Strategic Choice of Professional Telecom Services in the Post-PC Era

In April 2013, two news events drew attention to the topic of over-the-top (OTT) providers. One was the Boston Marathon bombings in the US. Shortly after the event, posts and photos flooded Twitter, Reddit, and other social media. The other was news about WeChat’s charging practices in China. This stirred up quite a buzz in the online community and pushed the conflict between OTT providers and telecom operators into the spotlight.

The lightning online response to the first major terrorist attack in the US in the age of social networks foreshadows an era where new media completely takes over mainstream print media and radio in covering an event. A report from the Pew Research Center released on April 23 (one week after the bombings) showed that up to 56% of the American people aged 18 to 29 had learned about the event on social media. In China, the WeChat incident shows how emerging media are nibbling away at the core services, such as SMS, of traditional operators. At the same time, small-data, long-online communications are creating unprecedented signaling storms for operators.

These two seemingly unrelated events show two key trends in communications: wireless access and mobile devices. The method of consuming information is also changing. We are entering a post-PC era, and the whole telecom ecosystem is being reshaped. According to OVUM, the annual revenue of the telecom service market is US$84.8 billion (2011), and telecom operators are facing tough challenges in their attempts to create or capture new opportunities. In this new environment, operators need to take customer trends and demands very seriously.

New Leaders in the Telecom Ecosystem

The world of mobile internet is complicated: The telecom subscriber market is almost saturated, and the main businesses that operators rely on for revenue are slowing year by year. On the contrary, OTT businesses are booming and demanding constant network expansion. As a result, there is a growing mismatch between investment and income. When an industry is mature and finds itself in such a dilemma, dramatic changes are on the horizon.

In 2012, OVUM published a report on the state of the telecoms industry in 2020. The report was based on a series of prior reports beginning in 2009. OVUM predicted that new players would enter the traditional telecoms ecosystem and influence technology, services, channels, and customer behavior and expectations. Operators would no longer be at the center of the telecommunications universe, where their only threat came from other operators. In the current environment, telcos no longer receive the majority of revenue from transactions made over their networks.

In 2013, Wei Leping, director of the Science and Technology Committee of China Telecom, gave a speech called “De-Telecom,” in which he concluded that future telecom operators will completely or partly return to playing the role of public service provider and will achieve meager profits and low growth. His comments triggered an online firestorm.

OVUM predicts that there will only be a small number of SMART (services, management, applications, relationships, and technology) players in the telecom ecosystem by 2020, and that fewer of these will be telcos. Apple, Google, and Amazon are SMART companies, and among the traditional telcos, only BT Global Services and Verizon Business have aspirations to be SMART businesses. The remaining telcos will become LEAN (low-cost enablers of agnostic networks) operators. They will run open, low-cost, technology-agnostic networks that provide network capabilities to a wholesale customer base.

In the future, LEAN operators will resort to continuous acquisition and integration to achieve considerable scale, which will then translate into cost advantages and bargaining power. LEAN operators will provide high-quality telecom services to business customers and, at the same time, attract investors seeking low risk and low returns. Lower OAM cost and higher management efficiency will become top priorities for LEAN operators. They will continuously outsource network-related businesses, including network infrastructure construction and network OAM. Equipment providers with global network operations centers, outstanding resource integration capabilities, and core technologies will be in a dominating position in the future telecom market. At present, vendors are also being tested in their ability to transition towards service provision. Only those that maximize their efficiency through better management, processes, and technology can possibly come out on top in this winner-takes-all battle.

LEAN operators will demand network infrastructure services, but SMART operators cannot be ignored. SMART operators will provide packaged end-to-end connection services, superior communication services, and abundant mobile applications to end users. Professional services providers will need to improve their service quality through smart pipes, swiftly restore interrupted services, and guarantee the ultimate customer experience. To ensure services are not adversely affected by network technologies, more sophisticated planning and optimization needs to be done in very complex heterogeneous network environments.

New Demand on the Value Chain of Telecom Services

In the post-PC era, many desktop user behaviors are being seen in mobile internet, and these behaviors will likely significantly impact the telecom ecosystem. WeChat, for example, is an instant communication app that builds its communication mechanism above the layer 3 TCP/IP of the traditional communication network protocol. People find it more convenient to chat with friends using WeChat on their mobile phones. Desktop chatting has therefore evolved into a small-data, long-online mobile chatting. Because of limited radio spectrum and the energy-saving modes of handsets, a network is prone to releasing established data links of handsets that are idle. However, this is often undesired by the end user and contrary to the customer experience that the OTT is trying to create. This is why OTTs have adopted a strategy of keeping a link alive for a super-short period. Unfortunately, this causes a signaling storm because invalid requests consume signaling resources. It also gives rise to poor overall user experience because many network resources are occupied.

