Why mobile operators need a digital makeover

Mobile operators are still using business support systems architected in the early 1990s. They need to become digital service providers delivering digital user experiences.

Mobile networks cell tower
Credit: IDGNS

The global mobile phone business is booming. Up until recently, operators had their hands full rolling out 4G services and upgrading users to the latest smartphones. Going forward, operators will face growing threats from Wi-Fi, over-the-top (OTT) services and innovative solutions not yet on their radar screens. Pressure to seize partnership opportunities will increase.

To meet these challenges, mobile operators must acquire new skills: the ability to quickly design and launch new services, to gather information and act on it in real time, and to create more compelling user experiences.

The problem for most mobile operators is that they are still using a business support system architecture developed in the early 1990s. Back then, voice generated almost all of their revenue, there were few smartphones, and opportunities to partner with content suppliers and app developers were practically nonexistent.

Today's environment is dramatically different. Operators now provide a multitude of voice, text, data and video services. Most users have smartphones and many have additional smart devices. Operators are partnering with (or even acquiring) content providers, app developers and manufacturers.

To prosper in this new environment, mobile operators need to modernize their business support systems.

Digital technology is accelerating the pace of innovation in one industry after another. For instance, Uber is using digital technology and mobile connectivity to upend the taxicab industry -- an industry that long seemed impervious to change. Uber's mobile app model of engagement has fundamentally changed the ride-for-hire experience. It's faster, more convenient and totally self-service.

While companies such as Uber are leveraging mobile networks to create significant new revenue streams, mobile operators have been lucky to see a modest uptick in billable traffic -- if that.

Doing business digitally

Mobile operators have said for years that they want their networks to be more than just dumb pipes -- they want to create and sell added-value services. To accomplish this, they must become digital service providers (DSPs) and create digital customer experiences.

What is a digital customer experience? Today’s customers -- particularly millennials and Gen Z -- desire real-time information, contextually relevant offers and personally engaging interactions. In a sharp break with the past, they want to purchase services on-demand. And they expect to do everything right from their smartphones -- preferably through a simple and intuitive app.

A digital service provider possesses the business support tools to quickly design and launch new services, to engage users in ways that drive sales (using analytics and predictive marketing), and to generate new revenue streams through collaboration with business partners.  

How can a mobile operator become a digital service provider? There are three options.

1. The complete overhaul

The first option is to completely overhaul the carrier's business support system. This approach is offered by companies such as Amdocs, Ericsson and Huawei.

Amdocs pioneered billing systems for wireline and wireless carriers. Today, the company describes itself as a provider of "customer experience software solutions and services for the world's largest communications, entertainment and media service providers." Digital transformation has become a major focus for Amdocs, and it has exciting ideas about how DSPs will provide enterprise customers with powerful new marketing tools.

Ericsson is a leading provider of networking technology, particularly infrastructure for mobile phone networks. Ericsson is working with operators to change the way they conduct business and interact with their customers, and to that end it has acquired numerous telecom consulting and system integration firms. Ericsson recently announced a five-year contract worth $1 billion to "digitalize and globalize" VimpelCom's business support systems.

Huawei is another major supplier of infrastructure for mobile phone networks. The company has developed a digital business support system (business enabling system, BES) as part of its next-generation "Telco OS." Huawei has conducted commercial trials including a large pilot program with one of the world's biggest mobile operators, China Unicom.

2. Spot upgrades

The main drawback to completely overhauling the mobile operator's business support system is that it can takes years and cost tens or even hundreds of millions of dollars.

The second option is to instead perform focused upgrades.

Dublin, Ireland-based Openet provides policy management software solutions for wireless operators. The firm has conducted studies of multiyear projects and has identified some major risks. Openet believes that it's wiser for mobile operators to think in terms of a phased digital transformation. The company has helped operators implement features such as tiered data pricing, content and data bundles, and usage notifications and upsell offers.

3. The parallel stack

The third option is to deploy a separate communication stack to work alongside the existing business support system. This approach lays the foundation for all of the capabilities of a DSP (service agility, digital customer experiences and partnering tools) in a relatively short time. It's an attractive solution given the urgency of responding to competitors' moves and seizing partnership opportunities. Operators are expected to derive a growing share of their revenue from business partners in the years ahead.

ItsOn describes its mission as "to fundamentally change how mobile services are delivered and consumed." The firm's cloud-client architecture delivers an end-to-end solution enabling operators to quickly create new services and offers, and letting users buy the exact services they want right from their smartphones. ItsOn's digital solution has been fully integrated by operators including Sprint, Telefónica Mexico, STC and MTN Group.

Matrixx Software emphasizes that today's mobile operators need real-time policy management and charging systems. The firm's communication software stack can be deployed as a virtualized system interfacing with the operator's existing business support system. Matrixx is working with operators including Swisscom and Telstra.

Digital transformation should be a top priority for every mobile operator. According to a survey conducted by Pegasystems, a provider of strategic business applications, telecom carriers tend to underestimate the threat posed by disruptive new entrants. In today's hypercompetitive digital environment, mobile operators must become as innovative and agile as startups.

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