The state of the Telco Industry

The following article was first published on the Bluewolf blog, an IBM Company.

Bob Fox, Global Industry Leader – Telecommunications at IBM Global Business Services

There are three major network-related trends from which telcos are emerging as enterprise digital service providers: cloud-based on-demand service delivery is complementing on-premises IT systems; programmable network infrastructure for supporting specific use-case scenarios is complementing passive networks, and data-driven network systems of insights are complementing systems of record. More and more, companies are experimenting with different strategies to move beyond their traditional role of network infrastructure and connectivity providers. So, what will it take for telcos to transform into digital service providers? With the annual Mobile World Congress (MWC) conference fast approaching, we talked to Bob Fox, Global Industry Leader of Telecommunications for IBM Global Business Services to share his insights.

What are telco executives telling you that they’re most concerned about?

The biggest one is, “How am I relevant in the value chain for people that use telecommunication services, in particular, mobile? How am I relevant in that value chain beyond just really cheap connectivity?” For example, when you’re roaming in some other country, you look in the upper left-hand corner, and you see it’s Telefonica, or Orange, or whatever. My best example is when I’m in China because it shows up as Chinese characters and I can’t tell which of the three companies it is. And it doesn’t really matter because if I can use my email if I can use my apps if I can download my movies, if I can watch my TV shows remotely, that’s what I care about. And I like my phone. I like the form factor of my phone, and I like my apps, and I like the things I can watch. But do I really care which provider it is?

So, what are they doing about it?

You can just look at the big carriers in the U.S., right? Five, maybe ten years ago, they were pretty much all following the same strategy. But not anymore. So CenturyLink, for example, post-acquisition of Level 3, now has their consumer business at 30% of their business and 70% will be enterprise. The next axis that’s important is how much you are gonna bet on needing to be in the content business, like what AT&T has done, which is much less capital intensive and actually throws off a lot more free cash flow per dollar invested than the telco business does. Diversify your relationship with your end customer through owning content. What that means is they are betting on 5G as a low-cost wireless broadband network. And people at least in the U.S. will stop building fixed broadband networks, Cable networks, FIOS, DSL, etc. And that will be a big battle between those who own fixed broadband assets versus people who have spectrum to build. These are multi-billions, tens of billion-dollar bets that people are making on these different vectors. Enterprise versus consumer, content versus just conduit. Broadband versus wireless.

What do you think about when you talk about disruptors?

I think it’s largely a big company game and it’s become more so rather than less so. I do think the holy grail for relevance for some of these companies, particularly in the B2B side, is to be kind of a marketplace of other companies. Build a platform that you can offer not only your own branded products but other people’s branded products. But the takeaway from all of this is that the telcos aren’t really competing with other telcos, right? They’re competing with the Googles, the Amazons, Netflix, Tencent, the Alibabas, etc. and those companies are continuing to grow, and the telcos are not.

How relevant is Salesforce for telcos now and how are they looking at a platform based business?

To reduce the complexity of big enterprise orders and make a lot more of that self-service, you need a Salesforce or Salesforce-like platform. You can’t do that on old CRM. So in the enterprise market, I think it’s pretty clear where they can play in terms of dramatic improvement in cost, time to market, and customer satisfaction/NPS. I think the open territory that nobody has yet to get out is on the consumer side in creating an emotional connection. No one says, “I love Verizon.” Leading companies sell commodity products, but in a way where the customer experience is as important or more important than the product itself. It’s not about deeds and speeds. So, how could you use customer experience platforms to really transform the way people feel, not what they think, about a company? By June 2019, twice as many telcos using Salesforce will be investing in Marketing Cloud as were a year prior.*

Why are we not seeing the investment there?

There’s an experiment I do sometimes. You go into an audience of telco executives, and you ask, “How many of you got your undergraduate or graduate degrees in the following disciplines: math, science, engineering, or business?” Everybody raises their hand. And then you say to them, “Okay, how many of you got your degrees in music, liberal arts, the performing arts or fine arts, philosophy, or English?” And there’s always one or two people. All the math, engineering, business background, that’s all left-brained thinking. And the right side of your brain is all about feelings and emotion and creativity. I think the telco industry is a left-brained-run industry.

What is an example of an existing technology partnership to benefit Telcos?

Industry disruptors understand the importance of adopting Agile ways of working and deploying cloud-native, digital BSS applications built on a common technology platform. Vlocity is a native Salesforce application that orchestrates business processes across all channels and devices and facilitates rapid integration with legacy systems. Vlocity delivers dozens of pre-built processes that can be quickly and easily downloaded, configured and deployed. Bluewolf’s AI Now™ for Telecommunications brings Vlocity for Telco + IBM Watson AI to deliver a rich user experience and robust cloud enablement platform.

Mobile World Congress (MWC) is happening February 25-28–and Bluewolf will be there. Want to talk with an expert about telco? Book a meeting. 

*Based on data from The State of Salesforce. Download the report to get more insights.

Bluewolf, an IBM Company, is the global Salesforce consulting agency that creates customer and employee experiences that drive a return on innovation–now.