Telcos Must Transform into Digital Service Providers to Survive the Digital Disruption

The telco market is in a state of rapid evolution and disruption with telecommunications companies now competing against web-scale companies, which can deploy a new service in a matter of hours, to deliver real-time experiences to telco subscribers. As more customers demand instant access for digital services, ABI Research predicts many Tier One telcos will transform into digital service providers (DSPs) or risk losing out to over-the-top (OTT) players like Google and WhatsApp.

“Digital transformation is the ultimate goal for telecoms operators; for instance, T-Mobile’s Un-Carrier digital offerings likely played a huge role in boosting the company’s total revenue by 48% over the past three years,” says Sabir Rafiq, Research Analyst at ABI Research. “But it may not be possible for all. While Tier Ones will probably transform to DSPs, smaller telcos may remain access-oriented.”

An industry misconception is that telcos simply need to upgrade their traditional operations support systems (OSS) and business support systems (BSS) in order to successfully undergo the digital transformation. But ABI Research finds this to be a basic approach—one that will not survive long-term market disruptions.

“BSS and OSSs are reactive platforms capable of providing telcos with basic services, such as configuration management and billing,” continues Rafiq. “Now is the time that telcos need to be investing in DevOps and Agile development models. Telcos will then be able to rapidly launch new services and improve their services post launch in real time as they receive detrimental feedback from customers.”

Telcos can work toward completing the digital transformation by deriving analytics from the vast amounts of data they hold, aggregating the analytics to provide valuable insights, and then consolidating IT and communication platforms to build an ICT infrastructure. This will enable the creation of new types of services, and potentially generate an agile environment that is proactive, rather than reactive to market changes.

“Digital transformation should be on the minds of all telcos right now, and they need all of the help that is available to them,” concludes Rafiq. “Tier One vendors—including Ericsson, Huawei, Nokia, and ZTE—and network specialists already offer products and services that aim to assist operators with service agility and analytics which ultimately can help telcos become a DSP and provide the services that their customers are demanding.”

These findings are from ABI Research’s Telecom Transformation to Digital Service Provider report.