CSPs harness E2ESO, Open APIs, secondary cores and AI to capture essential enterprise opportunities

Communications service providers (CSPs) are still challenged to balance the spiraling costs of network infrastructure with flat consumer revenues, which in some markets are being hit by inflation of operating costs. New ways to monetize their networks are needed and fertile ground to exploit exists in the enterprise market. Some CSPs are already succeeding while others are only now starting to target this sector and new innovations are making it simpler and more cost-effective to deliver truly tailored offerings that match the needs of specific verticals in specific countries.

Oleg Volpin, the president for Europe, Telefonica Global, and the Network Offering Division at Amdocs, tells George Malim, the managing editor of Vanilla Plus, that the levers for success are now in the hands of CSPs. Innovations such as Open APIs, secondary core networks, AI, and end-to-end service orchestration all contribute to the next generation of enterprise services but CSPs should still choose their targets carefully. By doing so, investment in 6G will become viable but trying to address everything is a recipe for failure.

George Malim, Vanilla Plus: What impacts does the continued evolution of the network domain have on CSPs and what is Amdocs' vision for the new era of telecoms?

Oleg Volpin, Amdocs: We tend to forget how important the network is for all of us as consumers. The challenge of that for CSPs is that, in many countries, inflation is rising, the cost of services is going up and our customers are paying their employees more but the price for services remains the same. It’s typically €20-30 for fiber and €10-20 for mobile per month in the majority of European countries. That’s very low in comparison to other essential services.

CSPs have to pay regulators for licenses and then pay to build the network and in many countries, the cost of a cappuccino is higher than a mobile service for a month and we, as consumers, still complain. We have to find a way to create a better balance for CSPs.

Amdocs helps in how to improve monetization of the network. We’ve launched B2B2X services to allow customers to sell services through the network and via exposing APIs. Without this, the telecoms industry won’t be able to afford 6G and regulators need to think about the situation they are creating. There’s no doubt this is critical infrastructure but it has to make sense for CSPs to build it.

Obviously, there are differences between geographies and we’ve seen in South Korea how CSPs have been able to monetize 5G for gaming but this is an exception and the majority of monetization potential is in the B2B market. The challenge is to capitalize on new capabilities such as network slicing. We are providing the software for our customers so they can sell to enterprises because it’s the major growth area.

It's not just about opening up APIs, it’s about exposing different capabilities and new business models for CSP customers. There are many examples of how to use new network functions to the benefit of enterprise customers but it is much more complex than B2C offerings.

GM: How does Amdocs' end-to-end service orchestration (E2ESO) solution fit into this and what does it enable for CSPs and their partners and customers?

OV: When you look at orchestration solutions today, the majority are not end-to-end. Different areas of network and IT software have to be orchestrated and, if you orchestrate each piece on its own, it’s cheaper and easier. However, that’s not end-to-end, it’s fragmented and you can’t provision certain models and services.

We’ve seen a North American cable customer grow revenue from zero to US$10 billion in the enterprise market because they orchestrated all of the IT and network software functions end-to-end. With fragmented orchestration, if a small-to-medium-sized enterprise wants fiber, you have the process to provision the network and then another process to build the pricing for this. The customer has to wait three months because the pieces are not integrated.

There are further risks. You might, for example, promise a certain capacity that you cannot supply and this adds to customer frustration.

GM: What is your view of network exposure as an opportunity for CSPs?

OV: As part of CSP monetization strategies, it’s a must. CSPs have enormous network assets that cost a lot and they are not being used enough. There are therefore a lot of benefits to exposing the network to new usage but also two main caveats.

The first is that all examples to date are very simplistic and we have not seen complex examples perhaps because the network doesn’t offer end-to-end 5G standalone or maybe because there is not enough demand.

The second thing is that 13 years ago when CSPs came to monetize 3G and 4G, the strategy was to enable partners to build app stores with CSPs, which CSPs would manage and it didn’t work. The question today is what’s different between then and now? It’s about demand and the ability to sell still. The opportunity is there but I’m not sure CSPs will be able to capitalise on it. 

GM: What opportunities does secondary mobile core present?

