The next generation of 5G networks are unlocking a mind-bending array of new use cases. Blistering speed, super low latency, and access to more powerful mobile hardware bring VR, AR and ultra high-definition experiences into sharp focus for the near future. But there’s a bigger shift being driven by 5G, and it’s not actually about speed at all. It’s about re-thinking the modern telco business model.
In a world where all Communication Service Providers (CSPs) are chasing the 5G dream, speed and capacity quickly become commoditized. Those capabilities become table stakes. The real reinvention of the telco lies not in connectivity, speed, or capacity, but in analytics, intelligence, and innovation.
This is the long-awaited shift from data pipe to data processor. Given their proximity and access to billions of connected end points and data sources, CSPs have a unique opportunity to offer insights and actionable intelligence into the data as it passes through their network. By adding cloud-based, enterprise scale analysis of such data, they can add value to their services, and bring insights as well as interconnectivity.
What’s driving this opportunity is more than just 5G. It’s the collision of IoT, the cloud, and analytics and AI putting telcos in a favorable position to take advantage. But we’ve been here before, with the advent of Machine to Machine (M2M) networking back in the early 2000s. Back then, few telcos took advantage of this precursor to IoT. Not many compelling services were developed for enterprise customers – a huge missed opportunity. The real question today is whether telcos can capitalize on this new moment, and really take advantage of the chance to reinvent themselves for customers embracing 5G, IoT, and the cloud.
Vertical Solutions and Platforms
However rich the opportunity is for telcos, it remains a complex one. Each customer, vertical and industry is different, and so it makes most sense for telcos to develop specific solutions to capitalize on use cases and offer meaningful intelligence for particular verticals.
And industry leading CSPs are leading the way creating targeted industry offerings and solutions including connectivity layers to connect all of the distributed assets and equipment, an IoT platform to manage and drive intelligence from the sensor data, and also solutions to secure and manage their connected ecosystems. For example AT&T Business is offering edge-to-edge solutions to help manufacturers with improved supply chain performance, asset utilization, and production planning. Similarly Verizon is offering end-to-end solutions for factory IoT connectivity, data analytics, cybersecurity and asset tracking and management.
And then there’s retail, where deep understanding of customer demographics, behavior, geographic movement and purchase histories are key. It’s easy to see how a CSP could add value and technical expertise to provide powerful and actionable insights to help retailers connect with customers. Take a clothing store for example. CSPs can offer end-to-end IoT solutions that can increase the effectiveness of inventory management efficiency and lower maintenance costs, boost customer engagement by providing information to increase sales transactions, size of basket, and repeat visits, and protects data from threats to the network that makes everything possible.
The possibilities for telcos to offer compelling analytics and actions out of customer data are endless. The questions telcos should be answering are no longer about connectivity, speed or capacity, but about what enterprise customers should do next with their data and, since every vertical relies on different sets of data, those answers are unlikely to come from a generalized platform.
A whole new industry opportunity
This expectation for the future of telcos is not new, or unique to Cloudera. Accenture, calls it Applied Intelligence and predicts a future where “telcos can continuously learn from customers and the ecosystem…. increasingly automat[ing] the creation of new services.”
Others, like Deloitte, predict that by 2030 the main focus of telcos will be the processing of big data and the generation of insights, having “outsourced most non-core activities that they still conduct in-house at present.”
Telcos should also heed the warnings that “the key to success will be a new set of skills such as engineering, software, and analytics that enable employees to master new technologies and innovative business models.” No longer can telcos rely on hardware and capacity – they need a significant and sustained investment in data processing, analytics and insights, driven by advances in machine learning and AI. That’s a whole new industry to some.
For CSPs, the opportunities to leverage data intelligence seem boundless. Because CSPs generate and aggregate more data than perhaps any other industry—and because they are the hub for connecting data to businesses and consumers around the world—they are in a unique position to use data to empower digital transformation for themselves and their customers.
This truly is a reinvention of the telco, driven from the inside out by new efficiencies and innovative abilities to add value to every vertical. That opportunity is driven by the cloud, and accelerated by trends such as industrial IoT and 5G, which will usher in a fresh wave of investment, and a sharper focus on driving returns.
Telcos are looking closer than ever at ways to realize their increased value. The question is whether they will seize the opportunity to become more than a data pipe and make the move to becoming a true data processor this time, or whether they will suffer the same fate as their predecessors did with M2M and let this generational shift pass them by.
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