Opening up the telco platform

Opening up the telco platform Dominic Smith reports back from the TM Forum’s annual event in Nice, where a new set of open standards are emerging which may be just what CSPs need to kick-start their digital transformations.

The telecoms industry is undoubtedly in flux, as traditional revenue streams stagnate and mainstream Communications Services Providers (CSPs) fight to stay relevant in a new world of Digital Services Providers (DSPs), however few will admit the scale of the problem. At the recent TM Forum Live! event in Nice, Peter Sany, President and CEO of the TM Forum, used his keynote speech to paint a stark picture of the challenge that lies ahead for most CSPs, but also a possible solution.

In his presentation Sany used several comparisons between DSPs and CSPs to put the scale of the challenge into context. Firstly, he looked at market capitalisation per employee for various companies and derived:
  • Siemens: $224,000
  • AT&T: $984,000
  • Apple: $4,478,000
  • Alibaba: $5,571,000
  • WhatsApp: $345,454,000
Although he acknowledged that the WhatsApp figure is somewhat arbitrary due to the inflated valuation when acquired by Facebook, his point here was that value creation per capita is much greater in digital economy companies.

Then he offered up some other stats to extend the comparison to more operational metrics (though the exact derivation of these numbers was not clear):
  • Amazon (AWS) can provision a service every 11 seconds; CSPs take 3-6 months to create a new service
  • WhatsApp with 55 employees adds roughly 1 million users daily; A CSP with 38,000 employees adds less than 5,000 daily
  • giffgaff crowdsources customer service and has high NPS (in the mid 70s); CSPs have thousands of CSRs and low NPS (see UK CSP NPS comparison here)
  • These are differences of several orders of magnitude and Sany’s argument was that for CSPs to set goals of becoming 10% more efficient is simply not going to be enough; much more drastic action is required.
The British Cycling team famously used the principle of the aggregation of marginal gains to become the most successful team at the London Olympics. The theory being that a 1% performance improvement in multiple areas (diet, sleeping patterns, aerodynamics, psychology, etc) added together would make the difference between winning and losing. And it did.

But this approach only works in a sport (or industry) governed by the same constraints or regulations. And the moment your competition changes or plays by different rules, then you need to completely rethink your strategy. Remember Dick Fosbury? After decades of high jumpers using the “scissors” and “straddle” techniques, Fosbury changed the sport forever by inventing his famous “flop” and within a few years everyone was using his method and the world record had leapt (excuse the pun) from 228cm through the 240cm barrier.

To compete in the digital landscape CSPs need more than just a step change in thinking; they need their own giant leap. Like Elon Musk’s SpaceX creating re-usable rockets for space missions or how another of Musk’s businesses, Tesla, is reinventing electric cars. (Of course Elon Musk himself is a native of the digital economy having made his fortune through PayPal.) But first, rather like the recovering alcoholic, the industry needs to admit it has a problem.

The TM Forum is an association that acts on behalf of its members, and in some respects Sany’s words are an admission of the challenge that lies ahead. However he is not speaking on behalf of the operator members, but rather issuing a rallying cry to stir them into action; to think and act differently. Some brave CSPs are already making headway – notably T-Mobile USA with its uncarrier initiatives and Telefonica with its strong digital strategy – however for the majority, urgent action is required.

The TM Forum is of course there to help and by bringing in expertise and insights from other verticals they are trying to retune CSP thinking to the new digital world, and the key learning now seems to be openness.

Sany’s keynote highlighted that the most successful digital services providers are “platform” businesses – i.e. they provide enabling platforms for others to innovate upon and build their own ecosystems – and herein lies the reasoning behind the TM Forum’s Open API Programme, which now has nine of the world’s largest service providers on board.

CSPs simply cannot be all things to all people, there are just too many options and too many other companies that better understand the needs of each industry and customer segment. However, by opening up their networks and BSS/OSS with a set of standardised Open APIs, they may just be able to establish their place in the digital economy as the platform for a whole new generation of digital services.