Why the Future for Telcos Depends on Embracing Open Platforms
By Steve Canepa, Global Managing Director, Communications Sector at IBM
June 8, 2021
The pandemic gave us a glimpse at how cloud platforms and connectivity can come together to deliver ingenuity in how we work, live and connect. But as telcos race to harness 5G and Edge, the critical question has now become: can they avoid the same fate that recently befell legacy media companies when cloud hyperscalers and direct-to-consumer streaming conspired to take the lion-share of the profits in the media value chain?
A new global IBM Institute for Business Value study released today, “The end of communications services as we know them,” polled 500 global telecom executives in 21 countries to understand their greatest challenges and opportunities as they transform their businesses to capture this new potential. One takeaway quickly became clear: to own their own destiny, telcos are facing an existential moment: they must become platforms themselves or face the realities of competing with them.
To propel this transformation, telcos are embracing open hybrid cloud platforms that enable public cloud scale and services while keeping them in control of their transformation journey and data. And many are looking to harness their dominant position in connectivity to deliver a platform for innovation to their customers – half (50%) of high performing communication service providers (CSPs) agree they must become strategic cloud platforms blending a diverse partner ecosystem, and 59% agree they must become secure clouds infused with AI and automation.
But as telcos look to the lessons of the past, the study also showed a growing reluctance to trust traditional webscalers and hyperscale clouds as they embark on this journey. Almost three quarters (74%) of the highest performing CSPs agreed that partnering with webscale companies, including hyperscalers, for 5G-enabled edge computing would mostly benefit the strategic interests of the webscalers.
Hybrid cloud keeps telcos in control
By embracing an open hybrid cloud approach, telcos recognize they can bring together their choice of cloud and on-premises environments as well as third party vendors, all enabled by an open platform that works as a lingua franca for data. This industry standard compliant architecture fosters the kind of deployment flexibility and industry-wide collaboration that’s necessary to capturing new value from next-gen connectivity. It also supports more ways to monetize the advantages of 5G – including reduced latency, enhanced bandwidth, and dedicated network capacity that can improve service quality for clients.
The reality is 5G will bring significant costs to the telcos – licensing spectrum, building infrastructure and managing a complex real-time platform. Nearly all major telcos have announced their commitment to spending billions of dollars in the coming years on infrastructure to support 5G. Because of this, there is a pressing financial urgency for telcos to transform their network architectures into software-defined platforms that can help them monetize growing volumes of 5G and Edge-enabled use cases. And the promise this holds has real bottom-line impact -- 91% of high performing CSPs surveyed expect to outperform their current financial expectations in five years as a result of using edge computing.
Telcos also view security as a fundamental element to their transformation -- 60% of telco CEOs surveyed see strengthening data security and privacy as important to their customers and a way to build customer experience and trust over the next 2-3 years, according to a 2021 IBV CEO study. A hybrid cloud model keeps telcos in control of their data by infusing enterprise level security in all aspects of the workflows they manage, as well as for those of customers and partners. With an open hybrid cloud approach, telcos can safely monetize their data because they can continue to own the keys to it, maintain control over privacy settings and integrate security and compliance across the breadth of their IT workloads.
Ensuring a central role in the 5G future
The bottom line is these recent study findings underscore IBM’s continued commitment to helping telcos embrace platforms that keep the power of innovation in their hands.
We are firmly committed to stay on-side with the Telcos as they embrace open hybrid cloud strategies to power their transformation. Our work spans the globe, including recent collaborations with Telefonica Argentina, Telefonica Spain, Lumen Technologies, Vodafone Portugal, Telecom Egypt, Samsung and Colt Technologies. Building on this momentum, IBM introduced the IBM Cloud for Telecommunications, and its ecosystem of 40+ partners. Built on IBM Cloud Satellite and leveraging Red Hat OpenShift, clients can deploy IBM Cloud services anywhere: on any cloud, on premises or at the edge, while addressing industry-specific requirements and data protection. And, importantly, they avoid lock in to any specific hyperscaler platform. IBM’s deep telco industry insights and Red Hat OpenShift experts in IBM Global Business Services are helping clients make progress across multiple dimensions and in every stage of their journey to hybrid cloud.
And we’re not letting up on our commitment to innovation. We’re envisioning the future by investing in innovations like the world’s first 2 nanometer chip technology that could significantly improve the energy efficiency or performance of everything from the servers powering 5G cell towers to handheld mobile devices. Through investing in this technology, we are increasing transistor density on each chip, adding more intelligence to devices at the edge.
There is little debate that 5G holds the promise to transform critical services in all industries, from smarter clean energy grids to improving the efficacy of public sector first responders. By evolving to open software platforms that align with standards-based approaches, telcos – and the enterprises they serve – will maintain control of where and how they deploy their network services, edge platforms and enterprise offerings. And this will prove a critical determinant of success – for telcos and all enterprise customers - as connectivity and compute synergize in ways we’re only now imagining.
Global Managing Director, Communications Sector at IBM