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Speakers at FutureNet World highlighted success stories in European comms, including eliminating bandwidth bottlenecks with 5G and fiber
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Challenges around monetization remain
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C-level execs describe the current environment as “tough”
FUTURENET WORLD, LONDON – The excellent FutureNet conference taking place in London today is packed with senior executives from European service providers and hosted by the erudite and engaging Roy Chua, principal at AvidThink. But anyone who came to the event hoping for easy answers about how to guarantee future success for communications service providers (CSPs) will leave disappointed.
While speakers celebrated huge achievements made in European telecom in the last few years, including eliminating the bandwidth bottleneck in access networks with 5G and fiber, and successfully deploying cloud, they uniformly agreed that CSPs have yet to master the critical challenge of monetizing new services and applications.
In an opening panel, C-level execs from BT Group, Vodafone UK and Orange all described the current environment with the same word: “tough.”
The investment environment is not making service providers’ job easier.
“This is an industry that goes through cycles of investment and then gets the benefit later,” said Howard Watson, group CTO and chief security and networks officer, BT Group. “Investors seem to have forgotten this, and are looking for an immediate return,” he commented, which prompted wide-spread head-nodding from the audience.
“We face a constant battle between spending money on legacy and investment in new capabilities,” Andrea Donà, chief network officer, Vodafone UK.
Investor impatience
As evidenced by the first quarter earnings and accompanying stock prices of CSPs and equipment vendors, investors’ impatience is incompatible with reality. Today, CSPs are paying for two sets of activities concurrently: simplifying their legacy networks while building for the future.
One way to reduce the capital investment challenge is for the telecom industry to slow its roll on 6G, allowing CSPs more time to monetize 5G — something both BT and Telefónica advocated for at the conference.
“We are reaching the end of an investment cycle on 5G. Let’s not rush to deploy 6G,” said Watson. “We need a period of time to monetize 5G."
The monetization of 5G mantra is at least six years old now, so it’s no wonder vendors are itching to move on at the same time as CSPs beg for more time.
Milking the maximum revenue from 5G only takes CSPs so far, however, and speakers agreed that the industry needs to find new ways to make money from services and applications that do more than deliver bandwidth.
“If return on investment is less than your cost of capital then you are losing money,” said Vodafone UK’s Donà. “We need to inject a new business model that takes you beyond connectivity to make it worthwhile being in this industry. That’s our North Star.”
Thin on solid examples
The bad news is that FutureNet was thin on solid examples of customer business cases that can support a business model that goes “beyond connectivity.”
The two mentioned were artificial intelligence services for consumers (meh) and service providers acting as orchestrators for multi-cloud networks (better).
The latter is where BT’s Watson said CSPs have “an opportunity to be the orchestrator” of helping enterprises orchestrate workloads across multi-cloud. “That’s the next accelerant,” he said.
While there was a clear consensus that enterprise sales will be an essential driver of new revenue, the exact nature of the enterprise opportunity remains out of view. That’s largely due to a cultural paradox.
Telecom operators are all about the technology, the reliability, the complexity. But enterprises like their networks to be simple, preferably invisible (neither seen nor heard), according to Iain Milligan, chief network officer, Three UK.
“The stumbling block is that enterprises just want things to work so they can focus on what they do. But we try to pitch the telecoms world to people who have no interest in it,” said Milligan. “We need to work out how we simplify not only the technology but also the pitch and build through enterprise services that are not in the way of their everyday [business].”
Cultural shift still challenging
Several speakers acknowledged the need for a cultural shift within service providers.
“Monetization is about culture. Our current mindset is to bring technology and then find use cases,” said Laurent Leboucher, group CTO and SVP innovation networks at Orange. “We need to reverse this by identifying the use cases first and then engineering around them,” he added.
Indeed, a “centralized and strong leadership across the whole organization, combined with a DevOps-style mentality, drives faster results,” Joe Cumello, SVP and GM, Blue Planet, a division of Ciena, told Fierce at the event.
He also provided key advice to service providers starting the process of automation: “You can’t attack automation until you have a really clean data set. Folks are starting to realize this.”
Overall, the vibe at FutureNet was neither gloomy nor ebullient, but realistic. That’s to be expected from an event where the plurality of attendees are CSPs wrestling with existential issues of survival, rather than vendors selling expensive life preservers.
It was a breath of fresh air to see CSPs coming together to crowd source solutions — after the hyperbole of Mobile World Congress in Barcelona.