Only Digital Transformation Can Unlock Value of 5G & AI – Experts

Telecom operators need to carry out digital transformation in order to be able to seize the benefits of 5G and AI – that was the verdict from the latest Huawei Operations Transformation Forum (OTF).

“The telecom industry needs to adopt new ways of working. It is the only way to join the digital economy and leverage the power of 5G, AI, and the cloud,” Huawei chairman Liang Hua said in a keynote address.

Going digital will enable rapid service innovation, intelligent operations and the ability to seize new digital opportunities, he said.

“Everything should be built on a core digital platform to maximize re-use, sharing and ROI,” he said. “We need to avoid silo systems and silo platforms.

Liang pointed out that the earliest 5G networks would be deployed in the next 18 months.

“In the 4G era, digital services can be seen as optional. But in the 5G era, where everything is on the cloud, digital services are not optional. They are a must.”

He said according to industry forecasts, digital services would account for more than 20% of the sales revenue of telecom operators by 2025.

GSMA CSO Laxmi Akkaraju says the biggest challenge for operators is to “build a better value capture mechanism” for 5G than for 4G.

She said 4G had delivered substantial growth but mobile operators had struggled to extract value from it.

Like Liang, she believed that the new era would be driven by 5G and AI.

“5G will be the core driver and will enable new services. AI will help us make sense of all the data generated – an estimated 250 exabytes per month by 2021.

“It will help us to develop new products and services for new revenue streams, ensure more efficient operations and better performance, and help us handle 5G network traffic loads.”

5G will take operators from a mono-product business providing primarily connectivity to a multi-product business with a number of revenue sources, he said.

But while “many, many new services” would contribute to network traffic growth, video would likely become the biggest opportunity.

“Operators need to be ready for video-centric future,” she urged.

This meant service providers needed to optimize their infrastructure to reduce opex cost and complexity.

They would also need to leverage new network capabilities such as virtualization and slicing to provide a better user experience, and use AI to predict traffic peaks and failures.

One operator that has achieved success in digital transformation is Turkey’s biggest operator, Turkcell.

Since 2015 it has introduced a series of new digital services, including streaming music, TV and cloud-based apps, with the aim of increasing the level of customer interaction.

While customers typically interact about 32 minutes a day with their network operator, Turkcell’s customers on average listen to 24 minutes of music, watch 57 minutes of TV and spend 31 minutes reading newspapers via its digital platforms.

The benefit has gone straight to the bottom line. In the last two years Turkcell has increased revenue by 52% and boosted ebitda margin by 11 points.

Liang Hua pointed out that the potential gains from transformation were not confined to the telecom industry.

Singapore-based DBS Bank, the recipient of multiple awards for its digital capabilities, had cut 250 million hours out of annual customer waiting time as a result. Another OTF speaker, Derek White, global head of customer solutions at Argentine bank BBVA, said the financial services sector was experiencing the blurring of lines across digital segments such as chat, social media, ecommerce, gaming, payments and lending.

The greatest blurring was in those areas the highest-frequency interactions were taking place.

“The old industry of walking into branches is not how people choose to interact with us. They are choosing to interact with their mobile devices at a rate 30 times that of walking into branches.”

The rising level of interactions was rapidly increasing the volume of data, making “data the most valuable resource for us.”

The ability to offer DIY service was the key to becoming a digital bank, he said.

DIY availability was the essential factor in driving retail sales, increasing customers and transactions.

White said the digital disruption sweeping the banking sector meant that the number of providers would likely go “from 20,000 banks to just a couple of dozen banks.”