2018-traversing the digital wave

Darren Tan / Delta Partners
15 Dec 2017

Digital challenges will continue to drive operators to transform.

Traditional revenue pools will continue to recede as operators’ digital initiatives take longer to materialize. Expect technological disruption to impact many aspects of the sector’s evolution, primarily affecting improvements on service delivery and the constantly evolving digital landscape.

AI and advanced analytics

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Artificial intelligence will be applied more broadly to revolutionize the way customer service is delivered and internal processes are managed. Expect AI to enhance service personalization through offers and customer experience. Anticipate more automation and advanced analytics to drive significant benefits on operator’s top and bottom lines, thanks to better cross-selling opportunities and optimized offerings, as well as opex reduction through automation, improved efficiencies, and elimination of redundancies.

AR/VR to boost mobile data growth

Real-time social media services and video streaming usage is sky-high, but we expect more social and commercial use-cases of augmented and virtual realities to drive further data demand.

Unlike current video, VR/AR requires high bandwidth on a bidirectional basis, with low latency, and edge computing. Expect operators to adopt smarter capex deployment through deep network analytics to ensure appropriate network densification to enable this. An operator’s digital agility will be further tested to ensure base-case connectivity experiences are sustained.

5G readiness-IoT opportunities

5G trials are edging closer to the initial promises. Expect operators in China, Korea and Japan to lead the way through their 5G roadmaps and commercial use-cases, especially the ones identified for the 2018 PyeongChang Winter Games in South Korea. With the recent 5G breakthrough by Qualcomm, operators will begin to outline their consumer and enterprise propositions, specifically use-cases in IoT, cloud, and AI.

Recent field trials by Qualcomm on the highly debated 5G New Radio (NR) millimeter wave technology has underscored mmWave bands as a key enabler for 5G. Expect more trials to establish viability of 5G as a true mobility standard.

Digitally lean and agile

Telcos will continue to drive lean initiatives to increase productivity gains leading to higher earnings in light of continuous revenue erosion.

While many are already operating at high levels of productivity with limited upside, telcos can further assess their cost structures through the advancement of machine learning and automation capabilities to achieve better optimization results. Network optimization through physical infrastructure sharing will continue and be encouraged by regulators.

Revenue diversification: omnipresence provider

Non-telecom revenues can be realized for Asian operators establishing digital omnipresence. Expect more operators to venture into a myriad of digital services, including video bundling, FinTech, and lifestyle propositions linked to home appliance control.

Albeit still marginal in comparison with current traditional telco revenues, an operator’s omnipresence can generate greater synergies and enhance overall customer experience through deep analytics and potential cross-selling opportunities. This will strengthen an operator’s challenge (and sustainability) against the onslaught of digital giants such as Amazon and Alibaba.

Specific to IoT opportunities, operators are expected to decide their degree of participation, i.e. as an enabler, reseller or a platform provider (like Vodafone and Orange). Expect operators to establish collaboration with global IoT enablers in developing customized IoT platform architectures relevant to specific industrial verticals (e.g. aviation, industrial, manufacturing, agriculture).

While IoT itself is an opportunity, such venture could result in serious reputational damage if IoT security becomes compromised. Serious investment in this space is anticipated.

Darren Tan is senior director, Intelligence Unit, Delta Partners

This article first appeared in Telecom Asia Vision 2018

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