As new uses and increased digitization drive IT forward, complexities inevitably arise. Networks need to be rebuilt with closer ties between IT, cloud, edge and telecommunications — a huge challenge for operators as the networks of the future evolve away from those of the past. The list of performance demands required by platforms such as 5G is formidable: they need to deliver high-capacity and ultra-low latency connectivity while being highly available, operationally flexible, energy efficient, intelligent and most-importantly, cost-effective.
For operators, their networks are their business, so naturally technological and enterprise shifts are intertwined. But the capabilities of 5G — in particular, the performance characteristics of 5G-Advanced — bring the potential for change more profound than in any previous mobile network generation. At times, it might be difficult to discern which comes first: the technology strategy or the business plan. Do operators build networks to fit their service goals, or are the services they offer dictated by how the network is evolving?
It’s likely to be a bit of both. But to assess the way that network evolution road maps and business policies relate, I looked at the strategies of two operators: Orange and Telefonica. Both have fixed and mobile technology platforms alongside operations in several countries, each with unique infrastructure and market dynamics. For these reasons, they make for good comparative examples.
In 2020 Orange announced its Engage 2025 strategic plan, in which it outlined the evolution of its network operator model. The plan emphasized continued focus on developing digital services and the positioning of data and artificial intelligence (AI) at the heart of Orange’s business. As part of this plan, Orange also strengthened its environmental and societal commitments, aiming to achieve carbon neutrality in 2040 — 10 years before the target date set by the GSMA. Orange also confirmed plans to shrink the digital divide by expanding network coverage throughout its market territories, providing inclusive offers and affordable smartphones as well as offering training and coaching.
The Engage 2025 concept covered several priorities:
- Payment capability, simplifying financial transactions for users and enhancing the utility of a mobile subscription.
- Security, providing trusted network access at a time when most valuable and personal data is carried over networks.
- Climate responsibility, with people becoming increasingly concerned about climate change and wanting to choose goods and services based on green credentials, including their mobile service provider.
Telefonica’s strategy focusses on being a cutting-edge player in its four main markets of Spain, Germany, the UK and Brazil. It’s also planning to reposition itself in Latin America as an autonomous unit, with local focus in Argentina, Chile, Colombia, Ecuador, Mexico, Peru, Uruguay and Venezuela. Emphasis has been placed on a multiservice approach to connectivity based on software-defined, converged networks. This has led to a new operational model based on increased automation, more agile methodologies and partnership frameworks with cloud players, app developers and more.
Telefonica’s goals include the following elements:
- Growth for its brand reputation and market leadership, based on a centralized corporate operations model. This will be achieved by different units collaborating through existing network links, efficiencies and economies of scale.
- Innovation by using state-of-the-art tech platforms. This includes the recently-created Telefonica Infra, which covers networks, operations and infrastructure provision from other providers. The subsidiary encapsulates cell towers, antennas, fibre networks — including submarine — data centre and edge.
- Creating value such as through the establishing of Telefonica Tech, a business-to-business digital services unit focussed on offering cybersecurity, cloud, data and Internet of things (IoT) services to enterprise customers. It also provides enhanced 5G and home broadband services to the public.
- Sustainability in supporting the growth of environmental, social and corporate governance targets. Some examples are achieving net zero emissions by 2040, zero waste by 2030, 90% to 97% rural mobile coverage by 2024, and 33% of executives being female by 2024.
Both Orange and Telefonica have similarities in terms of their overall strategy for both business and technology evolution. Their guiding principles might be characterized as follows:
- Creating new services, based on enhanced connectivity
- Network efficiency, based on software-defined networks and automation
- Improved network and data use, based on network intelligence and orchestration
- Service value, based on customized, enhanced user experiences
- Social responsibility, based on energy efficient networks and sustainable practices
The 5G era doesn’t necessarily change the fact that operators are primarily in the business of delivering connectivity. But the nature and value of that connectivity is changing, as is what can be connected — particularly with the rise of IoT, smart homes and connected cars. Unlocking the true potential of platforms such as 5G requires business as well as technology evolution, so it’s interesting to see evidence of how they inform each other in the above examples.
