AN OUTLOOK ON THE TELECOM INDUSTRY’S TRANSFORMATION FROM NOW TO 2020 AND BEYOND

NETWORK OPERATIONSFROM AUTOMATION TO AUTONOMY

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Table of Contents

THE FUTURE IS EXCITING: IS YOUR ORGANIZATION READY?A promising view: How business is doing ........................................................................................................................ 3Adapt or Die: The Danger of Legacy Ecosystems ........................................................................................................... 4

BEHAVIORAL TRENDS TRANSFORMING THE INDUSTRY Seamless Connectivity and Mobility .................................................................................................................................. 6OTT Changes Everything ...................................................................................................................................................... 6Efficient Streaming and Data are Crucial .......................................................................................................................... 7Immersive Experiences Become the Preferred Video Format ..................................................................................... 8Customer Intimacy for the Win ........................................................................................................................................... 8Everything is Connected ....................................................................................................................................................... 8

TECHNOLOGIES WITH EXPONENTIAL IMPACT 5G and edge computing ....................................................................................................................................................10Cloud and Virtualization ...................................................................................................................................................11Artificial Intelligence ............................................................................................................................................................11

BUILDING AN ECOSYSTEM TO SUCCEED: THE THREE “NO REGRETS” MOVESDevelop virtual platforms....................................................................................................................................................13Combine the latest AI-based technology with real-time orchestration capabilities................................................13Lower the costs of providing seamless ubiquitous wireless connectivity................................................................13

THE FINAL PREDICTION: FOUR THINGS THAT WILL CHANGE NETWORK OPERATIONS BY 20201. SLA-based and consumer-centric dynamic provisioning .......................................................................................152. AI-based Operations and Self-Driving Networks .......................................................................................................153. eSIM Connectivity in Everything .................................................................................................................................164. B2B Business Opportunities ........................................................................................................................................16About Intraway .....................................................................................................................................................................17

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THE FUTURE IS EXCITING: IS YOUR ORGANIZATION READY?Over the last years, we have witnessed a curious shift in the telecom industry: with the proliferation of the digital services, data traffic, and mobility are growing faster than ever. Analysts predict that by 2020, there will be 50 B connected devices, 50 EB/month mobile data traffic, and 20 Mbps mobile broadband connection speeds. This signifies an exponential growth in connected devices and mobile data traffic.

A promising view: How business is doingIndustry reports show a global decline in telecom income: in the last year, there’s been a 10% capex reduction, opex is down by 5%, and EBITDA by 6.5%. The telecom sector reels under heavy debt and declining revenue.

Why is operators’ revenue struggling in spite of increases in connectivity and data traffic? It’s called the classic Revenue and Traffic

Gap – current circumstances affect operation costs, but not revenue.

Revenues erode while investment in networks grows. OTTs create value and capitalize on consumers’ hunger for content while taking

VOICE DOMINATES

DATA DOMINATES

TIME

Traffic Volume

Operator Costs - Current Model

Operator Revenue

OPERATORREVENUE

&TRAFFIC

DECOUPLED

Customers

advantage of CSPs and MSOs’ investments in infrastructure and networks. In other words, OTTs are monetizing the traffic while telco operators are spending money on infrastructure to support it. Not such a great deal for operators.

4From Automation to Autonomy

The good news for telecom operators is that they own the golden ticket – the fundamental asset that makes everything possible in the digital economy: They own the network, but they have to adapt to a new reality. And they have to do it fast.

7.5B9B

CAGR 3%

2022

2016

WORLDWIDE MOBILE SUBSCRIPTIONS

WORLDWIDE TOTAL

MOBILE DATA TRAFFIC

WORLDWIDE MOBILE DATA TRAFFIC PER SMARTPHONE

8.8EB71EB

CAGR 42%

2022

2016

2.1GB12GB

CAGR 33%

2022

2016

Adapt or Die: The Danger of Legacy EcosystemsThe way in which the telecom industry conceived voice, messaging, and video services is dying. Offerings are now focused on over-the-top broadband services. Voice and messaging do not mean making a phone call or sending SMS anymore. Communication has shifted – we are now continuously connected through voice and text messages, DMs, chats in various social media apps,video calls over mobile apps like Whatsapp, Skype, Google Hangouts. Video is not linear broadcasting on a TV screen

anymore. Nowadays, everything is multi-device, on-demand, with Netflix and YouTube leading this space.

To support these new demands on the network, telecom operators must streamline

decades of piling on systems and complex architectures. They must change their “analog” processes and be open to exploring new business models. They must refresh their legacy ecosystems and embrace the digital transformation.

