Article

• Apr 13 2022

Telco, transformed: How operators are monetising the latest innovations

8 min read

How much do consumers really care about connectivity? As long as people can use their mobile devices the way they want to, when they want to, they don’t really give the ‘how’ much consideration. Yet as mobile habits and technologies evolve, so do our expectations of what should be possible. It’s up to telcos to keep up with that pace and deliver faster, clearer connectivity — which is why 2.7 billion euros had been spent on 5G deployment by 2020, in the UK alone.

The challenge now is for telcos to monetise on that 5G investment, and show consumer and business customers alike the value of 5G.

We caught up with Chris Secker, RPI's Managing Client Partner, EMEA, and telco specialist to get his insight into the challenges telcos face as we enter the 5G revolution.

What is the lay of the land for telcos in Europe?

It’s a momentous period. There’s always been a generational update —consumers know they had GSM, then 3G, then 4G, now 5G. We all want the best technology, even if we don’t know why, or exactly what it means for us. As long as our bills don’t go up, we’re quite happy. The average consumer tends to be more interested in the phone itself than the connectivity.

In Europe, we’re a little bit more advanced from an infrastructure perspective. Some countries hadn’t even monetised their 3G networks when the industry was trying to sell them 4G, let alone 5G.

I think that’s a real challenge at the moment, trying to find new, innovative services that customers are goingto want. There are features and capabilities that you can market and sell, but if we don’t need them yet, what’s the point? There’s also this battle between Communication Service Providers (CSPs) andTelcos, vs Hyperscalerslike Facebook and Google, as to who needs the other more. A telco could turn around and say, ‘We’re not going to support Facebook anymore’, and customers will vote with their feet and choose another provider.

When new technology iterations like 5G are launched, the government raises incredible amounts of money for spectrum, and telcos have to find a way to make that money back somehow. Inversely, Facebook and Google don’t have to absorb that cost, and the telcos can think they just piggyback off their data services because that’s what consumers want. It’s a real quandary.

How is the rise of 5G changing the landscape?

From a practical perspective, one of the biggest challenges is that if you live in a city, you can pretty much rely on exceptional connectivity. However, you don’t have to go far outside a major town before you find a data blind spot.

The 5G story is about seeking to address that problem.

Over the last five or ten years, Openreach have been trying to provide fibre everywhere. Laying fibreoptic cables from main cities out to a village of a hundred people is a huge expense for very little return. 5G can reach these places with less expense. Yes, you have to build towers to support it, but you’d have a situation where one 5G dongle could serve the internet needs of a whole household— Spotify, TV, Netflix, and all streaming or browsing. That gives rural areas the same coverage as a city, and that is a game changer, especially in a world of hybrid work.

Having Zoom meetings all day, then spending the evening with four screens between the family— watching YouTube and Netflix, playing games —5G can support all that. 4G couldn’t address this, and it’s very demanding on a broadband connection.

5G might be a bit more expensive than broadband, but now people are saying ‘Well, I can work from anywhere, and I can live in a small village without worrying about slow internet.’ I think people will happily pay for that.

Perhaps that answers the ‘why’ of 5G, for anyone wondering why they’d need it.

Absolutely. Think of the amount of data and capacity we use these days — try that through a tethered 4G connection and you’ll go bankrupt.

The other ‘why’ is the flexibility of 5G. I read a stat that said 40% of large enterprises would look towards CSPs and telcos for their digital edge computing capabilities. Because they trust them. They’ve been building their systems for years, why would they stop now? It’s reliable, they can outsource it, they can scale it, and 5G only increases the possibilities.

That’s true at a consumer level too. I used to work in field marketing in the Satellite TV industry. People always used to say to me, ‘Why can’t I just pay for what I want? I don’t watch sport — why do I have to have it?’ People just want to build their own packages.

There was a study that said,‘Lock someone into a two-year contract and they will quit that contract the day they can’.With no contract, they might stay for five, ten, fifteen years. I’m not saying it’s the silver bullet, but I don’t have a contract with Amazon Prime or Netflix, and I keep them.

It’s all about user experience. That applies to the contract, not just the service itself.

With 5G, there’s a lot of discussion about the ‘killer app’ — the one thing that’s going to make people want 5G. Have you seen any interesting developments along those lines?

I went to a conference just before the pandemic and I spoke to a very interesting guy who had built a platform known as Network-as-a-Service, which was very innovative at the time. Naturally everyone’s doing that now, particularly in the enterprise space. It’s essentially a portal or a platform. Platforms are everything now. Log in, choose what you want:e.g.this many servers, that capacity, that much latency, and how much you’re willing to pay for it.

There are plenty of companies on that transformation journey. Some are much further ahead than others. Some are on their last hurrah, sometimes having failed two transformations previously. Their third cannot fail, or it’s curtains.

How many are in that situation because they haven’t kept up with the pace of development?

Certainly a few. People seem to think that transformation is easy, but imagine you built a house that was quite small, and you added bits to it over the years, without considering the whole. Something new came along, and you just added it on. Eventually, you’ve got yourself a really strange-looking house. That’s what telcos are. They’ve bought into so many innovations without often considering the true implications.

And along with that, they have individuals who are experts in, say, provisioning one legacy piece of software. When they leave or retire, nobody in the company knows what to do.

Telcos want to move away from their reliance on highly experienced subject matter experts, who could leave at any point. They want their network to work irrespective of who is maintaining it. Rakuten, for example, are building fully virtualised, open source, open licence platforms that allow choice and flexibility. That openness is what’s key. Plugging software in to a ‘white box’ means no more painful transformations. It’s about giving everyone the flexibility to follow the best deals, best software, and the best technology.

It makes operating costs lower, and essentially means consumers have a cheaper phone plan, which makes them happy.

People are looking to 6G now, and we haven’t even got a use case for 5G yet. How are you seeing Telcos address that?

Some countries are always looking ahead like that. Japan and Korea are always at the forefront — when everyone was talking about 4G, they were thinking about 5G. Of course they were: it sells. It works, whether that’s for consumers, or tracking warships, or sending Wi-Fi to remote parts of Africa. When it comes to 6G, you could ask, ‘Do we need it?’ It’s a bit like asking ‘Do we need the iPhone?’ You don’t need it until you need it.

The more digital services we consume, the more capacity is needed. People say 5G has more than enough capacity to deal with just about everything we’re doing at the moment, but there’s always something that we’re not doing yet, that will eventually be part of the everyday. The Metaverse could be one of those things.

The question is, do you invent something and then find a use case, or do you have a use case and then invent something? It’s always going to be the former. Telcos have got their eyes on 6G, but they’re going to want to reap the rewards of 4G and 5G first.

There’s lots of talk about conglomeration as well. For example, what would be the point of everyone putting up a tower in a town, when you could have one tower and network slice it? A client we’re working with are building what’s called ‘neutral host services’, which ethically makes so much more sense. They’ll build a tower, network slice it, then sell portions to different telcos. Or maybe to somewhere like a factory who’ll want to have a private 5G network to monitor AI, robots and IOT. There will be endless use cases.

As the telco industry develops, it’s more essential than ever to find the candidates who will help you capitalise on the latest innovations. To discuss how RPI’s deep talent pool can help you secure those crucial hires, contact Chris at cs@rpint.com.

RPI provides access to the top leadership and technology talent globally