Can carriers keep up with the data explosion?
The migration from traditional voice to new IP based technologies and services – alongside a data explosion and increasing consumer data capacity demands – brings massive disruption to the telecoms arena. For carriers, it signals a shift in not just technology but revenue models and competition. It’s changing their product and service offerings, and exposing opportunities to engage in new ways with second tier providers, Over the Top (OTT) partners, and directly with customers. But a triple change imperative – across tech, strategy, and ops – is essential for their survival … and it is a challenge to keep up.
To remain relevant, carriers must invest in new technologies that do not deliver the margins that voice services did. It’s forcing them to take new variables into consideration and embrace new strategies.
What drives growth in data consumption?
The adoption of the latest wireless technologies, such as 4G and 5G, as well as broadband fibre networks will be essential to provide high volume services.
4G technology was the first real driver behind true mobile broadband connectivity and a driver of data capacity requirements. It brought users converged services that include multimedia content, cloud-based applications and big data analytics capabilities. 5G technology will ease the burden, offering better speeds and longer battery life but, perhaps most importantly, higher network capacity and better resource utilisation. This makes the move to 5G technology an essential consideration to service growing demand and a growing base of customers and Internet of Things (IoT) devices.
5G networks are only expected to start emerging in 2020. Nonetheless, current 4G standards and the ramp up to 5G are driving the adoption of wireless broadband in a cell environment not serviced by fibre or Wi-Fi services. As more and more clients demand wireless “connected anywhere” services, the need for constant technology upgrades to high speed and high data capacity services will grow. At the same time, increases in the efficiency of computing power and higher bandwidth, lower latency solutions, will give rise to new services such as augmented or virtual reality services, remote tele-medicine and remote touch sensing, to name just a few.
While drivers for adoption of advanced, high capacity technology and services remains low in rural areas in Africa, it is likely that isolated deployments by governments and non-governmental organisations for essential services, such as telemedicine of education, will create islands of uptake that will grow rapidly.
How big is the requirement for more capacity and how rapidly will it escalate as new IP-based services are developed and adopted? Our daily per capita data consumption is expected to soon exceed 1 GB of data – and its expected to grow exponentially at least for another five years.
That is going to put a lot of pressure on carriers to continuously improve infrastructure, and maximise usage and data volumes to achieve better returns.
Optimising network utilisation
To keep up, carriers will need to place more and more emphasis on keeping infrastructure current and relevant through continuous upgrades to the newest technology. Network resilience and alternate routing over load sharing multiple transmission paths becomes essential in a modern telecommunication network. Achieving this comes down to network architecture and making use of technologies that are more intelligent, software-defined and automated. This implies a change in the skillset employed by the carrier as network engineers need to be able to exploit new planning tools and design principles to support and maintain networks.
But infrastructure is likely to commoditise. As first mover advantage on fibre deployments and other service offerings begins to dissipate, infrastructure sharing and collaboration on deployment of expensive infrastructure such as radio masts and fibre ducts are becoming important considerations for service providers. Indeed, as infrastructure commoditises, competitiveness will be increasingly determined by service levels, quality of service and product mix, rather than size or ownership of the network.
For governments, there is also great incentive to encourage infrastructure sharing. Countries are getting legislators involved in making it mandatory in order to drive speed of infrastructure deployment, and manage down the cost of administration, which in turn will lower the cost of telecoms and further drive uptake.
To maximise revenue and build sustainable business models, networks need to optimise utilisation and have the ability to scale seamlessly as client acquisition increases. This is giving rise to new partnerships.
OTT players, such as Google and Facebook, are disruptors, yet partnerships with these players will allow carriers to increase data volumes on their networks and to maximise capacity. OTT players effectively provide entry points for consumers to participate in the digital economy, helping grow the subscriber base. New carrier strategies will emerge that enable them to maximise potential returns.
How is enterprise managing the data explosion?
