COVID-19: Forcing Telcos to Quickly Reinvent Themselves

3 Characteristics Needed for Their Successful Reinvention —

The telecommunications industry has never been more critical to the world than now. With COVID-19 forcing so many to live, work, and play apart, telcos are keeping the links between workers, friends, and families intact.

But in as much as they have become society’s glue, telcos are also going through a dramatic change of their own. This transformation, from connectivity providers into digital services providers, was already underway before COVID-19. Clearly, the pandemic forced a massive acceleration of this change, and in the months ahead telcos need to prepare for a very different marketplace with very different demands.

The Reality Now

It’s immensely gratifying to see that the COVID-19 lockdown brought out the best of much of the industry. Presented with an unprecedented challenge, telcos overwhelmingly responded with urgency, purpose, and empathy.

Between equipping field hospitals with high-speed connectivity and devices, offering insight on population movement to slow the spread of the virus in the US, Asia, and the EU, and generally keeping the world moving, telcos have gone above and beyond demonstrating their value.

With much of the world working remotely, they’ve massively expanded capacity to meet increased demand — not just for businesses, but also for schools and universities, which have gone almost entirely virtual. In some cases, telcos have even maintained services to clients unable to pay bills, in many cases waiving late fees and operating Wi-Fi hot spots.

But once this crisis is over, there will be no return to "normal" as understood before the pandemic. The world has changed permanently, and telcos need to prepare for a new reality fraught with uncertainty, requiring a level of agility, speed, and risk taking, that has been uncommon in this industry.

For many, the cultural shift will be more important than any technology challenge, and will require telcos adopting an entrepreneurial "disruption" mindset, with top-down prioritization and unified execution across the entire organization.

Telcos’ Near-Picture
Outlook

For the world at large, working, learning, and buying, are now overwhelmingly virtual and remote activities. Even after the pandemic is over, much of this customer behavior is likely to endure, and telcos need new business models and product offerings in response to permanently changed expectations.

Even before lockdown, telcos were already moving from being commodity voice-and-data providers to service-rich platforms, largely in response to competition from the big tech companies and OTT players. In this changing landscape, operators face increasing demand for services — traditional mobility, broadband, and entertainment services, as well as new cloud, IoT, edge "platform" services — from customer segments that have less capacity to pay and several competitive options. Speed and agility become defining capabilities in this digital platform market.

The pandemic made this transformation more urgent, driven both by massive consumer demand for remote services, and the need to cut operating expenses to meet that demand without taxing
available capacity.

3 Key Characteristics

There are 3 key characteristics of a platform business, compared to a commodity seller of connectivity and data networking:

1.
First, rather than being a fixed network, a platform is inherently flexible, with a network being defined by software rather than telephone lines or fiber optic cable.

2. Second, platforms are highly automated,
    with the ability to turn on services
    dynamically and scale capacity up or
    down in response to demand.

3.
Lastly, platforms are based on open-source software and a hybrid multicloud architecture — making them more resilient — with data-rich XaaS offerings from an ecosystem of partners, in addition to
traditional communication services.

The Next "Normal"

In the coming months, all telcos will face several challenges.

The pressure on operating expenses now felt by all organizations will only increase. At the same time, demand for robust, reliable telecommunications infrastructure isn’t going to diminish in the near term — if it ever does.

Meanwhile, many enterprise customers, themselves under lockdown with their own uncertain economic outlook, may have trouble with their own balance sheets.

That reality will force telcos to make hard choices about where to deploy resources in the face of this squeeze between higher customer demand and
diminished ability to pay. In India, a market that has been disrupted like no other over the last few years, we saw Vodafone Idea and Bharti Airtel announce innovative network cloud initiatives with IBM in May of this year.

Priorities need to be focused on maintaining business continuity even as supply chains for equipment are strained; telcos will need to adapt to a workforce that could be 20% to 50% remote, long-term if not permanently, requiring different tools and processes that support digital collaboration and agile decision-making.

This challenging time will help prepare telcos for the most important part of their transformation, prioritizing where they can deliver the most value, and building an operating model that is inherently more agile and competitive.

The Years to Come

As remote work becomes more widely accepted, consumers and businesses will demand richer, more consistent, omnichannel digital experiences, with a strong emphasis on self-service options and flexible pricing structures.

Customer care will increasingly be digital-first, with chatbots augmenting customer care representatives, and AI-based solutions enhancing the effectiveness of field technicians. We have already seen a marked increase in customer acceptance of these digital technologies.

By themselves, these are already beyond the scope of traditional telco offerings. But to stay competitive and to compete with the big tech platforms, telecoms will have to make these investments in both their technology and their people.

As much as customer demand and cost pressures are propelling telcos’ reinvention now, the imminent roll-out of 5G and edge computing give this transformation added urgency. In markets such as the US, China, and parts of Europe, capital is being prioritized on network evolution, with the major carriers maintaining or accelerating their 5G deployment plans. This accelerated change is being fueled by an expectation of increased revenue from new services and lower operating costs.

The new hyper-fast networks promise to revolutionize manufacturing, healthcare, energy, and other industries, by enabling instant or near-instant data analysis to increase efficiency through highly automated and connected operations. Manufacturers, for example, are turning to visual inspection, robotics, and other tools, to improve production quality and to ensure worker safety.

Because of the need for low-latency processing, where workers and production processes can immediately benefit from the insights created by data collection and AI, telcos will need to offer a hybrid cloud-based network connecting computing at
the edge.

Additionally, telcos will see dramatically increased demand for cybersecurity services. It’s not a challenge unique to telcos, and the industry generally has a reputation for strong cybersecurity offerings. Rather, it’s a macro trend challenge, driven by demand. More employees are working remotely, meaning digital demand is higher, which increases the threat surface.

Telcos should see this as an opportunity to boost their offerings. Many already use software like IBM MaaS360 for mobile device management, which can be
bundled with other tools for enterprise and small business customers supporting work from home. Vulnerability, threat management, and incident response solutions and services, are in
high demand, for both telecom operators and their customers.

However, telcos choose to
navigate the complex challenges of the current crisis and immediate aftermath, there’s no doubt that, in a few years’ time, the industry will look radically different. Customer expectations will be permanently changed, the competitive landscape will be more intense, and telecom operators will be in lines of business unthinkable a decade ago. By being bold now, companies can position themselves to be strong players in the new landscape. n

Craig Wilson
is VP, Global Telecommunications Industry, IBM. He is responsible for sales, business development, and solutions, for IBM’s Telecommunications industry globally. Craig has spent 30 years in the industry in a number of regional and global roles, living in Australia, Canada, and the US. Craig is a member of IBM’s Industry Academy, working with industry leaders and standards bodies around the world. For more information, please visit
www.ibm.com. Follow Craig on Linkedin at https://www.linkedin.com/in/wilsoncr.

@Craigwilsonibm