Mukesh Ambani, in 2017, while talking about Jio’s future plans had stated that telecom was evolving as a multi-wave game wherein telcos would have the opportunity to delight customers in a digital era. Over the past few years, the industry has indeed seen telcos going beyond voice and data connectivity offerings and committing effort and investment in building a portfolio of non-core digital services.
The emergence of digital lifestyles has opened up new avenues of growth for telcos, which are keen to expand their role and become digital enablers. In the past few years, Airtel and Reliance Jio have strengthened their connectivity offerings with digital money, digital wallets, video-on-demand (VoD), vehicle diagnostics, music- and entertainment-on-demand, IoT/M2M, enterprise solutions, etc. Most recently, Jio has launched a videoconferencing tool, JioMeet. And Airtel has joined hands with US-based operator Verizon to launch a branded videoconferencing service for enterprises and small and medium businesses (SMBs).
Revenues from traditional voice services have been fading for some time now. When data services were launched, it was hoped this would be a game changer. But soon a new breed of digital and technology players emerged, resulting in cannibalisation and disruption for telcos. Over-the-top (OTT) providers such as Facebook, Google and Amazon disrupted core telco services by substituting voice calls with OTT VoIP, SMS with WhatsApp, and pay TV with subscription VoD.
This called for disruptive strategies by telcos. As a result, telecom operators have moved away from merely selling connectivity to selling service-enabling digital platforms or experiences to both end-user consumers and B2B customers. In recent years, B2B or enterprise customers have become an important revenue centre for telcos. The uptake of ICT solutions by SMBs is largely being driven by their aspirations to go digital. Covid-19 has, of course, dramatically expedited the digital transformation of SMBs.
According to industry analysts, telcos have a strong play of offerings with over 50 key services across connectivity, digital, analytics, security solutions, cloud, XaaS, IT/ITeS, IoT, blockchain, Industry 4.0, payments, augmented reality (AR)/virtual reality (VR), etc. However, in their journey to reinvent themselves, they will have to rely on an agile operational environment and adopt a partner mindset. These are the two key pillars for long-term success.
Network agility and versatility
As per industry experts, telcos are becoming more agile and are scaling up to build secure networks to provide improved services. They are embracing open ecosystems to control network resources better. They are looking at AI and automation to help with cost optimisation. Vodafone Idea and Bharti Airtel have recently announced partnerships with IBM to enhance their data analytics and network deployment architecture.
To succeed, telcos will have to unbundle services from the underlying infrastructure/network they rely on. Building highly standardised and automated digital platforms based on network function virtualisation (NFV) and software-defined networking (SDN) will become important to transform vast amounts of data into contextual and applicable business insights in real time. Later, multiple third parties can be attracted around these data-driven platforms.
Evolving through partnerships
Telcos are realising that not every product and expertise needs to be developed in-house or from ground up. Co-creation and collaboration are becoming the order of the day. By teaming up with strategic partners, telcos can give customers access to a complete suite of solutions in a shorter time and at competitive prices. It also allows them to pursue opportunities in synergistic industries such as financial services, healthcare and e-commerce, and create new revenue streams for themselves.
According to Ashish Arora, chief executive officer, enterprise business, Airtel Business, three types of partnerships can help telcos stay relevant. The first kind of partnership is around go-to-market partners that are synergistic in nature. The second is for service creation, to offer new services in areas such as cloud and security that are completely integrated with the telco’s network layer and billing engines. The third and most crucial collaboration is for acquiring specialist capabilities in areas such as IoT and virtualisation.
Telcos can serve as orchestrators across the ecosystem of connectivity, platforms, hardware and services. They are at the nerve centre of the digital play, with most services being built around their infrastructure. With strategic bundling of services, telcos can build a valuable platform that can be used to offer their own bouquet of services and can be made available to new partners to deliver services directly to end users. This will on the one hand help operators continue to drive demand and derive revenue from their core services and on the other, create traction for new, value-added services.
According to Suphal Mehrotra, executive vice-president, Global Enterprise Business, Vodafone Idea, telcos are following a partnership-led approach that goes beyond white labelling. In this approach, the effort is to build a “sell to”, “sell with” and “sell through” model where telcos co-create with their partners.
In fact, active collaboration with partners and open ecosystems will be crucial for service providers to leverage the opportunities arising from new technologies such as 5G.
Preparing for a 5G world
Even as commercial launches look farther ahead in the future for Indian telcos, they are still readying the ground work. 5G is set to have a revolutionary effect on the telecom industry, both from a service and a revenue point of view. 5G and edge computing will unlock monetisation opportunities across several industries, including manufacturing, healthcare, energy and utilities, among others. For many large enterprises, private 5G is likely to become the preferred choice. As per industry experts, a shift is already under way among Indian telcos to make their back-end IT/ software applications 5G ready.
Covid-19 as a growth lever
The Covid-19 pandemic has acted as an unexpected catalyst for the work-from-home trend. Telecom companies have all the building blocks, such as 4G connectivity, home broadband, security and collaboration, to become the biggest enablers of social engagement amidst this crisis. According to industry analysts, this is a huge opportunity for telcos to transform themselves into digital companies and build capabilities for new revenue streams.
According to Vodafone Idea’s Mehrotra, healthcare is one of the most promising areas of growth for telcos. It presents both consumer as well as enterprise use cases. Telcos can get involved by offering IoT solutions across a spectrum of hospital functions such as to manage crowds and ensure hygiene regulations.
Meanwhile, there is also significant traction in Industry 4.0, which, until now, has been in the proof-of-concept phase. It is expected to move at an accelerated pace in the post-Covid-19 era.
An industry in transition
The industry is witnessing unprecedented levels of data consumption. Consumers are demanding customised self-service and omni-channel offerings – mobility solutions, home solutions, entertainment content, mobile banking and healthcare services. And telcos, enviably, are at the right place, at the right time.
To leverage this opportunity fully and gain a larger share of consumer wallets, telcos need to venture into unconventional areas. Jio, for one, has been moving towards becoming a tech solutions company. Under its digital business, the Jio telecom arm now provides digital connectivity (wireless broadband, narrowband internet of things, fibre for homes and businesses), which can be leveraged by building solutions on top of it for consumers and enterprises, thus enabling new revenue streams. At its recent AGM, Jio unveiled its ambition to transform itself into a tech ecosystem player providing industry solutions. With its recent strategic partnerships with global tech giants such as Microsoft, Facebook, Google, Qualcomm and Intel, Jio has made major headway on this journey.
Going forward, all telcos will have to pivot from being connection providers to end-to-end digital players to achieve long-term success. Taking cognisance of this changing paradigm, the Department of Telecommunications decided to rename the Telecom Commission as the Digital Communications Commission in the National Digital Communications Policy in 2018. It is now important that an enabling policy framework is made available to telcos to pave the way for their transformation into digital enablers.
By Akanksha Mahajan Marwah