As telecommunication companies (Telcos) roll out 5G, they find themselves in need of developing new commercial models, reimagining and repackaging existing assets, redesigning customer engagement, and verticalizing. The advent of 5G and the subsequent changes it will require have placed a spotlight on the fact that Telcos cannot survive on their legacy IT solutions and cannot expect to create a next-generation solution themselves.
For this transformation to a Digital Telco to be successful, the entire monetization ecosystem needs to be rethought, including the vendors that serve them. Vendors, as well as Telcos, must change their offerings and business models to align with the future operating models critical in this new environment.
Architecting the Future
The onset of 5G unearths six critical technical capabilities not achievable through IT overlays, extensions, or redevelopment of existing systems based on traditional database technology. These capabilities are absolute precision; low, predictable latency; complete availability; extreme efficiency; seamless scalability; and strong business agility.
Technological and market evolution have redefined the baseline architecture needed for any IT solution that hopes to serve a tier-1 Telco rolling out 5G. The combined challenge of these new demands is incredibly daunting and requires an entirely new way of thinking about the solution architectures.
The solution architecture must change to ensure the following technical KPIs are achievable across all customers, functions, and services at all times:
Providing a mobile-first, personalized experience that promises instant gratification, absolute transparency and complete control is a great way to build trust, strengthen loyalty and drive up Net Promoter Score®, but only if you always tell customers the precise truth. If any aspect of that experience contains incorrect or inconsistent data, it instantly erodes the trust you’re trying to build.
Precision applies across all aspects of the user experience, no matter who the user is or what they are doing. Examples include:
- Exact spending notifications and controls, not just for consumer and family sharing, but for large enterprises and IoT fleets.
- Instant visibility and impact of any purchases made, otherwise the dreaded “click again” death spiral results in overcharging and an angry (and expensive) customer service call.
- Precise variations in prices and rates based on user-driven parameter changes such as QoS or accepting a promotion or sponsorship offer (for example, an hour of free sponsored gaming). The customer should be able to see the usage as zero-rated as it occurs, it should never hit their balance to be reversed out later, and they should also see how much time they have left in their hour as they are playing.
Low, Predictable Latency
While it’s necessary to provide a precise response to every user interaction, a response is not sufficient to provide instant gratification. You must also deliver an “instantaneous” experience to the customer, which these days means within a matter of one or two seconds. A slow response rate can be as fatal as an incorrect answer. In addition, latency must be predictable. It cannot vary when a new service or offering is introduced that requires more complex business logic.
Online statistics have been well documented. Amazon’s calculated that a page-load slowdown of just one second could cost it $1.6 billion in sales each year. Shopzilla decreased page-load times from 6 seconds to 1.2 seconds and increased revenue by 12 percent, and page views by 25 percent. Slow page loading speeds cost online retailers globally more than $2 billion in lost sales.
To get this right, a successful approach starts with understanding key architectural principals that result in the most efficient and optimized processes, or digital paths, with a clear focus on those that directly impact the customer experience.
Digital paths encompass all the end-to-end application and business logic workflows, including all computations, data, data stores, and communication links executed or accessed to complete a specific process. Unnecessary network hops, stateful middleware, and multiple database queries make for inefficient digital paths, add to latency, and erode the consumer experience, eventually causing lost revenue and customer frustration.
In short, delivering a modern customer experience requires understanding the end-to-end digital path for each and every type of customer interaction—from the moment the user interacts with their device, all the way to the network and back again.
Of course, the only thing worse than a slow response is no response at all. Traditional solutions offer high availability to the network for service control, but that is often not instantiated to the customer-facing systems. In today’s world, with mobile as the primary channel, you’re offering full transparency to the app so that same “always on” demand is placed across the entire monetization ecosystem. Customer-facing high availability is now equally important as network-facing availability. If a user wants to add or change a package at 1:00 a.m., they expect to do it through the app. Gone are the days when they’d have to wait for the call center to open or get a message that the systems are offline for maintenance.
This model is a big shift for most vendors and Telcos, as many aspects of the overall solution ecosystem have never been tested to this rigorous standard before. It not only demands high availability across all user journeys, but also creates the need for “instant and total” recovery from local failures and complete site failures. Many traditional solutions do not replicate every aspect of the user data and experience, so a major failure requires “recovery procedures” to occur that immediately degrade the user experience.
Extreme Efficiency and Seamless Scalability
In the old Telco world, a customer made 10 to 13 calls per day, and each call was worth at least a few pennies. In the new Digital Telco world, transactions are varied and are measured for different reasons (monetization, loyalty, analytics, entitlements, etc.). A ping from an IoT sensor may be worth 1/1000th of a cent and might indicate a change in service pricing or trigger an entitlement. A modern smartphone interacts with the network thousands of times per day across social, video, shopping and email apps. An autonomous car may provide sensor readings thousands of times per second, and a single delivery of service may require retail, wholesale, and settlement rating all at once, in real time.
The fact is, the industry is creating an ever-increasing stream of events to manage, and the economic value of each event is much smaller than it was with traditional communications services. A step-change in the cost efficiency of managing these events is absolutely required to maintain profitability.
The event load is also much less predictable. The peak/average curves of traditional voice services were quite consistent. Now that the devices and subscribers are instigating interactions with the network and systems at will, and social media allows mass behavior at any time, there is no clear picture of when and how high loads will peak.
Cloud and NFV help with the hardware cost side, but they only optimize the physical infrastructure underpinning the software. If the software is inefficient or contains bottlenecks, the problem is not solved. A modern monetization platform must provide not just extreme efficiency, but also stable, predictable performance under any conditions (including a mass offer during the Super Bowl) that scales without impacting any user’s experience.
A 5G Telco operates in a world moving 100x faster than old-world Telco. The monetization platform underlying a 5G Telco must help it operate at this speed, not hinder it. The legacy practices of building custom solutions on top of frameworks will not satisfy an agile approach to development nor provide the business responsiveness required.
For example, requiring code changes to implement new services and offerings is instantly fatal, costing months and untold monetary investment, when the solution is needed in hours. All aspects of the evolving business and network environment must be configurable, including:
- New services and offerings.
- New types of balances, assets and usage/spend meters.
- New attributes in the subscriber or pricing data that influence the charging/policy decisions.
- New versions of network protocols.
Unless all of these activities can be efficiently configured without an army of technical resources, the required business agility will not be achieved.
Innovations from within the industry are opening huge opportunities for Telcos if they can get customer experience and service monetization right. The monetization environment for Telcos in the realm of 5G and IoT will become more and more complex. The user types will expand rapidly, from consumers to business to industry to vehicles, and a plethora of new ‘things.’ With each expansion, the competitive push to establish a richer, deeper catalog of offerings and plans requires business models defined by ‘experience-based’ pricing in each new segment and vertical.
The tightly coupled value chain of today will become a much more loosely tethered affair where humans, things and third-party applications will have access to an increasingly rich choice of offerings from a truly on-demand competitive environment. The ability to dynamically sell and upsell enterprise offerings through 5G network slicing, and to quickly enable new B2B2C pricing models for vertical IoT customers requires a holistic IT landscape that can address the myriad variations across consumer, enterprise and IoT.
In summary, 5G is not simply an effort to modernize and deploy faster networks; it is a catalyst that will drive fundamentally new business requirements for customer experience and service monetization. The monetization and technology approaches will have to experience radical reinvention and re-imagination to be fully fit for purpose in the coming decade.