Summary Bullets:
• Incumbent wholesalers should develop a robust cloud architecture framework to deliver future wholesale services, utilizing carriers’ unique capabilities in owning the network.
• Incumbent wholesalers must develop an underlying strategy for cloud that is interlinked across the different business units – promotes greater agility to operate effectively in future ecosystems.
Focus on Agility, Simplicity, and Automation in the Context of Cloud
GlobalData’s discussions during the 2022-2023 period with leading wholesale providers continue to highlight agility, simplicity, and automation as being key in the development of future products and services. Wholesale customers continue to demand the flexibility and agility to scale up/down their capacity, order their services online, pick and choose the required services, and have access to on-demand/pay-as-you-go billing models. Wholesale providers continue to become platform-centric with open application programming interfaces (APIs) and greater automation – artificial intelligence (AI) will play a key role here in the future.
A number of carriers have also been revamping their service portfolios, making them simpler and less fragmented, retiring a number of legacy products, and tailoring their proposition to different customer segments’ needs. Here, companies including Telefónica are offering a strong and innovative set of products focusing on customers in key markets by focusing on digital technologies and strong security credentials. Portfolio coverage includes enhancing the company’s voice and UCC portfolio as well as incorporating business intelligence and analytics in roaming and virtualizing its networks with the aim of harnessing technology such as AI and blockchain. Such portfolio initiatives will enable the provider to stay relevant and compete as well as partner with a differentiated offering in a changing competitor landscape.
Cloud Technologies Should be Exploited to Reduce CapEx/OpEx and Drive New Wholesale Cloud Connectivity Models
The overwhelming view from GlobalData’s discussions with senior stake holders across the industry is that traditional wholesale carriers are challenged in establishing how they position their businesses against new players in the ecosystem. Many of the obvious opportunities in wholesale, in the context of cloud, are targeted by traditional wholesale carriers. These are in sub-segments that carriers can easily exploit with partnerships with hyperscalers to enable them to operate in new wholesale and cloud-enabled connectivity models. There exists a multitude of examples where this is occurring, influenced by areas of play: BICS partnering with Microsoft to provide SIMs and eSIMs to roam between public and private networks. The partnership aims to provide capabilities to partners through Microsoft Azure’s private MEC. Other examples include Telefónica stating that in the main the majority of items are evolving to a virtualized approach, including SIP trunking replacing international voice for corporate customers and enabling carriers to not only deliver their services through a cloud model but to greater agility, and subsequently, reduce CapEx and OpEx expenditure through new cloud models. Lastly, pure-play disruptive segments are served by players including Twilio, Vonage (Ericsson), and MessageBird, delivering services through cloud communications platforms to enable enterprises to build and manage enterprise communication applications (i.e., voice and enterprise without the need to create and maintain the underlying infrastructure). The challenge with the latter for traditional carriers is establishing whether they should directly compete with a new breed of disruptive cloud providers or partners.
Strategic Options for Traditional Telco Wholesalers
Telco incumbents (including their wholesale divisions) must develop an underlying strategy for cloud that is interlinked across the different business units, including enterprise and wholesale. This will enable telcos to gain the scale and agility to operate effectively in future ecosystems. Options for consideration include shared customer ownership; white labeling of portfolio across enterprise and wholesale, and vice versa; exploiting portfolio expansion opportunities, e.g., expansion of security to include wider enterprise security capabilities for wholesale; consolidating and unifying processes and systems, e.g., unified service platforms; and standardizing technology and architecture approaches, e.g., centralize API and drive cloud.
Lastly, wholesalers must do more to drive additional revenues through value that exists on their networks. At a high-level, strategic initiatives include carriers looking at enablers that drive value in the digital economy, including the use of real-time data through developments in AI, increasing footprint and scale in connectivity in areas including IoT sensors, and utilizing skills in building next-generation networks across areas including 5G, NFV/SDN, and IoT that enables carriers to take a bigger stake in the future digital ecosystem.