The Dawn of the Digital Service Provider: Transforming from CSPs to DSPs

By: Tony Sceales
October 2015

TONY SCEALES

HEAD – INDUSTRY (DIGITAL
AND COMMUNICATIONS SERVICES)
SUNTEC BUSINESS SOLUTIONS

 Tony is responsible for SunTec’s Digital and Communications Services Industry Practice. In this role he builds and maintains strategic connections to clients, partners, analysts and industry bodies across the globe. He also ensures a strong fit between the products and services and the client’s needs. As a member and Ambassador of the TM Forum Executive Committee, and a member of its Open Digital Economy Steering Group, he is well placed to identify the trends and opportunities SunTec’s clients face as convergence, digital services emergence and increasing pressures on revenues and margins impact their businesses.

Having transformed their networks, communications service providers now need to transform themselves

High-speed broadband networks, coupled with high-performance computers, are proving to be a potent combination. As they become very fast and responsive, telecoms networks will soon be enabling everything from highly immersive gaming and telepresence to autonomous vehicles and remote surgery. People on opposite sides of the world will be able to share the same experience. Connectivity will be the king and distance will finally be dead1.

In this exhilarating new era, the term “communications service provider” feels woefully inadequate. To justify the investments they are making in high performance and low Latency networks, teLcos need to provide far more than communications. Ideally, they should be working with partners to offer consumers and companies a diverse range of digital services, encompassing everything from cloud computing to the Internet of Things to entertainment.

The customer experience should be focused on value transfer, not the transaction that executes this transfer; that is a bank and banking system requirement.

Opportunities abound

Although pessimists believe that many telcos and cablecos will gradually retreat from the service layer and end up just providing connectivity, that doesn’t need to be the case. If they can find the right partners and adapt their internal processes and systems, network operators have several major opportunities to boost both their revenues and relevance.

Firstly, enterprises, large and small, are looking for cloud and virtualization services that provide flexible, yet reliable and secure, access to computing power and applications.

As competition intensifies across the economy, companies can’t afford to compromise on ICT. With their in-depth understanding of connectivity, network operators are better placed than the so-called ‘over-the-top’ players to deliver flexibility, reliability and security.

Similarly, utilities, healthcare providers, city administrations, and many other organizations want to work with telcos to make smarter use of their assets and resources. Business leaders and political leaders increasingly realize that reliable and responsive connectivity can deliver a step-change in efficiency and effectiveness. Together, a telco and energy company could, for example, enable organizations in both the public and private sectors to remotely control all kinds of power-hungry equipment and dramatically reduce waste.

Moreover, in the consumer market, there is no reason why telcos and cablecos can’t build on their existing IPTV offerings to provide householders with a wide range of personalized entertainment services, including gaming, music, movies and other apps. Rather than simply selling a package of television channels

Time for transformation

To pursue these opportunities effectively and fend off competition from over-the-top players, both telcos and cablecos urgently need to make key organizational and technological changes. Like their networks, they need to be responsive, versatile and fast.

Rather than simply offering standard packages of gigabytes, minutes, texts and TV channels, network operators need to enable their customers to configure their own service proposition, mixing and matching a range of services. Why can’t a football fan simply pay for a service that records all the matches involving the teams he Likes, rather than having to buy a package of generic sports channels?

Time-starved small and mediumsized businesses, in particular, crave an automated proposition that enables them to quickly buy exactly what they need rather than a bundle that partially meets their needs. Today, small companies typically have to make do with a rigid “prosumer” package, while medium and large companies often end up expending valuable time and resources dealing with resellers and systems integrators.

In this new era, service providers need to be able to make taibred and timely recommendations and offers, while enabling customers to serve themselves. To become a digital service provider of this ilk, most telcos and cablecos will need new systems and processes.

In both, business and consumer markets, customers increasingly want to buy what they need, when they need it, with a few clicks of a mouse or taps of a finger. And they don’t want to be tied into rigid, long-term contracts, padded-out with superfluous services.

Flexible, nimble, profitable

Anticipating the dawn of the digital service provider, there is a need to develop an advanced software suite to enable DSPs to create tailored offerings in real-time by drawing on large volumes of customer and product performance data – an advanced revenue management and business assurance product suite that also supports real-time collection, mediation, rating, settlement and billing.

Crucially, it needs to enable a digital service provider to respond rapidly to a customer’s changing requirements and budgets. With such a software, a service provider has a live view of the profitability of each product or service

line with each customer, enabling it to dynamically change pricing and make offers in a way that maximizes sales and profits. In essence, service providers can tailor the price of a product or service to appeal to a specific customer in a specific context, while maintaining a real-time view of profit margins.

A digital service provider can also use revenue management and business assurance product to enable efficient interactions between different parts of the organization and the broader supply chain. In effect, the software can ensure that both internal teams and partners are appropriately incentivized and rewarded for delivering what customers need.

In summary, network operators need to transform themselves, as well as their networks. The days of rigid, one-size-fits-all pricing propositions are fading fast. If telcos and cablecos can become really responsive to their customers’ diverse and evolving demands, they will be pivotal players in the new digital era.