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How Can Telco Operators Reinvent Themselves?

How Can Telco Operators Reinvent Themselves?

October 1, 2024

The first article in this series discussed why telco operators need to reinvent themselves. In short, there are significant opportunities in both consumer and enterprise domains, but operators need to transform their platforms to address these new opportunities in an increasingly competitive environment. Despite the entry of hyperscalers in the telco domain, telco operators have the experience, physical assets, and technology expertise that no other entity has in the market. For example, current 5G cell sites are set up to transfer more than 200 Terabytes (TB) per day, a monumental feat considering any network, let alone wireless. In the fixed broadband space, connections transfer TB worth of data every day for consumers, especially if we consider 4K content and immersive applications. These require significant expertise that only telco operators possess.

On the other hand, they are faced with new challenges that require a full transformation. They cannot wait and continue surviving on connectivity revenue alone, predominantly driven by their consumer business. They need to transform their network and business and address new opportunities, while becoming a valuable partner for both hyperscalers and enterprises. The big question though is how to achieve this without disrupting their existing business and operations. This article discusses the key pillars for this transformation and the last article of this series will discuss what tools, products, and services they can use to transform and remain relevant in the future.

Key Pillars for Future Networks

Although the transformation discussed in these articles may appear vast and monumental, it can be encapsulated in a few key areas where telco operators need to focus to progress their strategies. Indeed, these areas discussed below are the starting points for operators to build their future strategies that will certainly affect many other parts of their business. For example, by deploying fully automated and sustainable networks, the operational efficiency of the operator will likely skyrocket, allowing its workforce to experiment with new business models without significant risk. By deploying ultra-high-speed networks, telco operators may cater to existing applications and use cases that previously required Ethernet or other types of physical connections in the enterprise domain.

Ultra-High-Speed Broadband

As ABI Research’s previous article illustrated, 5G has now delivered a massive capacity upgrade over 4G, with most 5G Massive Multiple Input, Multiple Output (mMIMO) sites delivering more than 1 Gigabits per Second (Gbps) of connectivity, with the ability to transfer more than 200 TB per day. These networks are changing user behavior, giving the impression to end users that the network is always there and ready to provide any type of content, even 4K video. Just like 4G, which stimulated an exponential growth in consumer applications, 5G will also create another wave of innovation in both consumer and enterprise domains. The transformation here will be enabled by the always-on, ultra-high bandwidth connectivity that 5G and future generations will enable. In the fixed broadband network domain, Very High-Speed Digital Subscriber Line (VDSL) and Fiber to the x (FTTx) deployments are providing 100s of Megabits per Second (Mbps) or even Gbps connectivity to homes and offices, helping enterprises distribute their workforces, while taking advantage of new concepts and technologies, including Artificial Intelligence (AI)/Machine Learning (ML) and edge computing services.

As an example in the mobile network space, almost all mobile operators now can deploy 5G and will soon have the choice to deploy 5G Advanced and, in a few years, 6G. These radio networks will likely require significant upgrades throughout the network infrastructure, including transport, backhaul, fronthaul, and core network, and will provide a massive capacity boost. The industry is also on the cusp of major innovations, including the use of metamaterials for antennas, distributed mMIMO, full-duplex communications, new multiplexing schemes, using AI for radio resource management, and much more. 5G has indeed provided the first step toward ultra-high-speed broadband, but it is also the foundation on which several radical new upgrades will be built. Therefore, it is now necessary for all mobile operators to invest in 5G as a foundation for the future, rather than just a consumer-focused network. In a similar fashion, fixed network operators need to refresh their deployment strategies to create the foundation for future broadband services.

Network Automation

The next evolutionary step toward future networks is automation. Handling very large amounts of traffic or hundreds, or even thousands, more connected devices will mean that manual control will not be possible for telco networks in the future. It is thus imperative to embrace automation throughout the network, in a tightly orchestrated manner to reduce operations and maintenance costs, and to optimize the user experience and meet enterprise Service-Level Agreements (SLAs), while ensuring that energy efficiency of these networks remains high.

Network automation will likely need to be deployed in both a centralized (in the core network) and a distributed (at the cell site or fixed broadband aggregation point) manner to exercise centrally orchestrated and granular control over the network. For example, an automation algorithm running centrally will not be able to fine-tune network parameters for any cell site within the network. On the other hand, an algorithm optimizing a single cell site may not have the network visibility to take larger network effects into account; for example, an influx of subscribers when a neighbor cell site suffers a catastrophic failure. It is thus imperative that automation is deployed throughout the network, in a tightly integrated manner, rather than separated and disparate islands.

Sustainable Networks

Energy efficiency and sustainability are key focus areas for all mobile operators currently, who aim to reduce their carbon footprint across many layers of their networks. Specifically, telco operators are aiming to make their networks energy efficient in these domains:

  1. Equipment Level: Innovations developed by infrastructure vendors are now making equipment more energy efficient, while increasing their performance gradually. For example, Gallium Nitride (GaN) power amplifiers, liquid cooling for cellular base stations, and advanced materials are promising to make next-generation infrastructure much more efficient than the previous generation.
  2. Site Level: At the cell site level, energy generation, including renewables, is progressing fast, giving operators the opportunity to become carbon-neutral in the immediate future.
  3. System Level: Energy optimization at the network level includes modernization and energy savings using AI/ML algorithms. The latest generation equipment is far more efficient compared to previous generation, meaning that operators that modernize their network infrastructure will surely have better energy efficiency. Moreover, using AI/ML algorithms across the network to reduce energy footprint is becoming the normal mode of operation in the industry.

Network sustainability will become a major focus for all telco operators globally. An energy-efficient network can not only save energy, but can also stimulate higher efficiency in applications and use cases in many different enterprise verticals. For example, telco operators can contribute to a carbon reduction in many industries, extending their network coverage in the enterprise domain.

Network as a Platform

Finally, the network needs to become a platform where Application Programming Interfaces (APIs) will facilitate cooperation with a much broader set of companies, which will be able to build innovative applications using ultra-high-speed connectivity. This is already taking place with 5G next-generation core networks and the service-based architecture, which is built on the philosophy of a service-oriented architecture, as well as VDSL and FTTx deployments. In addition, telco operators are actively opening up their capabilities to third parties through open APIs. By evolving their networks to become reusable platforms, telco operators can take a page out of the hyperscaler book and even progress to building and deploying Network-as-a-Service (NaaS) or as-a-Platform business models.

Takeaways and Next Steps

These four pillars represent the first steps toward network transformation to help operators progress their business to match current and future market requirements. The upgrade of these four domains is a complex process, but a possible one given the current technologies available to telco operators today. They can deploy the latest generation 5G base stations or VDSL/FTTx equipment and push aggressively for better energy efficiency, while preparing for NaaS business models through their service-oriented networks. In the meantime, implementing these features will result in lower operational complexity and Operational Expenditure (OPEX), while setting the scene for future business models.

The previous article argued that many telco operators need to take bold steps to integrate this vision. This article has displayed that this vision may be available to them sooner than they think. The next, and last, article in this series will discuss what tools will be available to operators to achieve this evolution and become valued partners for enterprises and hyperscalers.

Tags: Hybrid Cloud & 5G Markets, 6G & Open RAN, 5G & 6G Cloud-Native Systems, 5G

Dimitris Mavrakis

Written by Dimitris Mavrakis

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