Mark Windle, head of marketing at OpenCloud, discusses the new ideas he anticipates operators will be developing to protect their revenues and reconnect with the consumer in 2014
The roll out of LTE was a significant market disruptor in 2013. Extreme competitive initiatives are much in evidence. Operators are naturally keen to sign up consumers to their new superfast networks and make a return on their spectrum investment. The provision of high capacity data access however, means operators face increasing risk of becoming commodity data access providers, as competing OTT communications apps become more viable for mass consumer adoption and further erode the operators' share of the communication services market.
To avoid sliding into obscurity and spiralling into ever lower revenue scenarios, operators will need to be innovating with a vengeance, optimising existing resources, and taking advantage of new communication technologies and the transition to all-IP networks.
Some of the developments we can look forward to in the year ahead include:
VoLTE
In 2014 operators will begin launching Voice-over-LTE (VoLTE) services. Currently, several LTE enabled operators only offer voice over their legacy networks, using LTE for data and circuit switch fall back to GSM for voice. This approach doesn't take advantage of the benefits of the IP network for voice; meanwhile the OTT providers benefit from LTE's increase bandwidth.
By its very nature, continuing to use legacy networks for voice offers the same service we have today without the ability to implement new features or services that should come with moving to an IP network. So you could ask, what is the point?
There will be two stages to VoLTE launch. First will be the roll out of basic VoLTE services just to get it off the ground. However, this first phase again fails to take advantage of the IP network for service innovation. Consumers won't notice anything different in their voice services, so it could lead to further erosion of voice market share, as operators lose out to more agile and innovative OTT alternatives (WhatsApp, Google, Viber, etc.).
The second stage will see operators get going on real service innovation. In 2014 some will jump straight to this stage, launching some interesting new voice services, exclusive to an all-IP environment, with real differentiation. Nimble operators will gain an advantage over their peers and successfully compete with OTT brands in the battle for voice market share.
IMS
There is growing recognition amongst operators that services need to work across any device, via any network. Getting voice service onto IP is a critical step in achieving this, especially for operators that aspire to become leading communication services brands rather than simple providers of a conduit for the genius of others.
In 2014, operators will begin the long-awaited shift to all-IP, as they look to deliver costs savings on, as well as protect, a core revenue service; voice. As such, operators will actively move towards VoLTE, VoIP-over-3G and WebRTC, in all of which IMS will play a role.
The transition to all-IP networks, and the increasing multiple ownership of connected devices, will increase operator investment in IMS throughout 2014. Operators can't really hang back on this one or they risk losing out to brands that aren't as conservative in their approach and more gung-ho when it comes to maximising revenue opportunities as and when they emerge.
WebRTC and HTML5
The internet is about to change how we make telephone calls and consumer to cusiness (C2B) could well be the first telecom area that experiences change in 2014. WebRTC and HTML5 will be the catalysts, as they allow real time voice and video communication from within the browser.
There are two very big reasons why WebRTC will become the new norm for C2B customer service calls. The first is the better calling experience for the customer; the other is the billions that the businesses are spending every year with telecom operators (in the UK alone the figure exceeds £1 billion per annum).
Because WebRTC does not define the protocol used to set up and control calls, variants will emerge, fragmenting the communications landscape. This creates a 'many to many' communication problem, a problem that every operator is familiar with solving.
While it may not be a replacement for all of the lost revenue, providing a real time WebRTC-Telephony and WebRTC-WebRTC integration hub may well prove to be a significant communications interconnect opportunity for forward-thinking telcos in 2014.
Genuine pan-European telecom service provider
Throughout 2013, Neelie Kroes has been promoting the idea of pan-European telecom service providers and consolidation of European telecoms into a genuine single telecoms market. In addition, operators have been lobbying to be allowed to realise cross-country economies of scale, especially as they roll out their expensive LTE networks. Commercially and politically, a pan-European telecom service provider makes sense and we could end up seeing the first sightings of one in 2014.
Who will be the first is unknown, but it is likely to come from one of two camps. The first is the operating groups with a good footprint in the EU, such as Deutsche Telecom/T-Mobile Group and Vodafone. They will be motivated by cost savings in further rationalising their organisations. Alternatively, it might be multi-regional MVNOs, such as Lebara or Virgin Mobile, which already have centralised services and can expand their footprint by exploiting EU policies, such as the Alternative Roaming Provider legislation that comes into effect next year.
New reality dawns: Operators must innovate
Even with the deployment of 4G, innovation in communication services is still being stifled because operators continue to buy products which only allow for the basic telecom services to be put into the market and technically and commercially impede change, much like buying a TV and having a set of channels you can watch determined for you, without the possibility of adding new ones. The network operators are focussing on providing more of the same at increasing access speed whilst innovation in their communication services (VoLTE and RCS for example) only happens at a snail's pace.
For consumers it's a simple question of value. If operators don't want to just compete on price for 4G, they will need to add this value. The best way to do this is by continually adding new value from sources they own; their own intellectual property. Google does it and we expect operators to take a leaf out of their book in 2014 and rediscover the virtue of taking ownership of service innovation and acquiring the platforms that enable this. Operators will also discover that this change both speeds up innovation and reduces costs.