OV: I think it’s a great opportunity for many propositions. It’s much cheaper and faster to build because you build it for the specific proposition. As a CSP, you can take on more risk and do it fully with software vendors and fully in the cloud. You can serve enterprise customers at a cost that make it mutually beneficial. You optimize the cost for the customer, do it fast, and solve their business problem.

In the next three years, from the cost perspective, CSPs are still spending on their primary networks but this will change to a 50:50 ratio with secondary networks. You’ll see more and more of this in different areas, tailored to customer needs which will offset the cost to the customer.

It’s open to software providers like us and the secondary core has perhaps more opportunities than the primary network because it’s very safe to experiment. CSPs will be open to the challenges and opportunities of the secondary core.

GM: What role does GenAI have in the new network paradigm?

OV: It’s impacting everything and the key topic is network automation. There are major areas where AI is applicable and is being applied but the question is how to make it cost effective. The technology is there and it will definitely help us but the next 12 months will show what the cost-efficient ways to deploy it are.

It’s important to understand which use cases are cost-efficient and to consider that what is cost-effective in North America is not in Latin America, and Europe is somewhere in between. What is clear is that operations will be better and automated processes should be faster. More importantly, because we’ve spent so many years building networks, we’ll understand our data better.

GM: As CSPs engage in sophisticated B2B and B2B2X services how are their IT requirements changing and evolving?

OV: B2B and B2B2X have all become software-based and the integration between network and IT software has been the major focus of time. Software has to be built with time in mind because speed today is the differentiator. That’s completely different to 10 or 15 years ago and what was acceptable then isn’t now. The challenge today is to build software that can be deployed faster and the user experience has to be easy.

The end customer has become used to that speed from digitalization or UI-first services. However, services also have to be cost-effective. This is not simple because moving to the cloud isn’t making everything cheaper. It’s making everything agile but not necessarily cheaper.

The telecoms industry is really struggling with capex so we have to find a thin layer between making great software that is agile but too expensive and making software that works for each function. That involves making smaller packages that are easier for customers to deploy.

GM: There's renewed interest in the enterprise market opportunity for CSPs - why has this market not been captured yet?

OV: Whether the enterprise market has been captured or not differs from country to country and some have done better than others. However, a big reason for the failure to capture enterprises is that despite the challenges we faced as an industry, it was a good ride. B2C was still fuelling growth and it’s very familiar and much more simple to address.

5G is the first technology where CSPs can’t be successful without the enterprise market and that requires different skillsets and technologies.

If you look at enterprises such as the healthcare industry in the UK and the Philippines, they might only have a little in common, so there’s much less of a common denominator. You need to be able to recognize the needs of a particular geography and a particular vertical and therefore tailored skills and solutions are required. You’ll only capture certain areas. It’s important not to try and grab everything.

GM: What are the key challenges here and what is holding the industry back?

OV: Again, it’s different from country to country. For example, as a CSP I might want to be a full systems integrator at Heathrow Airport but to be that, I would need an understanding of the airport business, knowledge of what they need beyond connectivity, and the process and software to run that. Sometimes that doesn’t even exist so, to capitalize on the opportunity, you’d need to build all of those elements. It’s not necessarily an attractive target.

GM:  What needs to happen to move the telecoms industry onward into the industry's next phase?

OV: This has to start with an understanding of needs and alignment of the business model. First, we should have enterprise customers telling CSPs what they want – an understanding of that has to come first.

In order for us to be successful we have to understand each of our customers so the same mindset has to be there with them. We have to provide tailored solutions to them. You have to have more of a systems integration mindset than a telecoms mindset. Once that happens, a clear focus on what you want to do is needed, their ability to enable technology is not a problem but doing so cost-effectively is an issue.

The ability to execute cost-effectively is very important as part of understanding what the end game is. If you enable everything, the cost is high but if you enable only what is needed, the cost can be attractive.

The telecoms industry has done a very good job but regulators have to realize that competition is high and pricing is low. This is a very important industry and regulators need to be mindful of the challenges operators face in providing critical infrastructure to the world.

I believe that if CSPs are focused on the right services to provide enterprises they can make it but, in order to succeed they will need to collaborate with vendors and partners.

SPONSORED INTERVIEW (originally appearing across Vanilla Plus platforms)