End-to-end services have become so complicated that they require more than one NE for delivery. This is why the WeChat issue and other similar issues cannot be sufficiently dealt with by network software and/or hardware upgrade. Professional telecom service teams that are familiar with network elements, technologies, and vendors should be established to deal with network issues case by case. A traditional network-centered service ideology no longer fit in with changing demands in the mobile broadband age. For example, in order to centrally manage all push notifications, Apple introduced Apple push notification service (APNS). This reduces the impact of signaling on the network created by iOS applications. Core business is migrating from the bottom layer up, and the focus of professional services should also be redirected from the network to the customer. This explains why manufacturers have recruited specialists in terminals and app development into their professional service teams. In this way, IT-based mobile internet applications can have both interconnection and mobility. Not only will operators be better served, but OTTs and all other players in the telecom ecosystem will be better served and share professional knowledge and skills. 

The conflict that has been triggered by WeChat and others basically derives from the inherent differences between traditional communication technology and IT. To provide better information services for consumers, a suitable catalyst is needed to reshape capabilities. Telecom equipment providers are well positioned to be that catalyst because of their advantages in providing technology and services and because of their neutrality in the telecom value chain. Since 2010, ZTE has included important mobile internet services, such as Tencent QQ, Sina Weibo and Tencent WeChat, as key service modules in its UniCare professional service. ZTE has much experience in optimizing app-related services in networks around the world. At the 3GPP-R12 conference in 2013, ZTE proposed modifying the bottom-layer protocol to accommodate small-data, long-online services typically used in mobile internet. The proposal was accepted unanimously, and ZTE was called to lead this modification work.

Conclusion

Professional telecom services are becoming increasingly important in the overseas telecom value chain. In China, the situation is a little less rosy in terms of sharing technology, experiences, and knowledge.

In April 2013, two news events drew attention to the topic of over-the-top (OTT) providers. One was the Boston Marathon bombings in the US. Shortly after the event, posts and photos flooded Twitter, Reddit, and other social media. The other was news about WeChat’s charging practices in China. This stirred up quite a buzz in the online community and pushed the conflict between OTT providers and telecom operators into the spotlight.

The lightning online response to the first major terrorist attack in the US in the age of social networks foreshadows an era where new media completely takes over mainstream print media and radio in covering an event. A report from the Pew Research Center released on April 23 (one week after the bombings) showed that up to 56% of the American people aged 18 to 29 had learned about the event on social media. In China, the WeChat incident shows how emerging media are nibbling away at the core services, such as SMS, of traditional operators. At the same time, small-data, long-online communications are creating unprecedented signaling storms for operators.

These two seemingly unrelated events show two key trends in communications: wireless access and mobile devices. The method of consuming information is also changing. We are entering a post-PC era, and the whole telecom ecosystem is being reshaped. According to OVUM, the annual revenue of the telecom service market is US$84.8 billion (2011), and telecom operators are facing tough challenges in their attempts to create or capture new opportunities. In this new environment, operators need to take customer trends and demands very seriously.

New Leaders in the Telecom Ecosystem

The world of mobile internet is complicated: The telecom subscriber market is almost saturated, and the main businesses that operators rely on for revenue are slowing year by year. On the contrary, OTT businesses are booming and demanding constant network expansion. As a result, there is a growing mismatch between investment and income. When an industry is mature and finds itself in such a dilemma, dramatic changes are on the horizon.

In 2012, OVUM published a report on the state of the telecoms industry in 2020. The report was based on a series of prior reports beginning in 2009. OVUM predicted that new players would enter the traditional telecoms ecosystem and influence technology, services, channels, and customer behavior and expectations. Operators would no longer be at the center of the telecommunications universe, where their only threat came from other operators. In the current environment, telcos no longer receive the majority of revenue from transactions made over their networks.

In 2013, Wei Leping, director of the Science and Technology Committee of China Telecom, gave a speech called “De-Telecom,” in which he concluded that future telecom operators will completely or partly return to playing the role of public service provider and will achieve meager profits and low growth. His comments triggered an online firestorm.

