2018 means innovating communications for a ‘connected world’, says one operator
Shifts and fluctuations occur in every sector, with political, economic, and social factors all guiding peaks and troughs, positive and negative. According to the CEO of BICS, Daniel Kurgan, the telecoms industry throughout 2017 has been testament to this.
Digital transformation across all areas of society and business has had huge repercussions for telcos: OTT apps are replacing traditional voice and SMS in consumer and enterprise markets, causing revenues from traditional services to tumble. In addition, with the EU’s abolition of roaming charges this year, operators have come under increasing pressure to find new revenue streams.
As a result, the industry is at an inflection point and whilst it’s inevitable that some will flounder, through harnessing global digitalisation, service providers can flourish. Daniel Kurgan, CEO, BICS, forecasts the main issues which will shape the telecoms industry in 2018. Rather than ‘trends’, these predictions signify opportunities for long-term growth throughout the next 12 months and beyond. Out with the old, in with the new: The decline in legacy services will continue, meaning operators must adopt new approaches underpinned by a ‘connected world’ mindset.
The decline in traditional voice services, long feared in the telecoms industry, has gradually become the reality. Whilst consumers and businesses seem to be using more communications services, more often, the time and money spent on traditional means of communicating is declining. 2017, like no other, has been a year in which we’ve seen OTT communications players come to the fore. WhatsApp, Facebook Messenger, Skype, WeChat, and a vast array of others can now offer more attractive, feature-rich, enhanced services, often for a lower cost and at more convenience than provided by traditional voice and SMS.
In light of this, 2018 must be the year in which operators and telcos change tack. Instead of doing battle with the digital players, we’ll witness a growing number of incumbents collaborating, consolidating, and adopting a more forward-looking ‘connected world’ vision. By providing and managing critical mobile infrastructure, telcos will continue to stay relevant in the communications ecosystem in the future, so long as they adapt accordingly.
This means moving to virtualised infrastructure and offering services and solutions which recognise mobile as the beating heart of communication and interaction. Looking beyond mobile telephony, we’ll see a rise in the number of traditional industry players experimenting with digital service offerings, and adapting their business models to the diverse needs of the global market. The IoT, storage, healthtech, smart cities, chatbots, data analytics, 4K content: operators will move into diverse sectors, to deliver new solutions and engaging experiences.
M&A megadeals and small-scale consolidation will be progressed, announced and completed
As we head into the New Year, many in the industry will be asking: will 2018 match the rampant M&A activity of the past 12 months?
M&A megadeals will continue into 2018, with the IoT in particular driving telco interest in companies in a variety of vertical sectors. We should expect more deals involving chipset and semiconductor manufacturers, as those in the wider telco industry look to capitalise on IoT growth.
Continued hype around driverless cars will also drive M&A activity between the telco and automotive industries. Connected cars will rely on ultra low-latency, high-reliability connectivity; something telcos are able to provide and manage, with potentially huge returns.
It’s not only the big firms with the big bucks who’ll be floating and confirming partnership deals next year. We’ll also witness consolidation between smaller players looking for a way to enhance offerings, expand assets and stay relevant in the digital economy. Significant of CPaaS will drive A2P traffic volumes and allow MNOs to monetise a range of services
2018 will be the year that CPaaS (Communications Platforms-as-a-Service) really takes off. Adopting CPaaS will allow developers to easily and cost-effectively integrate real-time communications services into their offering, using the existing infrastructure and expertise of the provider.
We’ll see the benefits initially in customer care, with businesses from airlines and healthcare providers, to banks and retailers, adopting CPaaS to enhance customer engagement, using cloud-managed voice, video calling, or SMS. Without the need for extensive and expensive hardware purchases and back-end system development, businesses can go to market faster than ever with new services, to the benefit of consumer and enterprise. We identified this trend a couple of years ago, and made significant progress this year by completing our acquisition of CPaaS company TeleSign.
CPaaS services that will drive A2P volumes, together with the increased usage of 2FA
While enhancing engagement via voice and video calling is a natural progression which aligns with a more digitally-connected future, SMS has often been overlooked. But despite P2P messaging services declining, 2018 will see the surprise (for some) return of the humble SMS for A2P communications. The boost in CPaaS adoption will serve as a major driver for A2P traffic volumes, which are forecast to increase by 20% over the next five years to more than 2.7 trillion by 2022.
Our world is growing ever-more connected, and whilst network infrastructure improvements will continue next year, many regions will still be a while off ubiquitous 3G or LTE. Businesses in these regions will continue to adopt A2P SMS next year as a crucial tool for reliable customer engagement.
Even in those regions with 5G on the horizon, SMS will continue to prove popular with the enterprise market next year. Whilst apps can be deleted, push notifications turned off and emails lost in bulging inboxes, SMS allows an enterprise to automate communication, instantly, directly, and securely reaching their target customers.
In 2018 we’ll also see greater adoption of A2P SMS by banks and financial institutions, social media platforms, and healthcare providers, which will harness this for end-user authentication. Financial transactions, hospital appointment details, website access and the like can be verified via 2FA; sending the end-user a OTP (one-time password) via SMS.
This will help position A2P SMS – and value-add services like traffic monitoring and management – as a key revenue driver for MNOs globally. The IoT will prosper, and more enterprises in more sectors will recognise mobile connectivity as the cornerstone of a successful IoT strategy.
The combination of more sophisticated network infrastructure, the falling price of hardware, and the rise of cost-effective as-a-service business models have created the perfect IoT storm. From start-ups to international corporations, this climate will open the door to more companies looking to launch IoT strategies and enjoy the efficiencies this ecosystem will deliver.
Connecting people with things offers exciting opportunities, yet next year the opportunities presented by connecting ‘things’ with ‘things’ will be even more significant. As more companies connect smart devices, infrastructure and sensors, reliable connectivity will be required in order to support different M2M use cases. However, to truly unlock the potential of the IoT, devices must be able to access high capacity connectivity wherever they are in the world.
The value of the IoT has become clear in recent years, so in 2018 operators and enterprise will be looking for solutions and approaches to realise the benefits, and enhance end-user services. Lacking the core network infrastructure needed to deliver connectivity, next year we’ll see increased adoption of M2M white label platforms by operators. These can then be re-sold to the enterprise market, enabling the management of connected infrastructure and worldwide roaming agreements needed for global IoT connectivity.
Everyone is competing to gain a foothold in the IoT, and as more companies, manufacturers and operators enter the fray, competition will heat up in 2018. Rapid time-to-market, reduced CapEx and OpEx and a simple, accessible means of entering the IoT ecosystem will therefore be fundamental requirements of making this move.
While 2017 was undoubtedly a turbulent year for a vast number of operators, 2018 presents huge opportunities for telcos if digitalisation can be harnessed correctly. Operators should therefore look to embrace change and innovate, and in doing so can realise the full benefits that the connected world will bring.
The author of this blog is Daniel Kurgan, CEO of BICS