Source: Ericsson Mobility Report

WORLDWIDE LTESUBSCRIPTIONS

WORLDWIDE MOBILEBROADBAND PER SUBSCRIPTIONS

WORLDWIDESMARTPHONE SUBSCRIPTIONS

3.9B6.8B

CAGR 10%

2022

2016

4.4B8.3B

CAGR 11%

2022

2016

1.9B5B

CAGR 18%

2022

2016

BEHAVIORAL TRENDS TRANSFORMING THE INDUSTRY

6From Automation to Autonomy

Technology has the potential to transform every aspect of our lives, and how we relate to each other as human beings.

Technologies such as robotics, artificial intelligence, and nanotechnology are radically changing manufacturing and creating what we know as the 4th industrial revolution. Mobile apps are changing our behavior, the way we interact with each other, and the way we do businesses, with social networks and mobile commerce as clear examples.

Technology and society are a perfect feedback loop where technology drives society changes. Those changes generate demands that require new technologies.

The telecommunications industry must drive change – but it also has to adapt to behavioral trends. We have come to understand that the most relevant ones are as follow:

Seamless Connectivity and MobilityThanks to the proliferation of mobile devices such as smartphones, tablets, wearables, and smart cars, the need of ubiquitous wireless connectivity is increasingly important.

Users expect high-speed and hassle-free connectivity everywhere they go – from their homes to remote locations, they expect to be connected wherever their dynamic lives take them. Whether we like it or not, our digital life is now a key part of our everyday “real” life.

OTT Changes EverythingMessaging and voice consumption are no longer the traditional SMS or phone calls that were used more than 20 years. Nowadays these are led by Instant Messaging (IM) applications and voice over IP (VoIP) services, such as Whatsapp and Skype. With this breakthrough, messaging apps have capitalized on their user base to expand their functionalities. Becoming platforms themselves, these messaging apps now host everything from money transfers, gaming, commerce, advertising, and even municipal services.

Messaging apps are moving to serve as a single unified platform to support users’ every need, transforming into virtual concierges for our digital life.

In the video entertainment front, Internet-based video apps have taken over, moving from traditional ad-supported linear TV

programming to an on-demand, totally customizable experience for the viewer. We all know that cord-cutting is on the rise. According to a report by market analyst TDG Research, over 40 percent of users in the USA will have eliminated traditional cable from their homes by 2030. The future of TV – states the boutique consulting firm focused on the future of TV – is an app.

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Efficient Streaming and Data are Crucial According to Ericsson ConsumerLab TV and Media report: “The growth of on-demand viewing will continue to soar through to 2020, making up almost half of total viewing. 50 percent of all TV and video viewing will take place on a mobile screen (tablets, smartphones and laptops), an increase of 85 percent since 2010, with the smartphone alone accounting for almost one quarter (an increase of nearly 160 percent since 2010). Additionally, VR will be on the road to becoming mainstream, with one in three consumers becoming VR users by 2020.”

Another fast-growing trend is cloud gaming – with platforms like gloud.com gaining traction within the gaming community. These platforms require high-speed and low latency streaming networks to provide a great online gaming experience.

This means additional pressure to deliver efficient streaming experiences. Since the preferred content consumption format/type will not be unique, operators will need to deliver high-speed data as well as lower latency and enhanced customized experiences. Source: Ericsson ConsumerLab, TV and Media report, 2017

Approximately 70 percent of consumers watch videos on a smartphone - double the amount from 2012

70%

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Immersive Experiences Become the Preferred Video Format

As augmented reality and virtual reality peek into the mainstream, early adopters expect seamless immersive experiences. These game-changers will soon impact movie theater and theme park experiences and attendance, but their implications go way beyond gaming and cinema. Just imagine constant relevant feedback in front of you whenever you are in need of that – from manufacturing to sightseeing.

According to IDG Connect, 2018 looks bright for immersive technology. Leading experts agree that the two key areas that will be most disrupted by AR and VR are Internet of Things (IoT) and cybersecurity.

Customer Intimacy for the Win

Going beyond seamless connectivity at a good price and the ability to build strong emotional bonds with customers will become fundamental to succeeding in the digital economy. Digital natives like Uber and Amazon are setting the bar high and defining the customer experience that users

will come to expect from every company, including service providers. Knowledge of the customer, ease of use, and flexibility are key factors to master customer intimacy.

Everything is Connected

From ‘Smart Appliances’ to the ‘Smart City’, we will live in a world where everything is connected. We will have better information, more control and insight into the everyday things. With sensors everywhere, systems will be able to keep running autonomously.

LPWAN (lower-power wide area networks)

From Automation to Autonomy

technologies like NB-IOT, Sigfox, and Lora are accelerating the development of new IoT applications that require wireless long-range and low-power connectivity solutions.

Every device you own – and some you don’t even know will soon be an instrumental part of your everyday life – will be connected to the Internet. IoT will transform everything we know in the coming years: From the way we do business, to how we manage our household life, our health, security, manufacturing, and even our cities, will be powered by IoT connectivity.

