If the DSP model does succeed, will it create new vendor winners?

New research suggests some customers are quite positive about operators providing them with more services. So how can operators exploit next gen network capabilities to deliver on the DSP opportunity? And will that shift bring a shift in the vendor landscape along with it?

Do you believe in the idea of the Digital Service Provider? Or to put it another way – do you believe that operators can be not just providers of basic connectivity, but exploit new network capabilities so that they can act as a platform for a host of new (digital) services?

As operators invest in 5G, NFV and SDN, as they move networks themselves and the surrounding panoply of support systems to a variety of cloud environments, as they automate the operation of these, the end goal is not to achieve an elegant technical architecture in accordance with whichever ETSI or TM Forum blueprint, it is to transform their own business models. 

Some in the industry are positive about their chances. Others are, shall we say, less so. But what do consumers themselves think? 

Research carried out by Sapio Research and commissioned by telco software provider Openet asked 1620 consumers in five different markets (Colombia, Canada, the UK, Singapore and Indonesia) how they viewed their telco providers. You can read the results here. But simply put, Sapio’s figures suggest that there are lots of consumers who do want to engage with their operators digitally, and who view their mobile provider as a natural digital entity. They want to use digital channels to communicate with their providers, and they want to buy more digital services from operators. Operators have a strong brand presence that they can exploit, and even their own customers see considerable opportunities for operators to step up and use their networks and data as a platform to change their business models.

Although Openet’s research concentrated mainly on asking consumers about their direct relationship with service providers, it is the platform model that offers further opportunity. This envisages more of a B2B2C model where the sliceable network is the platform within which operators are “exposing” capabilities to content providers, games developers, IoT sensor providers and so on who themselves have the customer relationship for that service.

This model relies not just on the network capabilities operators are building, but also on the related business functions such as policy and charging. Operators need the ability to offer, manage and assure those capabilities to their platform partners, delivering all of that against SLAs. 

Openet, as one of the companies that provides software that could enable this operational and business model shift, clearly has a dog in this fight. Having remodelled its BSS-OSS software to be deployable as microservices in cloud environments, it benefits from any shift by operators towards the DSP model. 

“It’s not like watching your dad dancing”

Niall Norton, CEO, said that he is genuinely positive about the CSP to DSP transformation model. 

“The ones we are seeing right now and who have begun that journey are operators like Orange – providing utility and financial services under its brand – and Globe who is providing media. In those situations the brand becomes more important than just the technology, and it’s a different mindset in how they are engaging their customers. People trust them and think they are credible to do these things – so it’s not like watching your dad dancing.”

“For example, how long will it be before Vodafone, say, teams up with Aldi and Lidl to do home deliveries – they could.”

However, the ability to do that depends on having the right network and IT infrastructure, with these two elements increasingly converging within the operator organisation.

Operators cannot exploit the DSP capability if they do not have the systems in place to allow them to manage the new partner environment. That means moving away from service-specific business logic and technology stacks (policy, rating, charging, billing) to real time, decomposed software elements that can be invoked from any cloud environment, including the edge, to support service delivery. Norton called it a “Webscale microservices charging environment with a devops deployment model”.

“When it’s not a one off macro thing that costs millions, if you have the infrastructure to roll out micro campaigns elegantly, then you can become a lot more than you are,” he said.

In terms of B2B2C model, Norton said that increasing consumer trust in the brand means operators can be the “Intel inside” of a third party service provider delivering their service from the network. 

“In that  scenario you de-risk the bet; you become the platform and de-risk what is flavour of the month and then cherry pick the ones you want to come on board.”

Openet and the network

So how does BSS-OSS software, the sort of software components that Openet markets, help operators exploit upcoming network capabilities?

Norton says, “Policy and Charging are the two big components of that. If your charging is available at a component level so you are providing just rating for this particular service, or just balance management for that, then you can make the application creation and updates and modification very simple and quick to do. And we can automate that if you are orchestratable in that network environment. With policy and so on behind the scenes… can you elegantly, in a 5G world, deal with all sorts of service slices going on and then (what most people aren’t talking about) hand back in to an existing 4G network and potentially take on board WiFi as well. Can you you enable private networks and campus networks doing their own thing? It’s wholesale business for the operators at one level but it’s enabled by the policy management.”

Another area where Openet is engaging is around data management. Norton said that Openet has found that the data management knowledge the company has build up as part of its background in real time mediation is now playing a role as operators look to understand and correlate data to feed the AI engines that drive automated network and service tasks such as SLA assurance.

Can anyone play?

Openet took some pretty big bets two to three years ago on the telco cloud, and on re-architecting its solutions. It took a revenue hit as it did so, but now believes with its focus on policy, charging and data management, supported by a “Digital Business Platform” it is in the right place to enable DSP and 5G transformation. Norton said that vendors that had not truly undergone the work to decompose products and design them as cloud based microservices that can be deployed as part of a DevOps approach may yet hit a wall of pain when the major contracts that they are managing run out. That’s the difference between truly reworking code and re-labelling legacy software products as “5G”. 

Similarly, a poorly designed microservice can be even less use than a legacy product. And that design is not just about software design. Norton said Openet, which now has about a third of its contracts on subscription models rather than upfront payments, has put a great deal of thought into how it designs contracts with operators. For instance, where an operator has derived its own code from original Openet IP, what happens when the subscription ends?

Meanwhile, Openet is finding that operators are genuinely more interested in operating in an open and collaborative way, and working with new vendors that can innovate. Norton cited engagements with Samsung and Casa Systems, where Openet is being brought in as part of 5G deals those companies are winning. It is also working with major Systems Integrators and with IT providers such as Netcracker, as well as business software providers such as Salesforce. Half of the company’s own salesforce management is now lined up to address indirect opportunities, he added. And whereas in the past Openet would expect to be brought in by a systems integrator as part of a deal, now it is often finding that it is the one managing a carrier relationship.

“We are with Samsung on the network side, as well as Casa Systems, and there are others like Metaswitch, Mavenir and Affirmed Networks that are highly desirable targets. In the fullness of time I am ambitious we get someone like an Ericsson or Cisco on board, because they have a ‘make or partner’ decision in front of them as to how they address their need for a fuller 5G portfolio,” Norton said.

Openet, then, is one example of a smaller-to-mid sized company that hopes to gain from the move to the platform model within service providers, where the ability to move quickly and work collaboratively is at least as important as the security of working with a partner with industrial scale and a massive balance sheet.

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