Lifecycle Software CEO Mo Firouzabadian discusses hypersscalers, 5G and the importance of a streamlined approach
Not too long ago, the words ‘Amazon’ and ‘Telco’ would seldom appear together without conveying negative sentiment. This was down to what has been a dominant discourse in the sector: The Telco-Hyperscaler Debate.
Although the tide is turning, this ‘mutual-exclusivity’ argument was (quite convincingly) centred on the assumption that hyperscalers are out to ‘get’ telcos, and that one or the other must eventually win out. What nobody really expected was that we would start to see both sides find ways to collaborate.
Despite hyperscalers’ aggressive growth strategies, it now appears that they don’t really want to replace telcos, and feel they might be better off leaving more specialist parts of the industry alone.
5G has also been particularly effective at promoting the armistice, with Nokia and Ericsson already partnering with Microsoft, Google, and Amazon on 5G & Edge delivery.
This is filtering down to the Mobile Network Operators (MNOs) too – Verizon announced just last month that it is now expanding its 5G mobile edge computing (MEC) network with AWS.
Challenge
A unique set of challenges face telcos at this moment, with the pandemic making their services more critical than ever, whilst at the same time reducing how deep the average consumers’ and business’ pockets are.
Operators are still getting bogged down by fierce competition and slashed margins on top of increased service complexity and the introduction of new business models that conquer market share at a rapid pace.
There’s a clear need for more flexibility and with operators unable to charge more for 5G plans, the majority of MNO’s employees and resources are focused on a consumer segment that is not growing, limiting potential for growth.
Operators must realise that partnerships are not the only way to get a piece of the hyperscaler pie – MNOs need to strive towards internal assimilation of practices championed by those like Amazon to reach their full monetisation potential.
The hyperscalers lead by example when it comes to internal operations, and MNOs could be key beneficiaries by shifting tact and following suit.
By streamlining operations, maximising automation, and making better use of data, MNOs can redirect talent and resources away from their already established consumer segments to focus on where the growth will be: the enterprise segment.
5G Revolution
5G is revolutionising more than just our download speeds; it’s creating huge opportunities for enterprises, and will change how MNOs run, too.
Now is the time to take advantage with new research from IDC forecasting that worldwide private LTE/5G wireless infrastructure revenues will reach $8.3 billion by 2026.
Growing interest in private networks is one of the most interesting use cases for 5G, and there is going to be a significant monetization opportunity for MNOs in the enterprise segment.
This is where operators will generate the additional revenue for investing in 5G, since the consumer segment has already proven too resistant.
This will require MNOs to adapt. Monetising network capacity into segments requires modern tech stacks and as new private networks are created, new billing and charging services will be needed to match.
That requires a highly flexible and automated system capable of scaling seamlessly, moving out of the core network and into the network’s edge for lower latency, applying different policies for security and quality, and so on.
By automating more of the consumer segment operations, and making sure talent has the training and knowledge to move into enterprise, MNOs that have been slow to respond to the 5G opportunity can become well prepared for the market to completely take off.
The ‘Amazon’ Approach
The goal of taking the ‘Amazon Approach’ for operators is to make their business model as lean as possible, invest in new business, and leverage both existing and new assets into an ecosystem that supports growth.
A good example of a network that is already taking the Amazon approach is Smarty: the company has an extremely high efficiency business model, with the ratio of subscribers to employees of sitting at 13750:1.
To put that into perspective, another popular operator, Tesco Mobile, has a ratio of 3,600 subscribers for every one employee. You don’t need to be an expert to understand what these stats mean for business.
If Tesco Mobile keeps nearly four times the number of employees busy with its consumer segment, whilst Smarty commits more of its employees to developing areas of the business, there is going to be one clear winner when it comes to meeting new market demands.
MNOs are at a critical juncture. The winners and losers of the next ten years are being decided today, and those who take on lessons from rapid-growth hyperscalers will ensure that they have one foot in the right camp when the decisive hour arrives.