The 2020 CSP in the cognitive eraDownload the full report
The communications industry is in the throes of a digital shake up, as over the top (OTT) digital giants and new startups upset the status quo. Offering new communication options and, in some cases, alternative access technologies, these digital invaders are shifting the competitive landscape, capturing revenues and hitting margins.
At the same time, communications service providers (CSPs) are challenged to meet the increasingly high expectations of empowered – and less loyal – subscribers. In addition, they are tasked with large investments in network capabilities, particularly as the explosive growth in data-intensive applications increases traffic. Add a slowdown in subscriber numbers, continued regulatory pressures and forecasts for sluggish revenue growth, and the result is an industry in flux. The big question confronting providers is, “Where do we go from here?”
Seeking answers, we conducted extensive research, including a survey of 135 industry leaders in 51 countries (see Study approach and methodology section). Based on our investigation, as well as decades of engagements with communications clients, we assert that today’s CSP can emerge in 2020 as a new and stronger business. Indeed, providers have a huge growth opportunity before them thanks to disruption stemming from technology challenges, changing customer expectations and rapid industry convergence.
The rise of business ecosystems based on Internet and “as a service” technologies is creating new market opportunities. Many established OTTs are attempting to become core platform players of scale, effectively competing in the communications and IT sectors, as well as eyeing pieces of other industry value chains, such as finance and retail.
So, where is the growth opportunity for providers? CSPs have the size, global scale, market trust and brand reach to capture a good share of new markets created by emerging ecosystems. Further, success in an ecosystem platform could translate from national to global scope and massive growth for those that find the right niches. For example, China’s Tencent, which shifted from a product/service focus to a media, communications and commerce platform-based model, has become one of the largest Web companies in the world.
Making this growth opportunity a reality requires simultaneous progress along two trajectories. The 2020 CSP will emerge as providers advance along two digital service axes: The digital services provider (DSP) and the digital services enabler (DSE). (See Figure 1.) To complete this evolution, CSPs must make changes at warp speed.
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