The Rise of the Network

When you work in the telecom industry in North America, you live in two different worlds. In the first world, the mobile industry is growing dramatically with operator capital spending and data consumption increasing at healthy levels. The second world is one with more challenges.  In this world, the reality is that mobile connections are reaching saturation levels, forcing operators to shift their focus to subscriber retention and revenue growth in new areas. 

Despite these opposing worlds, we believe that telecom is booming. Even voice.  The fundamental problem, however, is that our thinking about the industry in on the decline. Going forward, we need to   change our view of the industry to focus on how we can capitalize on the opportunities that arise from these disruptions.

Today, there is an understanding that the basis of competition has shifted from an industry built around scale and robustness of networks to a model of choice and flexibility of services driven by the consumer. Software providers are even moving away from the services space to look into how services are being delivered to the end user. In order to compete, the telecom core and network will have to become service marketplaces.

For telecom operators to continue to flourish in this new environment we will need to rethink how networks are built and used. At Ericsson, we see many potential areas for disruption, the largest being at the heart of the network, 4th Generation IP, Cloud & Service Provider SDN.  From a telecom perspective, we are seeing software eat the network. To leverage this new phenomenon, we must remove the complexity that exists in a traditional IP and service network and make it more accessible to software developers. As a result, the cost basis for delivering services will fundamentally change, allowing scale experimentation for new business models.

Companies like Google, for example, have excelled at using a micro-experimentation approach to determine what elements constitute a good service experience and to create new opportunities. Historically, the telco and service provider communities have not followed their lead. If these communities can successfully implement micro-experimentation, they will be able to rapidly discover new types of business models. This transformation is already occurring today, with experimentation happening within the service provider space. To those that are not experimenting, it only looks slow if you’re losing.