Change isn’t easy; even minor adjustments can be tricky. But profound change — not just how you do things but transforming who you are — is a major challenge. Gigabit connectivity from 5G and fibre networks enables transformative technologies such as artificial intelligence, edge computing, data analytics and cloud-based resources to give operators tremendous potential for new services. However, capitalizing on this requires fundamental changes, not just in how operators build and operate their networks but in terms of what sort of business they are. It seems fair to say that integrating new technologies such as 5G, AI and edge computing brings telecom operators something of an identity challenge.
For operators, change driven by digital transformation touches everything:
- Infrastructure — evolving 5G and fibre networks into separated, cloud-based architectures, and increasingly working with hyperscale cloud infrastructure such as Amazon Web Services and Microsoft Azure
- Processes — shifting to cloud-centric, software-driven operations with highly automated and programmable networks will drive higher efficiency and better use of network resources
- Services — delivering scalable, customizable on-demand connectivity and building revenue with value-added or managed services, as well as completely new forms of digital, AI or cloud-based services, some of which are still being created
- Business models — adopting usage-based or as-a-service models and selling through direct channels or with wholesale offers to create new commercial partnerships and value networks
In short, what, how and to whom operators offer requires rethinking. They need to be planning for a decade from now and asking themselves what they should be doing to transform their infrastructure and seize the opportunities of digitalization.
For instance, it’s arguable that to fully exploit 5G, particularly in the standalone 5G era, operators should free themselves from old technologies. The complexity of 3G networks could limit 5G’s potential — not just operationally, but also in terms of the operator’s business model. Certainly we’re seeing more operators, including the three major US carriers as well as EE, Telia and Vodafone among others, making public statements about their plans to shut down their 3G networks to free up spectrum for other uses while reducing the complexity of operating a multi-technology platform.
Aside from that, unlocking the true potential of digital transformation requires business as well as technology evolution. Even though the era of next-gen networks based on 5G and fibre doesn’t necessarily change the fact that operators are still in the business of delivering connectivity, the nature and value of that connectivity is changing, as well as what they’re connecting to — particularly when this might be a non-human end-point such as Internet of things applications, smart homes or even connected cars.
Connectivity is becoming a more complex business, so collaboration is crucial. Operators can’t do this alone; they need to look for long-term technology partnerships with network solutions providers and others. I’ve written in a previous blog about the five main capabilities Huawei believes operators need to focus on today to enhance their competitive ability tomorrow. Addressing these capabilities forms the basis of Huawei’s blueprint, which is called GUIDE, for telecom digital transformation. As Huawei sees it, these capabilities are: service expanding, efficiency innovating, resource leveraging, value competing and society contributing.
A good example of this might be the end-to-end network slicing and mobile edge computing capabilities Huawei delivered over a private 5G network for its enterprise customer China Southern Power Grid, in partnership with China Mobile. This project touched on all its GUIDE capabilities: expanding into a new service environment; innovating on efficiency with its end-to-end slice management; taking advantage of existing network resources; creating value for the operator; and contributing toward a more sustainable power industry.
As operators position themselves for future competition, these capabilities become increasingly important in technology strategies that are part of a business road map toward digital telecom services. It’s worth noting some positive recent examples.
China Mobile. At MWC 2022 in Barcelona, the operator’s executive vice president, Li Huidi, spoke about how the company was building a future of digital intelligence through deep investment in new infrastructure for 5G, including data centres supporting the upgrading of traditional industrial data services. This investment includes deploying over 700,000 5G cell sites in China, 30% of the global total, making available 107 artificial intelligence capabilities as a service on its network and initiating service-based architecture network slicing.
China Mobile also has a centralized telecom cloud with 100,000 servers, and said its network would be completely cloud-based by 2025. It’s accelerated its digital transformation by automating networks to enable self-configuring, self-healing and self-optimizing operations through zero-wait, zero-trouble and zero-touch provisioning.
Telefonica Germany. Chief technology officer Mallik Rao, also speaking at MWC 2022, advocated for virtualized radio access network and cloud networking, noting that these are central factors in the operator’s technology platform strategy. This includes deploying its 5G core on public cloud, based in Bremen, after previously having four or five 4G core networks throughout Germany. Part of this network evolution was driven by 5G-based private mobile network opportunities that could potentially result in needing to support 30 to 40 5G private networks for critical services alone, and perhaps thousands overall in Europe. Telefonica Germany needed a new way of building networks so moved toward software-driven, cloud-native architecture to remodel its business.
STC. Khaled Aldharrab, vice president of infrastructure for the Saudi Arabian operator, spoke at the 5G MENA conference in Dubai in May 2022, and said it’s using 5G as a business development opportunity with its enterprise customers (see Instant Insight: 5G MENA 2022 Event Shows Slow But Steady 5G Progress). He also said that successful, revenue-generating 5G deployments start with clear understanding of customer needs in edge computing, in terms of network resources and connectivity, performance metrics and computing power. This requires understanding where to locate edge computing — for example, on customer premises or in the telecom operator network — and making decisions about necessary upgrades such as in data centres, building this into customer engagement.
As can be seen from these examples, technology evolution is driving change in operators’ business. There’s complexity in digital transformation, but some operators are already seeing results. For example, John Stankey, CEO of AT&T, said at the carrier’s investor day in March 2022, “The transformation we’ve undergone (…) is delivering outstanding operational results. We will be a simpler, more focussed company with the intent to become America’s best broadband provider. We plan to ramp up investment in our key areas of growth — 5G and fibre. And at the same time, retain our focus on growing customer relationships, continuously enhance the customer experience. We are at the dawn of a new age of connectivity, and AT&T is positioned to take advantage of a strong and unique market opportunity”.
Operators find themselves on a long-term journey toward becoming more service-focussed in the digital age and, as with all adventures, it’s important to find the right travelling companion. Huawei believes conditions are ripe for operators to surge ahead in their digital transformation journey, and that it can support them in the evolution of their networks and businesses as they look to address future customer needs, create new service opportunities and redefine their competitive positioning.
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