As 5G deployments continue to grow, the next-generation networks must handle the substantial data traffic generated by hundreds of new applications and services utilized by millions of users. According to GSMA, 5G networks are likely to cover one-third of the world’s population by 2025. Hence, the technology’s impact on the mobile industry and its customers will be immense. Consequently, this development warrants the close workings between vendors and telecom operators to incorporate trust, cooperation, shared risk and investment and mutually beneficial SLAs to run their respective operations.
Over the years, a lot has changed in the telco/vendor relationship. From procurement processes to price negotiations to standardization and service delivery, both industry players must recognize the best resolutions that complement each other’s operational and business objectives.
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Performing Strategic Assessment
Looking at the technology stack, the emphasis on hardware-centric solutions to provide physical network equipment—switches, routers, and other infrastructure components— is giving way to software-defined networking (SDN) and network function virtualization (NFV) solutions. This is a logical development as digital technology is deeply incorporated with overall business strategy in the telecom sector; encompassing network management, customer interaction, CRM, database management, and customer value management and so on. SDN and NFV functionalities make technologies like network slicing possible. This means that instead of using a uniform approach for all customers, it allows the customization of functionality and network operation for a specific customer. This is a departure from the one-size-fits-all approach seen in previous mobile generations.
In the traditional service delivery model, projects were typically long-term and expensive, involving extensive customization using traditional waterfall development or linear-sequential life cycle models. However, the focus has shifted towards flexibility and adaptability due to quickly changing market conditions. This is achieved through agile and iterative development models, especially as businesses move away from a physical presence and promote reliance on digital services.
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When it comes to business models, upfront capital expenditures (CapEx) have given way to operational expenditure (OpEx) and subscription-based models. Revenue models based on product sales and support are transitioning to pay-per-use pricing structures.
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Currently, the network architecture, characterized by a hierarchical and centralized structure with limited scalability and flexibility, is transitioning towards more distributed and decentralized architectures. There is more focus on scalability, flexibility, and adaptability to handle dynamic workloads.
Previously, longer development cycles and the time-to-market of services (due to slower adoption of new technologies) hindered the scope of innovation. Currently, the emphasis is on rapid innovation and quicker time-to-market, due to the faster adoption of emerging technologies. For example, network operators struggle to generate revenue from under-utilized links across their networks. To address this challenge, PCCW Global recently collaborated with Syntropy, a Web3 network software company, to build the Open Bandwidth Exchange (OBX) that allows web3 application developers, network infrastructure engineers and technical application owners to purchase network services on demand through an API. Utilizing a transparent, usage-based pricing model, OBX could leverage bandwidth potential to meet the internet requirements of VR, AR, and the metaverse.
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Broader Participation
If closed ecosystem with limited collaboration beyond vendor-supplier relationships was the norm, today, there is increased collaboration with a broader ecosystem, including startups and other industry players. Recent observations in the 5G evolution show that along with vendors and CSPs other industry players such as the 5G Automotive Association (5GAA) and satellite providers are also increasingly a part of the 3GPP discussion on 5G.
Customer experience has become the focal point of every business, and telecommunications is no exception. Given today’s connectivity demands, along with network performance and reliability, experience and customer-centric solutions have become vitally important. There is greater emphasis on customer experience and personalized services with the use of analytics and AI to enhance customer engagement.
Security, Sustainability and Cloud
Given the increased digitalization of services, security measures focusing on network integrity are not enough. A focus on cybersecurity, privacy and compliance with evolving regulations related to data protection, privacy, and emerging technologies must be the norm now. According to the UAE Cybersecurity Council, the UAE prevented more than 71 million cyber-attacks in the first three quarters of 2023. Experiencing a data breach can be financially burdensome, particularly in the Middle East, where the average total cost of such incidents stands as the second-highest globally, reaching USD 8.07 million. Additionally, the marked increase in the recent adoption of cloud-native solutions and services has characterized the modern telco-vendor relationship with both opportunities and challenges.
Cloud-based digital transformation across sectors warrants software-driven solutions, collaboration, and customer-centric expectations. Moreover, a recent Epson survey revealed that respondents in the UAE sought a more sustainable lifestyle supported by innovative technologies – 57% were keen on owning electric vehicles (compared to 58% in KSA) and 51% plan on using renewable energy (compared to 49% in KSA). Nearly half of the surveyed individuals in the UAE, specifically 48%, expressed intentions to avoid unsustainable brands. This highlights a discernible level of consumer awareness and underscores its potential influence on purchasing behaviors. The telecommunications sector plays a crucial role in facilitating the advancement of sustainable practices among small businesses and startups, aligning with their growth trajectories. Telcos and vendors must align their strategies to support this determining component in the digital economy.
Furthermore, standardization bodies such as ITU and 3GPP are already setting the path for the development of the sixth generation of mobile systems (6G), ushering in a new era of sustainability and technological innovation. The ITU’s IMT-2030 Framework Recommendation identifies 15 capabilities for 6G technology. Nine of those capabilities are derived from existing 5G systems. The ongoing advancements in the Information and Communication Technology (ICT) industry present both challenges and opportunities for vendors, telecommunication companies, system integrators, and regulatory bodies. It calls for collaborative efforts to navigate toward a profitable and sustainable future for the telecom sector. Hence, the operating words for success in this journey are ‘collaboration’ and ‘interoperability’.
The expanding landscape of 5G/6G deployments and the anticipated global coverage by 2025 underscore the pivotal role of collaboration between telecom operators and vendors. As the industry undergoes significant transformations, fostering trust, cooperation, shared risk, and investment through mutually beneficial Service Level Agreements (SLAs) becomes imperative. The evolving dynamics necessitate a strategic alignment of operational and business objectives. Amidst the challenges and opportunities in the ICT realm, success hinges on the principles of collaboration and interoperability. All stakeholders must adhere to these guiding principles to effectively address the escalating demands of future connectivity.
