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Are operators even capable of innovation?

Swisscom change management slide

The Service Delivery Innovation Summit 2017 in central London took another look at the age-old problem of how operators innovate, renew and avoid commoditisation.

A packed morning of speakers was opened by Telefónica’s Head of Network Virtualization Strategy Antonio Jose Elizondo Armengol, who detailed some of the technological challenged but also emphasised that is won’t work without accompanying cultural transformation within operators.

This sentiment was echoed by Stefan Rupp, Chief Digital and Transformation Officer for Swisscom, who talked-up the Silicon Valley-style ‘fail fast’ culture that encourages long-term thinking and seeks to empower employees further down the corporate food chain. It’s futile, he said, for operators to try to move into new markets while still doing things the way they always have.

Thomas Neumann, Principal Device Manager at Vodafone, joined the chorus for a more dynamic, agile way of doing business. He neatly summed up his approach by saying “We also celebrate fuck-ups.” One of the key areas of product innovation he is exploring is the use of customer data to both tailor products for them and to provide bespoke solutions to any problems they might have.

Automation is a key component of both virtualization and corporate agility. Phil Wolfenden, EMEAR VP for Cisco Technical Services, started his bit by stating “Complexity is the thief of time and time has become our scarcest asset.” To illustrate the importance of automation he cited the example of an Indian operator, clearly Jio, which has been acquiring new subscribers at the rate of seven per second, something that would have been almost impossible to process manually.

Wolfenden then touched on a very sensitive aspect of automation: the spectre of job redundancy. He conceded that Cisco’s own otherwise successful automation journey hit its biggest bumps in the road when it came to selling it internally and not persuading employees will create, rather than destroy job. It’s easy to see why Cisco struggled to sell that message. He also said operators need to get better at pooling their resources and cited the Ngena consortium as a good example of that.

One thing that had been conspicuously lacking from all this talk of transformation and agility was any resulting innovative products. This issue was at least partly addressed by Ansi Deniz Rona Bayildiran, digital experience manager at Turkcell, who told us about Turkcell’s Hesabim app, which functions as a hub for all the operator’s other OTT offerings.

The morning concluded with a panel discussion with the theme: How can telcos acquire new customers on the digital stage? Most of the discussion, however, focused more on not losing existing customers (good old churn) rather than finding new ones, which is fair enough in markets where the subscription level has reached saturation point anyway.

There was lots of talk about what a strong position operators are in, with their existing customer relationships and all the juicy data they can derive from their networks but, again, the killer products and services that will exploit those opportunities and resuscitate operator margins were thin on the ground.

Speaking on the sidelines, Strategy Analytics’ David MacQueen noted that this conversation has been happening for at least a decade. He is in charge of a relatively new area at SA that concerns VR/AR business opportunities and he noted that much of the interest, just as with IoT, is more on the B2B side. Specifically, this means immersive training with VR and heads-up displays containing technical assistance for AR.

There is a distinct sense of déjà vu at digital transformation events such as these. Everyone solemnly agrees that operators need to adapt and then chuck around buzzwords like DevOps to show how serious they are. But at the same time there is little evidence of what all this new-found agility will enable operators to do, that they had previously been unable to.

One questioner during the panel session made the point that even when operators do try something different, it’s usually in order to support their legacy business rather than create fresh revenue streams. That’s hard to argue with, but there is also a rich history of operators trying to diversify away from their core competency with disastrous results (anyone remember Vodafone 360?).

Right now there seems to be a rush to lure subscribers with premium or unique content. But for this to be more than a defensive move, such as with BT Sport, it needs to be part of a broader strategy to expand the customer relationship to include products and services other than the basic connectivity commodity.

The Turkcell hub seems like a step in the right direction. Right now UK apps such as My EE are useful only to check how much data you’ve used or buy prosaic add-ons such as roaming packages, when they work at all that is. What if the app was a genuine destination, featuring not only content, special offers, etc, but maybe even some casual gaming functionality to keep people coming back to it on a regular basis?

It’s all very well automating everything and browbeating your staff into mimicking Mark Zuckerberg, but you still need to come up with good ideas. If operators are really serious about this, they need to empower their people to be more entrepreneurial and not punish them for failure. Then they might finally start fighting back against those big, bad OTTs.

  • TechXLR8

  • TV Connect MENA


3 comments

  1. Santa Claus 28/09/2017 @ 4:34 pm

    I just don’t see evidence on the ground of any ability to change. There are executive aspirations to be more than fast/reliable transport, but the front line product management teams are designed to resist change and innovation.

    For innovations, it can take 2-3 years to go through labs and business case work to even decide whether or not to go forward. This is why startups with only focus on operators have been dying at a rapid pace or re-focusing their products to get to the enterprise market where a huge amount of potentially ready buyers exist.

    Finally, the conflict where enterprises want something that is available across their business’ geographic footprint and the desire of operators to create walled gardens where the innovation bolsters the value of their network seems fatal.

    Can the cultures actually change vs just talking about it? We shall see.

  2. Ahmad Sardar 29/09/2017 @ 5:29 am

    Thank you Scott. I’m beginning to love your articles. This article is as funny as it is insightful.

    • Scott Bicheno Scott Bicheno 29/09/2017 @ 9:26 am

      Thank you

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