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JUST LIKE MOORE’S LAW DISRUPTED COMPUTING POWER EVER SINCE 50 YEARS AGO, A DIVERSE RANGE OF BREAKTHROUGH TECHNOLOGIES COULD SOON BE PLAYING A ROLE IN TACKLING THE TELECOM INDUSTRY MOST PRESSING CHALLENGES.

TECHNOLOGIES WITH EXPONENTIAL IMPACT

10From Automation to Autonomy

Here is a list of the technologies that have the potential of creating an exponential impact on the industry:

5G and Edge Computing 5G is the next-generation mobile networking standard that will build on the global 4G Long Term Evolution (LTE) ecosystem. Its promise goes well beyond high-data rates, spectral efficiency, ultra-low latency, or massive sensor networks. It enables new service opportunities – from just people communicating on phones to fast real-time low latency data transmission between things.

On the other side, edge computing, although still in its early days, has the power to bring the core building blocks of cloud – calculation, storage, and networking – closer to the consumers. The latency involved in the round trip to the cloud is reduced when the calculation moves closer to the origin of the data, a powerful enabler for the immersive experiences end users enjoy with AR and IoT.

Although IoT is the key driver of edge computing, many use cases are accelerating the pace of adoption. As published in Demystifying Edge Computing -- Device

Edge vs. Cloud Edge in Forbes, “artificial intelligence and machine learning models rely on cloud for the heavy lifting. Typically, an ML model is trained in the public cloud

and deployed in the edge for near real-time predictions. Edge computing becomes an essential component of the data-driven applications.”

5G Consumer Survey “Key Motivations and Use Cases in 2019 and Beyond”, Qualcomm, Sept. 2017

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The industry knows it: software-defined networking (SDN) and network function virtualization (NFV) are gaining traction. As Steve Marsh, Intraway’s CTO for North America mentioned, “operators seek innovative ways to meet growing bandwidth demands, boost service delivery and performance, slash operating costs and bring new products, services, and features to market faster than ever before, virtualization has stepped off the wishlist into the ‘must-have’ list for many.”

With the power to define, scale-up and scale-down networks on demand reusing cost-effective generalized hardware, SDN and NFV are blocks for delivering increased agility and cost-savings. They lay the foundation for a new, more efficient way of doing business.

Cloud and Virtualization As innovations in devices, applications and services have driven the connected world towards cloud based big-data computing and storage solutions in the last two decades, the underlying network that connects all of these things together has remained virtually unchanged. Ever-increasing data and cloud solutions demands are compelling operators towards networks elements, which can scale accordingly but at lower costs.

The networks that were designed for voice calls are no longer optimal for connected devices or ‘things’ to communicate in real time. With IoT upon us, it will additionally trigger the need for agile, cloud-centric, software-driven networks.

Artificial IntelligenceAs reliable and affordable bandwidth becomes readily available, convergence at network level becomes possible. Adding dynamism and intelligence into the systems through AI makes solutions intuitive, proactive as well as reactive to situations.

AI is expected to have an impact on many areas – the most important being traffic classification, anomaly detection and prediction, resource utilization and network optimization, along with network orchestration. It will also assist the mobile devices with virtual assistants and bots.

Artificial intelligence will solve most of the issues related to customer care, network coverage, billing, service/product offering and many more, making possible to personalize services and establish one-on-one communication with each subscriber creating adaptive customer journeys.

“SDN and NFV represent a big opportunity for service providers to save on capital and operational expenditures, develop agile solutions

to compete with (and partner with) over-the-top (OTT) providers, open new revenue channels and improve customer experience.”

-- Disrupting telcos with virtualization

ET Telecom

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BUILDING AN ECOSYSTEM TO SUCCEED: THE THREE “NO REGRETS” MOVES

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“Most of the trends the telcos are exposed to display a high level of uncertainty – they could turn out to be disruptive, lead to exponential

change over the next decade o sink without trace.”

-- To be or not to be | The Future of the Telco Business Model

Deloitte

There are many factors affecting telco’s business. From declining revenue streams to ever-increasing customer expectations, to new pressure from new and old players, to other tech giants dipping their toes in their sandbox, telcos’ traditional business model is taking a lot of punches lately.

The role that telecom operators will adopt in the future is still uncertain. Nevertheless, all possible scenarios have a common factor: playing alone is no longer an option and the key to succeeding is building an ecosystem to leverage and monetize telecom assets and promote innovation.

Whatever role they adopt in the future, there are a few “no regret” moves telcos can easily execute:

- Develop virtual platforms – Virtualization in all its dimensions (SDN, NFV, and Cloud) is the key element that will enable exponential growth in traffic and connected devices while maintaining infrastructure costs under control. It is also an enabler for creating an open environment to external developers and partners and to facilitate the rollout of new and innovative services.

