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The future of CSPs - this year and beyond

(Image credit: Image Credit: Totojang1977 / Shutterstock)

The global telecommunications industry continues to evolve as we enter 2020. With legacy revenue streams under increasing pressure from over-the-top (OTT) players, communications service providers (CSPs) must find new ways of serving both their consumer and enterprise customers. But, although many CSPs have undertaken their own form of digital transformation in an effort to address this, they still remain vulnerable to the demands of changing consumer expectations, more nimble competitors, and new and emerging technologies.

The influence of OTT companies is only going to grow over the next 12 months, however, and CSPs will need to change their mindset in order to keep up. Earning brand loyalty - an increasingly rare commodity - and gaining a competitive advantage will require them to shift from their traditional position of simply being utility providers to becoming retailers whose success depends on providing exceptional customer services. 

With the growing global adoption of 5G, and the continued rise of technologies such as Internet of Things (IoT), augmented reality (AR), AI and edge computing, 2020 looks set to be a year of significant innovation and opportunities. But CSPs must be able to efficiently manage their costs and improve their customer services if they hope to capitalise on these.

Here, then, are five important trends that we can expect to see as CSPs adopt and integrate these new technologies throughout the coming year.

Capitalising on 5G opportunities

As implementations gather momentum around the world, the efficiency gains offered by 5G networks will undoubtedly accelerate business operations and boost customer satisfaction. As a result, we can expect to see greater innovation in areas such as industrial IoT and smart communities - not to mention in many ways that have yet to be discovered. Throughout this year and beyond, 5G’s increased bandwidth, higher speeds, and lower latency will continue to present CSPs with strong opportunities for revenue growth, as well as for higher customer acquisition and retention. But to seize these opportunities, CSPs will need to find ways to best leverage 5G technologies that will support emerging applications such as edge computing, IoT and AI.

The growing importance of AR and AI

AR and AI are set to become game-changers in the telecommunications industry, with benefits ranging from their ability to improve customer service, transform field force management, and create new ways of interacting, many of which will be as a result of AI’s ability to automate network management. At the same time, the increasing popularity of streaming video is forecast to result in a 50 per cent growth in video traffic by 2023 - accounting for 75 per cent of all mobile data traffic. And we expect this to accelerate further still with the adoption of technologies such as virtual and augmented reality applications that will be enabled by 5G. If they are to take advantage of the advances in AR and AI, CSPs will need to optimise their networks to cope with the higher levels of data, as well as ensuring they’re capable of learning autonomously.

Computing at the edge

By processing data locally, edge computing can significantly reduce network latency and strain on bandwidth - critical factors for any CSP that wishes to remain competitive in a 5G-enabled environment. And, with the use of connected IoT devices expected to reach 5.8 billion this year, many CSPs will be scrambling to the edge in a bid to handle the increase in data traffic that will accompany this. Indeed, those CSPs that are able to fully support edge computing will be in a far better position than their competitors to deliver innovative applications and services without compromising performance.

The need for smarter networks

Building a smart network can fundamentally change the way in which CSPs are built and how they operate. Given the demands made on them by the latest ongoing advances in technology, it’s becoming increasingly important for CSPs to ensure they have the right infrastructure, management tools, and visibility across their network. This will allow them to not only benefit from faster time-to-market, the creation and delivery of new services, and the ability to rapidly scale resources up and down, but will also enable them to reduce costs. According to McKinsey, “by transforming their networks and operations with the newest technologies, mobile operators could double their cash-flow conversion within five years.”

Faster, more agile

Speed and agility will continue to prevail as the race to be first to market heats up both in the enterprise space and with consumers. However, while these have always both been competitive differentiators for CSPs, the race will only accelerate further with the emergence of 5G, IoT, and edge computing.

Over the course of the year, CSPs will be required to create new and innovative services much faster than ever before. During this time, it will soon become apparent which industry leaders have the infrastructure, tools, applications, and skills needed to stay at the forefront of innovation.

The next 12 months are poised to be critical in determining the success of CSPs around the world. The telecoms industry is evolving and, for more strategic CSPs, there is great potential for building and delivering innovative new services and capturing new revenue streams by tapping into the power of 5G and edge computing. Indeed, analyst firm IDC estimates that, by 2023, more than half of new enterprise infrastructure deployments will be at the edge rather than in corporate data centres - up from less than 10 per cent today. What’s more, by 2024, the number of apps at the edge is expected to increase by an incredible 800 per cent.

Predictions such as these can’t be ignored, and those CSPs prepared to respond to the demands on their network that these developments represent will reap the greatest rewards throughout this year and into the future.

Frank Palermo, executive vice president of technology, media and telecommunications, Virtusa

Frank Palermo
Frank Palermo is Global Head of Digital Solutions at Virtusa.