I wrote earlier this year about Huawei’s proposed GUIDE model, a network and business transformation blueprint for operators reimagining their networks in the digital era to create new user experiences and revenue streams.
Let’s see if it echoes the strategic directions taken by Telefonica and Orange’s Engage 2025 plan.
Orange outlined its intent to deliver augmented connectivity, essentially meaning multigigabit broadband, to both retail and wholesale customers. The pace at which Orange is rolling out fibre-to-the-home services certainly supports this goal, with 60.6 million homes connected by June 2022 and about 8.4 million being added year-on-year. Orange has also made strides in improving connectivity quality; it’s offering upgrades from standard Wi-Fi to ultra-fast 6E Wi-Fi as part of its Livebox 6 service, which uses a new 6 GHz frequency band and provides speeds of up to 2 Gbps downstream.
Telefonica has also sought to expand its fibre coverage, which by June 2022 had grown to 164.7 million premises, 86 million of them through its own network. Its fixed network coverage now includes 50G passive optical networking, fibre-to-the-home and fibre-based mobile backhaul. It’s also switching off legacy technology by discontinuing copper-based networks in Spain from 2024 to focus on a fibre-first strategy.
This underpins both Orange’s and Telefonica’s drive to accelerate automation, using technologies such as AI and machine learning to increase efficiency in network operations. Automation means faster market responsiveness, such as zero-touch provisioning and service activation, as well as self-optimizing and self-healing network capabilities. Telefonica has discussed its journey toward a fully autonomous network, and has indicated 2025 as a target.
Intelligent Computing and Network as a Service
This implies building smarter, resource-orchestrated and adaptive digital networks. Since launching Engage 2025, Orange has been pushing its business-to-business activities based on intelligent networking and computing. It does seem to have increased its presence in IT departments in its home market, having grown revenue year-on-year in cybersecurity, digital and date services and cloud. And given that Orange announced its industrial partners for developing European standalone 5G networks earlier this year, it appears to be making good on this initiative.
Telefonica launched Telefonica Tech to capture growth of digital services, including cybersecurity, cloud and IoT. It has services in over 175 countries and boasted over 300 business-to-business partners in 2021. An extensive portfolio using existing infrastructure assets includes professional services such as security detection and response, vulnerability risk management, cloud networking, managed services and consulting. Telefonica Tech revenue hit €944 million in 2021, and is on track to reach €1.2 billion in 2022.
Differentiated Experience On-Demand
This is harder to quantify, but in Orange’s case it underlines the intent to deliver more open and valuable infrastructure — networks that can operate in a range of digital industries. For Telefonica this can be demonstrated by its three-pronged approach to value-based development: infrastructure, including the functional separation of networks; enterprise; and consumer, as evidenced by its Marco Polo suite offering the same home connectivity services regardless of access.
ESG — More Bits, Less Watts
This might manifest in different ways, such as Orange’s commitment to closing the digital divide or building greener networks. Orange has committed to renewable energy comprising 50% of its energy mix by 2025. Telefonica achieves its corporate responsibility through reducing its carbon footprint, promoting biodiversity initiatives, encouraging a circular economy and helping customers decarbonize.
As these examples indicate, Huawei’s GUIDE model resonates with the strategic priorities and actions of operators as they look to evolve their business and technology infrastructure. But planning future-proofed networks is more complex than ever before: building faster, smarter and greener networks is reliant on many variables, which Huawei claims requires a more holistic approach. Its GUIDE is NOW model is intended to create closer relationships with operators and position it as a strategic partner — offering technology solutions combined with a consultative perspective on business transformation and the societal role of IT. Aligning technology platforms with strategic goals is incredibly tough, so such support could prove valuable.
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