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Why Telcos Need to Rethink Their Service Offering in an Era of Transformation

Feb 25, 2020

In today’s rapidly changing world, Telcos need to work extra hard to avoid moving down the value chain as SD-WAN vendors, cloud-based enterprise application providers and public cloud providers offer attractive services at a low cost. Telcos need to present themselves to their business customers as providers of vital services that can close critical gaps that those other players just cannot. Among such critical gaps are performance visibility and end-to-end Quality of Experience (QoE), security and always-on operations. 

To the telcos advantage, these gaps are, at the moment, almost impossible for the other providers to bridge. Service providers therefore, have a unique opportunity to work toward moving back up the value chain. 

What is the OTT threat to communications service providers?

Looking at business customers today, we can see that their expectations are such that they want their network business services to flexibly adjust and better fit their needs, in terms of customized offerings and fast introduction of new services and upgrades.

SD-WAN vendors, for example, offer an appealing, low priced, over-the-top (OTT) alternative to IP/MPLS VPNs that helps reduce enterprises’ expensive transport costs. However, since they don’t own the network itself, they are limited in their ability to guarantee their customers’ user experience. 

The trend toward the use of public clouds, by business customers large and small, means that they become more dependent on connectivity to the cloud. Clearly, any failings in this connectivity can impact revenues, again pointing to a critical gap that telcos can work to fill.

Public cloud services are becoming real substitutes to IT services and are expected to make entire enterprise data centers redundant in the not-so-distant future.

This continual change means that branch site traffic doesn’t need to go through the enterprise headquarters as before. It could be backhauled directly to public clouds, where IaaS and applications such as Salesforce, Office365 and others reside.

It’s clear that the market has grown pretty packed and if telcos want to protect and grow their position they must find ways to offer services of critical value to their customers.

Rather than offering the reselling of OTT SD-WAN, which many service providers are doing today, they can take on an SD-WAN service model which will enable them to leverage their assets, both networks and data centers, to enhance their services offering. 

How can network disaggregation help CSP service models?

Telcos can speed up the process of certifying, onboarding and productizing new services by disaggregating software from the hardware appliance on which it runs.

Virtualized customer premises equipment (vCPE), a major example of network disaggregation, is appealing in that it allows providers to launch new services, such as a combination of networking, security and IT services, which, in many cases, they were not able to offer before. These can be specifically customized for various market segments and verticals such as hospitality, retail and supply chain management.

SDN control and automation tools, and zero-touch provisioning (ZTP) in particular, allow the launching and delivery of new value added services to be streamlined. This agility and flexibility means not only better time-to-market but also improved customer experience and the ability to flexibly adjust an existing service in an agile way. 

With disaggregation, value-added services can be deployed either on premise, hosted in the vCPE, or at the service provider’s data center, depending on the specific application or service latency requirements. 

What are telco cloud on-ramp services?

Cloud-bound services with guaranteed end-to-end SLA can be offered by service providers by leveraging their existing network assets. As such, all enterprise traffic will be anchored in the service provider’s data center, giving it the opportunity to enrich its offering with value-added services such as security, voice and, more specifically, the ensuring of end-to-end SLAs.

With transformation to the cloud and the move of the cloud perimeter closer to customer sites, the enterprise’s environment has changed. Telco cloud services can address the issues that arise as a result of this change.

As cloud on-ramps are becoming increasingly popular, there is no reason why telcos shouldn’t offer their own alternative to private cloud access and colocation providers, thereby participating in the cloud business value chain.

Interested in learning more about how service providers can leverage their network assets to move up the cloud value chain? Contact us and we’ll be happy to discuss your needs. 

This story was originally published in ISE magazine. Read it here.


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