The future for telcos depends on embracing open platforms

5G and edge computing will help define who wins in the booming digital economy.

The pandemic has shown how cloud platforms and connectivity can come together to deliver ingenuity in how we work, live and connect.

As telcos race to harness 5G and Edge, the critical question has now become: can they avoid the same fate that recently befell legacy media companies when cloud hyperscalers and direct-to-consumer streaming conspired to take the lion-share of the profits in the media value chain?

A recently released global IBM Institute for Business Value study, “The end of communications services as we know them,” polled 500 global telecom executives in 21 countries to understand their greatest challenges and opportunities as they transform their businesses to capture this new potential.

A takeaway quickly that stands out is, to own their own destiny, telcos are facing an existential moment: they must become platforms themselves or face the realities of competing with them.

To propel this transformation, telcos are embracing open hybrid cloud platforms that enable public cloud scale and services while keeping them in control of their transformation journey and data. Many are looking to harness their dominant position in connectivity to deliver a platform for innovation to their customers – half (50 per cent) of high performing communication service providers (CSPs) agree they must become strategic cloud platforms blending a diverse partner ecosystem, and 59 per cent agree they must become secure clouds infused with AI and automation.

But as telcos look to the lessons of the past, the study also showed a growing reluctance to trust traditional webscalers and hyperscale clouds as they embark on this journey. Almost three quarters (74 per cent) of the highest performing CSPs agreed that partnering with webscale companies, including hyperscalers, for 5G-enabled edge computing would mostly benefit the strategic interests of the webscalers.

Hybrid cloud keeps telcos in control

By embracing an open hybrid cloud approach, telcos recognize they can bring together their choice of cloud and on-premises environments as well as third party vendors, all enabled by an open platform that works as a lingua franca for data. This industry standard compliant architecture fosters the kind of deployment flexibility and industry-wide collaboration that’s necessary to capturing new value from next-gen connectivity. It also supports more ways to monetize the advantages of 5G – including reduced latency, enhanced bandwidth, and dedicated network capacity that can improve service quality for clients.

The reality is 5G will bring significant costs to the telcos – licensing spectrum, building infrastructure and managing a complex real-time platform. Nearly all major telcos have announced their commitment to spending billions of dollars in the coming years on infrastructure to support 5G.  Because of this, there is a pressing financial urgency for telcos to transform their network architectures into software-defined platforms that can help them monetize growing volumes of 5G and Edge-enabled use cases. And the promise this holds has real bottom-line impact — 91 per cent of high performing CSPs surveyed expect to outperform their current financial expectations in five years as a result of using edge computing.

Telcos also view security as a fundamental element to their transformation — 60 per cent of telco CEOs surveyed see strengthening data security and privacy as important to their customers and a way to build customer experience and trust over the next 2-3 years, according to a 2021 IBV CEO study. A hybrid cloud model keeps telcos in control of their data by infusing enterprise level security in all aspects of the workflows they manage, as well as for those of customers and partners. With an open hybrid cloud approach, telcos can safely monetize their data because they can continue to own the keys to it, maintain control over privacy settings and integrate security and compliance across the breadth of their IT workloads.

Ensuring a central role in the 5G future

There is little debate that 5G holds the promise to transform critical services in all industries, from smarter clean energy grids to improving the efficacy of public sector first responders.

By evolving to open software platforms that align with standards-based approaches, telcos – and the enterprises they serve – will maintain control of where and how they deploy their network services, edge platforms and enterprise offerings. And this will prove a critical determinant of success – for telcos and all enterprise customers – as connectivity and compute synergize in ways we’re only now imagining.








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