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Impact of New Technologies on Value-Added Services in Telecoms

Estimated Reading Time: 7 Minutes

The telecoms industry may pride itself on being particularly innovative, but perhaps the technology game moves so quickly that the players themselves have trouble keeping up. When I talk to communications service providers (CSPs) I often find that they are not really aware of the new possibilities offered by technological advancements, in particular in the areas of containerization, automation and agile development.

This is especially true in our area of expertise: value-added telecom services.

Key Requirements for Value-Added Services

In the last quarter century we’ve been in this business, the four key requirements of CSPs and indeed of their customers have remained more or less unchanged:

  1. Time-to-Market Can the service be implemented, launched and adapted quickly?
  2. Market Responsiveness Can we continually adapt and enhance the service to meet the diverse and evolving customer demands?
  3. Stability/Reliability Can we ensure that the service will always be available with the necessary quality
  4. Commercial Viability Does the service make good commercial sense for the CSP and the end customer?

The “Old” World of Waterfall Development and Bare-Metal Solutions

Just as recently as five years ago, many CSPs concluded that they could not fulfil the above requirements and more or less reduced their value-added services (VAS) portfolio to only the must-have items, like voicemail. It’s 2023 and many still do this today, although – as I said at the beginning – the advent of agile methodology, containerization and automation has completely changed this situation. In order to better understand the repercussions of these innovations, let us first look at the “old” world without them.

Without containerization, a CSP was forced to waste time and incur additional costs for the purchase, installation and integration of hardware for each service. This was the case even with simpler services, like voicemail, SMS, IVR, etc. As each service had its own separate bare-metal solution with its own dedicated hardware, things like redundancy, spare parts kits and capacity expansions meant more hardware, more rack space, more waiting time and more costs. Maintaining all these separate legacy platforms greatly increased operational expenses for many CSPs, reinforcing their negative attitude towards value-added services.

It’s no wonder that in this “old” world of bare-metal implementations and waterfall development, many CSPs saw themselves as Behemoths too slow to do anything with value-added services.

When CSPs resell OTT services from global vendors, the vendors get almost the entire profit margin for the services.

New Alternatives Made Possible by Containerization, Automation and Agile Development

So now let’s consider how these technologies have changed the situation.

First of all, the time required for implementing a solution has been reduced twentyfold, at least. With containerization, there’s no more dedicated hardware to order, install, integrate and maintain. Moreover, with an orchestration system such as Kubernetes, it’s possible to install application software at the press of a button and the entire lifecycle management is automated. CSPs today can deploy a complete solution by themselves, without the support of the vendor, and in just a matter of hours. The same, of course, holds true for the implementation of new versions and expansions. The fact that there is neither dedicated nor proprietary hardware to maintain means much lower maintenance costs as well. We’ve seen CSPs slash their operational costs by simply containerizing standard services like voicemail, SMS and IVR, while getting rid of rack after rack of legacy equipment.

Secondly, the timeline for the actual development, customization and enrichment of sophisticated services, like cloud customer relation solutions, has also been shortened significantly. It is, of course, widely known that agile development generally allows you to program solutions quicker and more interactively. Needless to say, there are no more long specification and development periods.

Here’s how we realize the agile development of value-added telecoms services with CSPs.

We develop all our new services directly with the participation of CSPs in a program we call Joint Agile Product Development. The ideas for the services come either from us or from the participating CSPs and their respective customers. Each service starts with a minimum viable product and is developed in two-to-three-week cycles called ‘sprints’ which even include testing. At the end of each cycle, a participating CSP can immediately try out the service in its own development network, even getting feedback from end customers. The results all flow into the changes and additions made in the next sprint.

But agile development is not only quicker and more responsive: It also eliminates the commercial impediments to developing new services, namely, those incredibly large upfront capex investments. Cooperation in our Joint Agile Product Development is, for instance, free-of-charge for all CSPs using our Telecoms Low Code, and the results are available to all the participants; there are usage fees only if and when a service is launched commercially.

And talking about all participants: Our Telecoms Low Code was developed to allow product managers, customer-facing teams, and other employees with little or no coding experience to accelerate the creation process. These citizen developers can build apps through a drag-and-drop interface, helping professional developers to focus on bigger and more innovative tasks. In fact, for those CSPs who want a more intensive and exclusive cooperation, we also offer Dedicated Agile Development, where an entire squad works exclusively for one CSP at a predefined monthly fee.

These agile development programs have the same goal: CSPs should be able to try out new ideas and even solutions for just one important customer quickly, without wasting all that time (and money) for specifications, tenders, business cases, budgeting, and so on.

Without virtualization, a CSP was forced to waste time and incur additional costs for the purchase, installation and integration of hardware for each service.

The Opportunity

So you see, we believe that the technological advancements of virtualization, automation and agile development make it viable for CSPs to implement and maintain their own services in their own telecom network.

You might, however, rightfully ask whether there is a business opportunity if you’re competing with established global over-the-top (OTT) services. Certainly, many CSPs still fear that they cannot make a go of it against OTT products from global giants, like Microsoft and Cisco. Should CSPs therefore be content with just reselling these products and are their customers really happy with them?

When CSPs resell OTT services from global vendors, the vendors get almost the entire profit margin for the services. Reselling such products also turns the CSPs themselves into fairly interchangeable sales channels: An enterprise customer using Webex Calling or Microsoft Teams “sticks” with Cisco or Microsoft. The CSP just provides bandwidth and telephone numbers, adds little value and can be replaced easily. Indeed it seems to us that vendors like Cisco, Apple and Microsoft are even looking to cut the CSPs out of the business altogether by becoming themselves global communications providers. From our vantage point, leaving communications services to global OTTs turns out not to be particularly advantageous for CSPs.

It is also questionable that such global OTT products actually fulfil the key requirements for value-added telecoms services mentioned at the beginning of this blog post. If the same product is being used by customers worldwide, it tends to cover only the demands all these customers have in common, i.e. the lowest common denominator. Moreover, a product offered by the likes of Microsoft or Cisco is not readily customizable for specific markets or individual customers and usually adapts quite slowly to changing or diverse market demands. There is less competition and less variety. As these services are usually provided not in the network of a national CSP, but rather in an unregulated vendor cloud outside the national borders of the end customers, many important aspects are not guaranteed, like sufficient capacity for peak periods, data protection, disaster recovery and reliability.

New Technologies and New Opportunities

With all of the above, the combination of the advancements in containerization, automation and agile development allows CSPs not only to reduce the operational costs for standard services, like voicemail, but also to respond agilely to the diverse requirements of their own national markets and important corporate customers, offering sophisticated services, like UCC and secure home office solutions, in their own telecoms network. This is really good news for our industry.

Marshall E. Kavesh