The classic telecommunications (telco) offering – consisting of voice, messaging and data services – is eroding. Competition from alternative providers, such as IT services firms and over-the-top suppliers, is putting pressure on traditional firms to embrace new technologies and experiment with innovative business concepts in order to become more relevant to customers and maintain a healthy profit margin.
“As telcos undergo digital transformation, they evolve from communications services providers (CSPs) to digital services providers (DSPs),” explains Rainer Kellerhals, Microsoft’s managing director of media and communications for the EMEA region. “While the network remains an essential core asset, as DSPs, telcos will become software companies who operate a software-defined network with software-defined services on top of it.”
“Revenues are shifting from network connectivity services related to voice, text, data and broadband to higher level services delivered over converged networks,” adds Eric Troup, Microsoft’s chief technology officer for worldwide communications and media.
With the advent of 5G, this trend will only accelerate. “There’s a huge opportunity for telcos to accelerate their business strategy, and 5G will be the springboard to success,” says Amol Phadke, global managing director leading Accenture Network Services.
Kellerhals agrees: “5G will create many new opportunities for joint innovation, from 5G-based internet of things (IoT) and connected services to 5G-based immersive media and gaming,”
This shift will inevitably impact the customer experience. “Historically, telco services didn’t require a lot of explanation, and customer service was mostly about bills or fixing technical issues,” Kellerhals explains. “But as telcos offer an increasing variety of digital services, more explanation and support will be needed. Telcos will need to manage the more sophisticated customer experience. It starts with explaining the new digital services in marketing campaigns to get users interested, then it’s about providing assistance in configuring and operating these services, driving engagement with these services, and ultimately helping consumers and enterprises to be successful in applying these services.”
According to Rick Lievano, Microsoft’s worldwide director of industry technology strategy for the telecommunications sector, customers are more demanding than ever. They want telcos to provide the same ease of use and broad range of support channels as digital native services such as Netflix. “This means providing rich omnichannel experiences that can service customers at any time and across any device,” he explains.
Microsoft is working hard to help telco firms, whatever stage of transformation they are at.
“In the short term, we are focusing on what we call ‘cloud transformation’ – moving datacentre workloads and workflows to the cloud and up-skilling staff on software development, DevOps and cloud platforms,” Kellerhals explains. “In the mid-term, we are co-creating solutions based on our respective capabilities and services and jointly taking them to market. In the long term, we are driving co-innovation leveraging 5G, artificial intelligence (AI) and deep network integration.
“Microsoft is uniquely positioned to help telcos stay ahead not only because we have the largest, most consistent, and most trusted cloud platform and strong AI capabilities, but also because we have been through a similar transformation ourselves and understand what it takes to ‘hit reset’ and re-build a company’s technological assets, organisation, business model, and culture in flight. So we understand where these companies are today, and can help them on their journey to a successful future.”
Telcos leveraging Microsoft Azure can more easily create apps and services across the edge, their local and regional Microsoft data centres, and the Microsoft global cloud. Azure Security Center keeps them secure. Azure IoT enables telcos to create their own, industry specific IoT services quickly, and Azure AI infuses intelligence into apps and services, on the edge and in the cloud.
Furthermore, with Azure Media Services, telcos can build live and on-demand online video services, and with Project xCloud, they can stream games from the cloud to any device.
A number of recent commercial successes illustrate the value of these technologies.
Nokia, for example, has recently joined forces with Microsoft to accelerate transformation and innovation across industries with cloud, AI and IoT. BT is the first global communications service provider to offer its enterprise customers a managed service that integrates the Microsoft and Nokia combined offering.
“Bringing together Microsoft’s expertise in intelligent cloud solutions and Nokia’s strength in building business and mission-critical networks will unlock new connectivity and automation scenarios,” said Jason Zander, executive vice president, Microsoft Azure. “We’re excited about the opportunities this will create for our joint customers across industries.”
“We are thrilled to unite Nokia’s mission-critical networks with Microsoft’s cloud solutions,” said Kathrin Buvac, president of Nokia Enterprise and chief strategy officer. “Together, we will accelerate the digital transformation journey towards Industry 4.0, driving economic growth and productivity for both enterprises and service providers.”
Meanwhile, global telecommunications firm AT&T is providing much of its workforce with the cloud-based productivity and collaboration tools available with Microsoft 365, and plans to migrate non-network infrastructure applications to the Microsoft Azure cloud platform. It will work alongside Microsoft to bring to market integrated industry solutions leveraging 5G including voice, collaboration and conferencing, intelligent edge and networking, IoT, public safety, and cyber security.
This article was originally published in the Winter 2019 issue of The Record. Subscribe for FREE here to get the next issues delivered directly to your inbox.