Gartner: Top 10 Trends for Communications Service Providers (CSPs) in 2020
Key Findings:
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Compared with previous cellular generations, the multilayered architecture of 5G creates opportunities for CSPs to expand beyond connectivity-centric solutions. However, disaggregation also allows new entrants to join incumbent CSPs in the 5G ecosystem.
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Increasingly, network-based CSPs are exploring options to spin off network-related infrastructure into a separate entity, thereby unlocking funds needed for network upgrades and expansion while still meeting shareholder dividend commitments.
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As live streaming of TV, games and e-sports enters the mainstream, the need to reduce latency and lower cost is driving hyperscale cloud providers, device manufacturers and developers to expand their influence out to the edge of CSPs’ networks.
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Data, analytics and artificial intelligence (AI) now play an expansive and critical role in generating new business value, lowering costs and improving customer advocacy.
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Cloud-native CSPs are emerging as aggressive challengers, and leading incumbent CSPs are expanding on efforts to virtualize their networks and adopt cloud-native capabilities.
Recommendations:
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Pursue new capabilities and partnerships for 5G and streaming content by investigating how ecosystem approaches could be employed to meet business strategy goals.
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Accelerate migration to cloud-native capabilities by appointing leaders who understand the business and technical implications that will arise.
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Facilitate organizational alignment to become data-driven by establishing executive-level accountability and cross-functional oversight for data intelligence activities.
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Maintain free cash flow from traditional telecommunications services by adopting automation, analytics and AI to improve operational efficiency and drive down costs.
Discussion:
Among the topics Gartner has observed as top of mind for CSPs include network virtualization and artificial intelligence. These are embellished in sections Becoming Data-Driven Becomes Critical and Cloud-Native as a Network Foundation, which explain the imperative needed to address what are becoming foundational capabilities. AI Enters the Workforce addresses the people context of AI, and how the move to automated provisioning and operations can, in the midterm, lead to augmentation, rather than wholesale replacement.
In the consumer market, digital content is well and truly dominating the strategy agenda. Livestreaming of TV, games, e-sports and other digital content is now mainstream. The need to improve performance and lower cost is driving the ecosystem of hyper-scale cloud providers, device manufacturers and developers to expand its influence into what was previously the exclusive domain of network-based CSPs.
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5G Assessment:
5G is viewed by mobile-network-based CSPs as a significant opportunity for growth, particularly in B2B. It also presents a challenge in terms of the level of investment required for coverage and capacity demands. At the same time, digital ecosystems are increasingly dominating the way industries function and, subsequently, how technology solutions are defined. This presents compelling opportunities for competitive market entrants looking to exploit opportunities to reinvent processes and define new operating models for industries.
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Compared with previous cellular generations, the multilayered architecture of 5G (network plus software and services) creates opportunities for CSPs to expand beyond connectivity-centric solutions. However, disaggregation also allows new entrants to join incumbents in the 5G ecosystem.
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CSPs aspire to derive value from 5G through enterprise solutions that expand the mobile ecosystem to new industries, enabling opportunities to participate in concepts such as factory of the future, autonomous transportation, remote healthcare, agriculture, digitized logistics and retail.
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CSPs have found it difficult to identify strong monetization and operation efficiency opportunities for enterprise 5G, partly because of a lack of insight into key vertical markets.
5G improves drastically on previous generations of mobile cellular connectivity (3G and 4G), with peak data speeds of up to 20 Gbps, much higher network capacity and significantly lower latency. As such, 5G-capable handsets and smart devices will give rise to new experiences for consumers, such as gaming, esports, content streaming and virtual reality (VR), to name a few.
However, for CSPs, the enterprise segment will be key to monetizing higher-margin opportunities. To be successful, it will require a significant shift from 3G or 4G, where the focus was on delivering horizontal product and service offerings related to connectivity. By taking a platform approach to 5G, CSPs can potentially unlock new value through delivering industry-specific solutions.
The software-centric approach of disaggregating hardware and software (e.g. Open RAN) creates opportunities for new providers to offer solutions or services in the 5G ecosystem. It will enable enterprises to procure services from multiple providers in the ecosystem, enabling service flexibility and diversity, rather than being locked in with a single CSP.
The concept of 5G as a platform leverages a broad range of capabilities (beyond those related to connectivity, such as edge computing and network slicing). It also encompasses the use of data analytics, AI and machine learning, data aggregation, and service orchestration. Security will play an important role. Thus, the concept of 5G as a platform includes horizontal capabilities (common across industries) and vertical capabilities (specific to industries) that can enable CSPs to participate in emerging digital ecosystems.
Since the technology specifics of 5G are still a work in progress, there will be shifts in product or service offerings. Technology alliances and partnerships between diverse stakeholders are likely to arise. Such a nebulous market can be confusing for enterprises and participants, especially in the context of evolving standards.
An industry-platform-centric approach to 5G has the potential to enhance a CSP’s ability to deliver better business outcomes to their enterprise customers. However, new operating practices are required. The isolationist nature of processes, systems and methodologies within the network and IT will also need to be addressed (see “Unlocking the Value of Network and IT Fusion in CSPs”).
Most CSPs have begun implementing some of the foundational capabilities for treating 5G as a platform, such as software-defined networking and network function virtualization (NFV). These provide for the ability to divide services into smaller, software-driven functions, which allows businesses, operators and cloud providers to deploy and configure these services in a more-flexible manner. But again, these solutions and networks often lack interoperability.
Although it’s still early days for the 5G private network opportunity, regulators and standards bodies are beginning to put initiatives in place targeting this opportunity. CSPs have the potential to deliver turnkey network solutions into the industrial space. Equipment vendors would also have the option to do this directly.