For enterprises, technology is less of a concern than cost/benefit equations. Businesses want to get away from large, fixed capex expenditure that they are unlikely to recover. This is driving the shift to cloud computing, which is a convenient, scalable operating expense. As long as the cost benefit remains, cloud computing will grow. This will drive the proliferation of data centres. Already investments in data centres by major players – carriers as well as OTT players – are growing as providers realise that these services need to be brought closer (physically) to the customer to maximise quality of service and use of infrastructure.
Can carriers retain their market position?
The current telecoms market disruption is unprecedented. We are seeing the birth of a new industry – one that is far more inclusive but also more facetted and complex. While technology seems to be leading the way and providing carriers with a competitive advantage, the ability of carriers to strategically partner and leverage new opportunities may provide the ultimate long-term advantage.
As consolidation continues in local and global markets, it seems that multi-national players are faring better – with a bigger and more diverse market, they are able to experiment with a broader spread of offerings and access a greater selection of partners. There is no doubt that the data explosion will continue, as will consumer appetite for new and differentiated services. Carriers will need strategic and tech smarts, as well as considerable stamina to stay the course. Those that do will emerge as players in a very different landscape – one that is just starting to come into view.
Eckart Zollner is the Business Development Manager at Jasco, South Africa. Jasco offers smart technologies across areas like telecommunications, information technology, energy and industry.
Grupo Espinosa: 70 years of constant evolution
Founded in 1952, Grupo Espinosa has been relentlessly supporting the publishing industry with producing more than 100 million copies every year – whether its books, magazines, catalogues or single-order custom prints. No project is big or small for Grupo Espinosa, as the facility can scale up on demand and their turnaround times are highly competitive. Grupo Espinosa works with on-demand digital press or offset press, in paperback with glued softcover binding, PUR softcover binding, stitched paperback binding, binder’s board, hardcover, saddle stitched, Spiral or Wire-O. Equipped with the experience needed for a product to leave the plant ready for distribution, Grupo Espinosa delivers anywhere inside or outside Mexico. Traditionally starting off as a black and white printing press, Grupo Espinosa has experienced transformation first hand – from colour to digital offset printing. Currently, Grupo Espinosa is also looking at making capital investments into audio books to match with the increasing demand.
So how did a seemingly local operation in Latin America become a world-renowned printing facility trusted by hundreds of clients? As Rogelio Tirado, CFO of Grupo Espinosa for the last six years says “It all comes down to our market experience and our dedication to quality”. With nearly 70 years behind them, and located in Mexico City, Grupo Espinosa has two major locations – one spanning 75,000 square metres and the other about 45,000 square metres. Both locations are controlled by a single ERP (Enterprise Resource Planning) system ensuring speed, consistency and quality of work. Tirado says this isn’t their only competitive advantage. He adds “Our competitive advantage is the relationship we have with customers and the trust they put in us with their intellectual property”. Speaking of trust, global publishing giant Macmillan Education exclusively partners with Grupo Espinosa for their Latin America operations, as part of Macmillan’s decentralized hub strategy. Having a facility that offered the full spectrum of service – from storing digital content to printing and distributing – was one of the major requirements for Macmillan, and Grupo Espinosa was recognized as the leading printing hub for providing this 360 infrastructure. Another factor that has led to success for Grupo Espinosa is the absolute focus on quality and time. The staff are committed to providing the best quality in the best possible time, without causing wastage of resources. Sustainability is a huge factor playing into Grupo Espinosa’s operations, and they’ve created a healthy environment with the sustainable use of paper and energy resources as well as keeping their employees – most of them associated with the organisation for over 10 years – happy. He adds, “In order to be truly successful, you need to be good to the environment, employees, suppliers, and your customers. But most importantly, you need to be sustainable, you need to have proper working conditions, pay proper salaries, proper prices for paper, source the paper from sustainable sources, pay your taxes, basically be a good global corporate citizen and that's probably one of the biggest achievements that we have.”