- Combine the latest AI-based technology with real-time orchestration capabilities – AI, machine learning and natural language processing technologies, combined with real-time dynamic orchestration capabilities will allow operators to automate more processes and tasks than never before, significantly reducing operating costs while

To learn more about

the role and benefits of

orchestration, access

The Essential Orchestration

Toolkit for CSPs and MSOs

– Everything you need

for orchestration project

success

improving service quality and customer experience.

- Lower the costs of providing seamless ubiquitous wireless connectivity – Wireless connectivity is growing exponentially. A digital experience is built over the concept of mobility. Reducing costs to rollout, provision and manage wireless networks and to provide and activate wireless connectivity to end customers will be a powerful differentiator to create value.

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THE FINAL PREDICTION:

FOUR THINGS THAT WILL CHANGE NETWORK OPERATIONS BY 2020

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We foresee that by 2020, networks will have transitioned from offering limited traditional static pre -built services to dynamic on-demand and customizable content and communications packages.

Networks will be ubiquitous and flex to the needs of the applications that they are carrying. The days of dumb connectivity will be long gone. Networks will behave much more like the services that they enable.

The industry will see traditional models replaced with seamless, on-demand-based networking platforms.

There are four things that will shape network operations over the next five years which accelerate the growth of the digital ecosystem.

1. SLA-Based and Consumer-Centric Dynamic Provisioning

In the near future, we foresee consumers assuming additional control by way of adaptive and dynamic provisioning of network resources based on user-defined policies for their own SLA performance requirements. In an SLA-based and consumer-centric dynamic provisioning model, the consumers are

declaratively defined in terms of goals, which are subjected to a number of constraints that are specific to the user requirements. Operators will look to a framework that will facilitate avoiding the cost of any SLA violation and controlling the monetary cost of the allocated resources.

2. AI-based Operations and Self-Driving Networks

The network transformation will force operators to reconsider how to ensure availability, performance and quality of service. Speed, scale, and complexity challenges traditional rules-based monitoring and management.

Network operations will use machine learning and advanced analytics techniques to improve monitoring, assurance and automation process in order to:

- Manage the performance of highly distributed infrastructure

- Support the speed of application architecture change

- Proactively identify problems driving the majority of incidents

- Manage digital agent interactions at the edge of the infrastructure

Advances in artificial intelligence, machine learning, and intent-driven networking have brought us to the threshold at which automation gives way to autonomy.

The networking community hungers for disruptive ideas to address the unsustainable economics of present-day networks.

3. eSIM Connectivity in Everything With the landscape of 50B IoT devices connected to the network by 2020, on-demand remote provisioning and management of mobile connectivity is going to be a key factor in catapulting this business to the next level.

Current state-of-the-art mobile networks represent a roadblock since they rely on a physical component (the current SIM card) to link the device to the network.

GSMA’s Embedded SIM (eSIM) standards and technology enables devices to work on

any network without a physical SIM card. This would allow customers to easily connect devices or switch between networks without having to acquire or change the SIM card.

Although eSIMs are already used for machine-to-machine (M2M) applications, the introduction of eSIMs for consumers will deliver multiple benefits:

- More connected devices – eSIMs are smaller than traditional removable SIM cards, enabling devices like smartwatches, fitness trackers, and even glasses to have stand-alone mobile connectivity

- Easy to add to a data plan – connecting devices to a mobile account with eSIMs can be as simple as it currently is to add a device to a home broadband

- Faster to get connected – consumer devices with eSIMs will be able to connect to mobile data networks practically straight out of the box

The future of connectivity is mobile and the future of mobile networks is eSIM.

4. B2B Business Opportunities By leveraging their infrastructure advantage in combination with state-of-the-art digital

technology, telcos can position themselves as the backbone of the B2B digital economy to make up for some of the terrain lost in B2C.

This position spans the categories of connectivity and offers telcos the possibility of taking leading roles in intelligent networks, cloud services, analytics, IoT platforms, security solutions, billing, CRM and much more.

Network operations will look very different by 2020. Overall, the network will be better able to serve the demands of the digital ecosystem and will have the elasticity to grow and change alongside it.

Steps have already been taken and this approach to an on-demand network will be solidified by 2020. It is an exciting journey, is your organization ready?.

Managing over 55 million devices deployed in 22 countries over three continents, our solutions have helped improve communications service providers’ profitability, time-to-market and customer experience since 2003. In other words, we unleash the full potential of networks by adding the latest, cutting-edge functionalities while reducing operational costs.

Visit our website to learn more about our activation and orchestration, customer experience and network management solutions.

www.intraway.com

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About Intraway