Tech mahindra
Tech mahindra

The Pace of Transformation

Posted by: Balaji T S On September 21, 2016 06:18 PM

Peter Drucker said, “the Greatest Danger in times of turbulence is not the turbulence – it is to act with yesterday’s logic”.

The kind of turbulence we see in the telecom industry clearly demands new logic – and, sure enough, it has seen a number of new technological improvisations: Virtualization, Edge computing, Software Defined Networks, Software Defined Radio, Open-source software on general purpose platforms, etc. However, a revolutionary change faces some initial challenges – especially due to the B2C nature of such a pay-per-use and high cost infrastructure business.

Two of Telstra’s revolutionary changes exemplify the point being made – first when they turned off their AMPS network and then, a decade later, when they turned off CDMA to fully  embrace GSM. In both the cases, the push back came from the customers – the very subscribers who would benefit by a digital mobile technology instead of AMPS and a more ubiquitous (and hence cheaper) technology than CDMA. The issues highlighted displayed a lack of equivalent level of coverage by the new technology as it starts up to change of handsets. So, it is not wrong to assume that the new technological improvisations are going to be revolutionary.

In fact, an infographic shared by GSMA Intelligence points to the fact that, despite planned general availability of 5G by 2020, 2G and 3G technologies will continue to operate in some parts of the world! Additionally, the infographic shows that while 2G revenues will decline, both 3G and 4G revenues will grow!

Besides the issue of adoption by customers, I feel that some of the technological improvisations mentioned above have a few more challenges to face – they need additional Capex! Given that many operators are in Managed Services support with OEMs for their networks that include certain Capex cover, CSPs will not be able to make a justifying business case for this incremental Capex.

In fact, with pricing models for VNFs not changing dramatically from that for PNFs, despite virtualized network functions and software defined networks, a recent proposal goes to show that on a five year TCO basis, there was no saving but a marginal increase in expenses owing to the Capex needed to introduce SDN/NFV.

This means, any provider of network services to operators should continue to focus on managing existing technologies and infrastructure in the best possible manner for another 5 years (perhaps even 10, considering the spread of technology across the globe).

Given that one of the main drivers for transformation is the growing gap in the rate of increase in costs versus revenue growth rate, there has to be a commitment towards increased automation, analytics, AI based tools, and systems.

Learn more about how Tech Mahindra proposes to bring in automation and AI based tools to enable CSPs to RUN their network in the most efficient manner networks at our upcoming NS Conclave in Pune on September 27th.

Tags: Network Services
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