Consumer expectations are changing and people today will abandon companies that can’t respond quickly to their needs.
Internet players such as Google, Facebook, Alibaba and Tencent have raised the bar for all enterprises. Telecoms operators around the world understand they must upgrade their networks and systems to be more agile, in order to respond to the rapid technological change and keep up with consumers’ demand.
But the journey to become a digital company has not been defined and operators face a huge task in streamlining legacy processes in order to be fast and flexible like the internet giants.
Keynote speakers at Operations Transformation Forum 2016 in Wuzhen, China agreed that operators must first transform themselves, before they can lead other industries in their own digital transformations.
Zhengmao Li, China Mobile SVP, said because its network is so large, it can take up to a year to complete a network upgrade. For example, it took a year to deploy voice over LTE (VoLTE) even though the operator thought it would take six months.
“Our partners, such as Huawei, provided us with very good solutions, but it took a year because of the heavy burden on our legacy network,” he said.
He pondered how you cut this time to weeks or even days in future –a huge challenge the telco is facing. “This is something we must resolve.”
“When the telecoms industry becomes more horizontal and virtualisation is more common, there will be larger opportunities,” he predicted.
Li said that there are many buzz words being used in the industry – IoT, Communications 4.0, Internet+ and Made in China 2025 – that all relate to one question: what does the future communications network look like?
“It needs a very strong network to support a digital economy,” he said.
China Telecom is also working on building a smart network, which is the foundation for its transformation, said Caiji Zhen, a VP for the operator.
China Telecom has taken steps internally to move into new business areas, he said. Its revenue doubled to CNY300 billion ($45 billion) between 2004 and 2015.
By 2025 it aims for 80 per cent of network functions to be virtualised.
More than QoS
Ke Shen, VP of China Unicom’s Shanghai branch, agreed that the driver of digital transformation is changing consumer demands, coupled with challenges such as pressure on revenue and soaring traffic, which requires continual investment.
China Unicom spent five months developing a strategy to transform both its IT and network infrastructure, with customer value creation the key objective. It also knew it needed to improve enterprise operational efficiency.
He gave the example of spending three months to develop support for a game application, which its partner then pulled because it was outdated when the operator was finally ready to launch.
Over the past three months it has done other transformation work, including testing things like omni-channel internet support.
Shen said that it has found that since digital transformation is a new thing for carriers, there no agreed standards or a common understanding of what success looks like.
Howard Liang, Huawei SVP and chairman of Open ROADS Community (pictured above), said that over the past year the telecoms industry has been exploring ways to use digital technology to improve the user experience, make businesses more agile and improve operational efficiency.
Open ROADS (Real-time, On-demand, All online, DIY, Social) Community, for example, is gaining traction among operators and vendors. Earlier this year three working groups were established to address common issues, such as data analytics, cross-industry services as well as a transformation architecture and a cross-industry digital maturity assessment model.
Huawei set up a joint transformation project with HKT in Hong Kong to puts the ROADS experience-driven operations transformation and infrastructure re-architecting into practice. HKT aims to deliver a true ROADS experience to customers in two to three years.
“We’re not just talk about it, we’re putting it into practice,” Liang said.
During the implementation of this project, Huawei found that the transformation should be based on services not the network, requiring a move from being network-centric to customer-centric. Also, it’s important to first choose to transform existing services, rather than pushing forward with new ones.
The impact of video
Jim Lu, president of Huawei’s Global Technical Services, stressed in his keynote that video is changing everything, and the executive has been impressed by the rapid rise of live-cast shows this year.
More than 50 per cent of network traffic is video, which has been part of a fundamental service, he said. “Video service has become a strategic focus for operators, which is demonstrated by AT&T’s announcing plans to acquire Time Warner, transforming it from a communications service provider to a media content provider.”
A better experience requires more bandwidth. The bandwidth requirement for 4K service is up to 50Mb/s, while the bandwidth requirement for experience-level VR service reaches 1Gb/s, he said. “This is both a challenge and an opportunity for operators’ networks.”
“We believe that operators need to manage and enhance the end-user experience, so a digital operation transformation and infrastructure re-architecting is a must,” Lu explained.