*By Marisol Penante
One of the impacts we are experiencing as a result of the pandemic is the relevance of connectivity and services offered by cloud platforms, which have enabled companies to continue operating and, as a result, have definitely changed the way we work, live and interact. As the world realizes the relevance of coverage and quality of connectivity, telcos still face important business challenges and compete to move towards 5G and Edge. A critical question now is: can they avoid the same fate that befell media companies recently when cloud hyperscalers and consumer streaming companies (OTTs) captured most of their profits?
In a new global study by the IBM Institute for Business Value released today, “The end of communication service providers as we know it“500 global executives from telecommunications companies from 21 countries, including Brazil and other countries in Latin America, were interviewed to present their views on the biggest challenges and opportunities as they transform their businesses to capture the new potential of this wave brought by the implementation of the 5G ecosystem and Edge Computing.
One of the main conclusions obtained from the views of the executives of these companies is that in order to have control of their own destiny, operators need to change their position. They must adapt their infrastructure and connectivity providers business model to a Services Platform Model, which takes into account the fact that their own network infrastructure is becoming a hybrid cloud platform and data, voice and multimedia services are gradually being migrated to open components.
To drive this transformation, some telcos are embracing open hybrid cloud platforms that enable scale while staying in control of the business and your data transformation journey. Many are looking to leverage their dominant position in connectivity to provide an innovation platform for their customers – half (50%) of global high-performance communication service providers (CSPs) agree they must become strategic cloud platforms by combining an ecosystem of partners diverse, and 45% of all respondents in Latin America agree that they must become secure clouds with AI and automation.
But as telcos look to the lessons of the past, the study also showed a growing reluctance to rely on traditional webscalers and hyperscaler clouds as they embark on this journey. Nearly three-quarters (74%) of top performing CSPs understand that partnering with webscalers, including hyperscalers, for Edge computing and 5G, primarily benefits the strategic interests of webscalers.
Hybrid cloud keeps telcos in control
By adopting an open hybrid cloud approach, telcos gain control over where to install parts of their architecture, whether public or private cloud, as well as the chain of partner suppliers in an environment enabled by an open platform that works as a lingua franca for data. This industry-standard compliant architecture promotes deployment flexibility and industry-wide collaboration, a necessary element to capture the new value of next-generation connectivity. It also supports more ways to monetize the advantages of 5G – including reduced latency, increased bandwidth and dedicated network capacity that can improve the quality of service for customers.
The reality is that 5G will bring significant costs to telcos: spectrum licensing, infrastructure building and real-time management of a complex platform. Worldwide, almost every major telecommunications company has announced its commitment to spend billions of dollars over the next few years on infrastructure to support 5G. Because of this, there is an increasing financial urgency for telcos to transform their network architectures into software-defined platforms that can help them optimize costs to enable network growth at the scale of traffic and demand demand. of new use cases that 5G requires. And the promise this represents has a real impact on the bottom line – 91% of the high-performing CSPs surveyed expect to exceed their current financial expectations within five years as a result of using Edge Computing and 5G.
In conversations with customers across the region, I've noticed a near-term scenario where Telcos will continue to roll out 4G more quickly on their networks while continuing to upgrade their transmission networks to fiber and begin rolling out 5G. Also important for the region will be the implementation of fixed wireless access with 5G(FWA) as an alternative to fiber broadband coverage in specific regions.
Telecommunications companies also see security as a key element in their transformation – 60% of telcos CEOs interviewed believe that strengthening data security and privacy for their customers is important, as well as being a way to build experience and trust with them over the next 2-3 years, according to the CEO Study 2021*. A hybrid cloud model keeps telcos in control of their data, implementing enterprise-grade security across all aspects of the workflows they manage, as well as those of customers and partners. With an open hybrid cloud approach, telcos can securely monetize their data because they remain in control over privacy settings and integrate security and compliance across the breadth of their IT workloads.
Making intelligent use of the synergy between connectivity and distributed computing capacity will be the determining factor for the success of telcos and all companies, partners and customers that are part of this ecosystem. For this, it is important that they think beyond the connectivity they provide today, choose their Cloud Hyperscale partners with care and discretion so that they can keep control of the value chain of their networks' evolution, establish points of control over this new platform , managing the monetization of this new ecosystem, and preparing for the next generation of networks and applications through hybrid clouds.
*CEO Study 2021: https://www.ibm.com/thought-leadership/institute-business-value/c-suite-study/ceo
*Marisol Penante, Consulting and Services Leader for the Media and Telecommunications industries at IBM Latin America
Notice: The opinion presented in this article is the responsibility of its author and not of ABES - Brazilian Association of Software Companies
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