage and cloud adoption. They need to package services and products around these to meet the needs of their customers. Telecom providers are ideally positioned to enable communication and collaboration and they need to leverage this to their advantage.
Khneisser further adds that telcos should promote more cloud adoption and help their install base take the route of Software Defined WAN (SDWAN) through a managed services contract. “Moreover, telcos need to start building a more granular charging function mechanism that supports billing users by type of data usage such as VoIP apps, social apps, instant messaging apps, or business apps. This approach will help telcos shift from being only a simple data channel provider to charging based on service usage.”
In the midst of the prevalent economic climate in the region, organisations are under pressure to increase their bottom line and find new avenues of growth. This is where big data and data analytics come into play. “Only by leveraging the opportunities afforded by big data will telecom firms be able to tap into new customer groups, provide best-in-class services to their existing customer base and stay ahead,” El Kabbany says. He further emphasises the need to maintain a “lean and efficient organisation that not only knows how to respond to its customers in real-time, but also facilitates seamless interaction within its workforce is the key to success. Thus, digital transformation and opting for a ‘digital first’ strategy can make all the difference between success and failure. Making this anything else than a top priority is a sure way to get left behind.”
The fear of the traditional telcos is to be degraded to a “dumb pipe”, providing connectivity only and losing the customer connection. Countering this, Schnepfleitner says there is nothing wrong in providing a superior connectivity service. “Firstly, economic theory suggests that focus will lead to more efficient production and cost saving. Secondly, experience from other commoditised utilities shows that the business model of a “pipe” can profitably work. Thirdly none of the diversification endeavors of telcos have ever worked. I recall a myriad of very expensive and failed WAP portals, content creation platforms, dabbling in the movie business, music platforms and the like. It’s simply not in the DNA of the telcos, not they have the relevant resources or possibility to roll these services out worldwide, which would provide economies of scale. Fourthly, connectivity and last mile will not be provided by OTTs, therefore telcos will have a steady stream of revenue and profit. Finally, it’s already reality and one can only try to defy gravity.” He recommends that the way forward is to accept this reality, form alliances and implement revenue sharing models.
Niranj Sangal, CEO, OMA Group believes that telecom operators along with banking and financial services sector together can play a major role in enabling citizens to adapt the government initiatives which are focused on digital transformation and furthering mobile payments economies. “Companies that have the expertise and are able to provide innovative solutions such as e-KYC, peer to peer cross border remittance using blockchain technology, Mobile Point of Sale acquiring will stand to gain tremendously. These companies partnering with telecom operators will enable the banking sector to move towards digital and mobile transformation especially in a fast pace growth market such as Africa.”
He recommends telcos to invest in mobile payment systems to reap the advantage of tremendous opportunities in the sector. “However, the industry must also work towards covering larger populations with Internet and mobile networks and coordinate them to facilitate and guarantee interoperability for such solutions.”
The importance of ongoing training and development cannot be stressed enough. At the moment, the Middle East is facing a significant shortage of highly skilled technology professionals. Providing continuous training and development is the only way to pre-empt this issue and ensure that the IT operations of the future, be it data analytics or cybersecurity, will be in good hands.
Jean-Philippe Gillet, Intelsat’s VP EMEA says the telcos should focus on making their networks future-proof so they can react quickly to changing end-user demand. “Our move toward managed-service models will expand hybrid network solutions. This approach will allow our customers to reduce their capital expenditures and redirect resources and manpower toward application development that will bring new traffic on their networks.”
No looking back
Going forward, it’s recommended that the telcos continue their technology investments and increasingly go for strategic collaborations and partnerships with content and other value added service providers to provide a rich digital experience to customers. Customer experience should continue to be the prime driver of projects and telcos should make best utilisation of big data analytics to deliver personalised experiences, reduce churn and enhance profitability. Any kind of change is tough; but then the ones who face the challenge have the potential to emerge victorious and grab a giant share of the digital pie.