Telcos are looking at over-the-top (OTT) providers as an opportunity, rather than a threat, according to new research by Comarch. The research paper, The State of Digital Transformation, was commissioned by Comarch from Heavy Reading.

The research found that

  • 42% of telcos are choosing to partner with OTT providers such as like Netflix and Whatsapp by bundling services from partners.
  • 24% decided to compete with these providers, by developing apps of their own.
  • 18% chose to diversify by transforming into multiplatform providers for OTTs.
  • 14% preferred to specialise, by focusing on customer QoS issues in order to maintain a competitive position.

Investing in digital transformation is a top priority

Respondents identified investment in business intelligence and analytics as their main priority over the next 12 months.

Systems that support customer service and operations were also high priorities. Security concerns, like cybersecurity and identity access management were some of the least prioritised areas for investment.

“Telco data is some of the richest in the world, with users carrying a phone wherever they go and using it for everything from making calls to banking and shopping. The wealth of information that can be gleaned from this data is invaluable for telcos. It’s no surprise that telcos are prioritising their investment in business intelligence and analytics,” said Małgorzata Siwiec, Comarch.

Mixed plans on big data

Respondents to the survey were divided on how to handle the data they collected.

  • 28% plan to use the data to develop marketing and advertising campaigns.
  • 26% are using the data to understand their customers and don’t plan to monetize it.
  • 20% will use the data to roll-out location-based services.
  • 11% plan to sell reports on user behaviour to third parties, the same number will sell anonymised user data to third parties

In the long-term, telcos intend to use their data to develop a greater range of self-service apps and provide more personalised offers to customers.

Digital transformation priorities

Telcos are also looking to save on costs by increasing their focus on process automation and network virtualisation. The research found that they are less concerned with investing in DevOps as part of their digital transformation process.

In fact, 11% of respondents admitted to having no DevOps function at all. Of those that have adopted DevOps, 39% reported that it only covers parts of the organisation, with parts of the company resisting implementation.

“The greatest irony of the smartphone age is that the companies that enable the connectivity of mobile computing still have a high level of manual processes in their operations and are generally regarded by consumers as a pain when it comes to ordering services or resolving problems (which in turn often arise due to human error in manual processes). The good news is that telcos are no worse than most established industries when it comes to embracing automation and digitalization. Rather than compare a telco with an advertising business (Google, Facebook, etc.) it would be fairer to compare them with your local electric utility, airline, bank or supermarket chain. In that context, telcos are actually fairly digitally savvy,” said James Crawshaw, Senior Analyst, HEAVY READING.

Network evolution

Digital transformation and network evolution have some overlap in that innovations such as virtualisation are seen as potential enablers of greater agility for telecom operators. The research investigated when companies thought they would have at least 50% of their  operations/services moved to the cloud.

  • One third said this would take place within the next three years
  • 37% said it would happen in the next three to five years.
  • 5% admitted it would take more than 10 years.

When it comes to implementing NFV/SDN, unsurprisingly the most commonly cited challenge (35%) is integration with legacy tools. This was followed by culture (23%) as network engineering, operations and suppliers have to redesign and rethink deployment for the cloud.

About the research

Comarch, the global supplier of software and services, commissioned Heavy Reading to survey telecom operators in order to produce a paper on The State of Digital Transformation in Telecommunications.

HEAVY READING surveyed 119 participants from companies including AT&T, BT, Colt, Comcast, Orang, T-Mobile, Telefonica, Verizon and Vodafone.

Almost half (49%) of respondents work for Tier1 operators with more than $1 billion in revenue, with the majority of these having revenue greater than $5 billion.

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