OVUM predicts that there will only be a small number of SMART (services, management, applications, relationships, and technology) players in the telecom ecosystem by 2020, and that fewer of these will be telcos. Apple, Google, and Amazon are SMART companies, and among the traditional telcos, only BT Global Services and Verizon Business have aspirations to be SMART businesses. The remaining telcos will become LEAN (low-cost enablers of agnostic networks) operators. They will run open, low-cost, technology-agnostic networks that provide network capabilities to a wholesale customer base.

In the future, LEAN operators will resort to continuous acquisition and integration to achieve considerable scale, which will then translate into cost advantages and bargaining power. LEAN operators will provide high-quality telecom services to business customers and, at the same time, attract investors seeking low risk and low returns. Lower OAM cost and higher management efficiency will become top priorities for LEAN operators. They will continuously outsource network-related businesses, including network infrastructure construction and network OAM. Equipment providers with global network operations centers, outstanding resource integration capabilities, and core technologies will be in a dominating position in the future telecom market. At present, vendors are also being tested in their ability to transition towards service provision. Only those that maximize their efficiency through better management, processes, and technology can possibly come out on top in this winner-takes-all battle.

LEAN operators will demand network infrastructure services, but SMART operators cannot be ignored. SMART operators will provide packaged end-to-end connection services, superior communication services, and abundant mobile applications to end users. Professional services providers will need to improve their service quality through smart pipes, swiftly restore interrupted services, and guarantee the ultimate customer experience. To ensure services are not adversely affected by network technologies, more sophisticated planning and optimization needs to be done in very complex heterogeneous network environments.

New Demand on the Value Chain of Telecom Services

In the post-PC era, many desktop user behaviors are being seen in mobile internet, and these behaviors will likely significantly impact the telecom ecosystem. WeChat, for example, is an instant communication app that builds its communication mechanism above the layer 3 TCP/IP of the traditional communication network protocol. People find it more convenient to chat with friends using WeChat on their mobile phones. Desktop chatting has therefore evolved into a small-data, long-online mobile chatting. Because of limited radio spectrum and the energy-saving modes of handsets, a network is prone to releasing established data links of handsets that are idle. However, this is often undesired by the end user and contrary to the customer experience that the OTT is trying to create. This is why OTTs have adopted a strategy of keeping a link alive for a super-short period. Unfortunately, this causes a signaling storm because invalid requests consume signaling resources. It also gives rise to poor overall user experience because many network resources are occupied.

End-to-end services have become so complicated that they require more than one NE for delivery. This is why the WeChat issue and other similar issues cannot be sufficiently dealt with by network software and/or hardware upgrade. Professional telecom service teams that are familiar with network elements, technologies, and vendors should be established to deal with network issues case by case. A traditional network-centered service ideology no longer fit in with changing demands in the mobile broadband age. For example, in order to centrally manage all push notifications, Apple introduced Apple push notification service (APNS). This reduces the impact of signaling on the network created by iOS applications. Core business is migrating from the bottom layer up, and the focus of professional services should also be redirected from the network to the customer. This explains why manufacturers have recruited specialists in terminals and app development into their professional service teams. In this way, IT-based mobile internet applications can have both interconnection and mobility. Not only will operators be better served, but OTTs and all other players in the telecom ecosystem will be better served and share professional knowledge and skills. 

The conflict that has been triggered by WeChat and others basically derives from the inherent differences between traditional communication technology and IT. To provide better information services for consumers, a suitable catalyst is needed to reshape capabilities. Telecom equipment providers are well positioned to be that catalyst because of their advantages in providing technology and services and because of their neutrality in the telecom value chain. Since 2010, ZTE has included important mobile internet services, such as Tencent QQ, Sina Weibo and Tencent WeChat, as key service modules in its UniCare professional service. ZTE has much experience in optimizing app-related services in networks around the world. At the 3GPP-R12 conference in 2013, ZTE proposed modifying the bottom-layer protocol to accommodate small-data, long-online services typically used in mobile internet. The proposal was accepted unanimously, and ZTE was called to lead this modification work.

Conclusion

Professional telecom services are becoming increasingly important in the overseas telecom value chain. In China, the situation is a little less rosy in terms of sharing technology, experiences, and knowledge.