5G’s existential

question

Smarter pipe
or data-driven service provider?

Thought leaders’ reflections on

transformation to digital service provider
2 5G’s existential question

Contents

3 Introduction

4 The never normal — Don’t let a good crisis go to waste

6 Think IT — Be more than telco

8 Monetisation beyond connectivity and communications

9 Using a data mesh to make sense of 5G

11 Security is key to new B2B services

13 Conclusion: Telcos can win the talent war through ‘transformation with purpose’

15 5 key take-outs and action points for telcos

© Market Mettle Ltd 2022 unless otherwise shown. All rights reserved.
3 5G’s existential question

Introduction

“There’s a lot of work to do…

If you haven’t started, you’re late.” — Enrique Moreno
Most telcos, particularly in Europe, would agree 4G was a missed opportunity.
Better data connectivity was monetised by a raft of new apps that snagged a free
ride from operators’ massive investment in new capability and performance.

With 5G, telcos know things must be different. Rather than gifting to third
parties, monetisation needs to go beyond connections to include innovative,
secure, value-additive services — starting with business-to-business (B2B).

Telcos need to think like IT companies and technology consultants as they

transform their strategies towards providing connected solutions that can
be digitally and commercially tailored to user requirements and experience,
whether human or app, with faster and more reliable delivery.

To offer a holistic view of how the telecoms industry can convert the challenges
of 5G roll-out into new business opportunities, TelcoFutures tapped into the
community of leading industry experts at the REACH telco transformation
forum to share their thoughts and guidance. They include:

• Steve Brobst, CTO, Teradata.

• Jan Geldmacher, venture capitalist, industry adviser, and telco alumnus
(SoftBank, Sprint, Vodafone and BT).
• Rabih Dabboussi, Chief Revenue Office, Rakuten Symphony.
• Boris Maurer, EMEA Comms & Media Industry Lead, Accenture
• Enrique Moreno, Head of Telco & Media Industry at NTT Data DACH.
• Inma Martinez, scientist, digital pioneer, and stakeholder advisor.
• Keri Gilder, CEO, Colt.
• Steve McMillan, CEO, Teradata.

Together, they navigate the cultural and commercial transformation needed to

benefit from the services that will run through this improved infrastructure.
4 5G’s existential question

The never normal

— Don’t let a good crisis go to waste

The uncertainty may have felt deeply unwelcome at the time, but telecoms
operators should regard the disruption of the pandemic years as a reminder
there is no such thing as ‘normal’.

Change is taking place all around, and much of it is out of control.

Steve Brobst
This serves as a timely reminder that organisations must constantly adapt or
CTO
die. A smart company will always, in the famous words of ice hockey legend Teradata
Wayne Gretsky, skate to where the puck is going to be, and not hang around
where it’s just been.

While business news stories discussed whether things would go back to how
they were, or whether there is now a ‘new normal’, there is another more
revealing possibility.

According to Steve Brobst, CTO at data orchestrator Teradata, it’s better

to discount the notion that things have ever been ‘normal’. The telecoms
environment is always in a state of flux.

The pandemic may have taken this to an extreme but, ultimately, accepting
constant change is his advice to telcos trying to navigate what annual reports
often refer to as ‘strong headwinds’.

“The ‘never normal’ is the ‘new normal’, so we are going to need to adapt to
that continually”, he suggested. “These changes that are happening now during
COVID, the changes that happened during the global financial crisis, the changes
that happened during digital disruption, those are permanent changes. And that’s
why it’s important that you innovate and you adapt, and you take advantage of
the disruption to instigate change innovation within your organisations”.
5 5G’s existential question

This may not be a welcome message for those hoping the industry would return
to a more comfortable past. However, the jolt of the pandemic was just what
operators needed to remind them that change is always being navigated by the
industry. There has never been a comfortable time to sit still but now, more than
ever, it really is time to be bold and embrace disruption.

“Discomfort is a part of innovation. We think of it as an uncomfortable

situation, but from an innovation point of view it’s your friend.
In telecommunications with 5G, we clearly have disruption coming.
We need to embrace it. As Winston Churchill said, ‘never let a good crisis
go to waste’. So, I wouldn’t call 5G a crisis. Actually, it’s a huge opportunity,
but it’s a disruption, and it’s going to disrupt the business models of a lot of
telecommunications companies.” — Brobst.

The REACH telco

transformation forum
was a hybrid live/virtual
event with attendees
joining from across
the globe to learn from
a range of leading
industry experts.
6 5G’s existential question

Think IT
— Be more than telco

If the telecoms industry is honest with itself, the roll-out of 4G was not its finest hour.

While it was exciting for consumers to receive data at connections of tens of

megabytes per second, it was the shareholders and owners of services such as Uber,
WhatsApp and Deliveroo who had most cause to celebrate.
Jan Geldmacher
After many years of chest-beating about how the industry can do more than
Venture capitalist,
simply exist as a pipe, the 4G roll-out simply made the pipe faster and cheaper. industry adviser,
and telco alumnus
(SoftBank, Sprint,
While the telco industry was splitting hairs on standards, a raft of successful Vodafone and BT).
mobile-first organisations took advantage of the new improved bandwidth to
launch apps that became the go-to services for getting food delivered, booking
accommodation, watching videos, and hailing a taxi, to name just a few.

The OTT businesses behind these apps made millions and billions, while
mobile operators were bundling more data into lower-price tariffs.

With the industry now on the verge of offering mobile connection speeds that
can match fixed home broadband, with higher availability and lower latency,
telecoms companies can think beyond consumers, and focus on how they can
add value for more lucrative business customers.

This could be in many areas, according to Jan Geldmacher, venture capitalist,

industry adviser, and telco alumnus (SoftBank, Sprint, Vodafone and BT).

All industries require services that go beyond faster connectivity, to include

maximum reliability and minimum lag, and — increasingly — software control.

This is not just to connect companies to their staff and customers, but also to
keep autonomous devices talking to one another at a time of accelerating digital
transformation and automation.
7 5G’s existential question

Companies are crying out for the resilience and capability of 5G to facilitate the
integration of sensors which are proliferating throughout supply chains, as well
as at points of service and product delivery. As Geldmacher points out, robots
with mobile connectivity will for the first time have the same reaction speed as
humans, due to 5G’s lower latency.

This places the onus on the telecoms industry to step up and claim its place
higher up the value chain.

For telecoms providers, though, there is a huge decision to be made. Those that
prosper will think more like an IT company, devising the products and services
CIOs will want to deploy to deliver against their boards’ vision for growth. Telcos
need to align with their enterprise customers’ strategic plans, and move beyond
the role of connectivity supplier operating through the procurement department.

“You need to be in the strategic patch of IT decision makers and not only
negotiate with procurement officers, you need to be the guy that consults
the IT decision maker. In order to do that, you need to become relevant; you
need to increase the spectrum of products and services you offer to your
customers and that you are known for, and that you are good at.”
— Geldmacher.

While a simple point to make, this is going to be far harder to deliver.

Telecoms companies have historically bet their shirt on either doubling down
on commodity, such as providing the most data for the lowest fee, or trying to
differentiate through content acquisition to become news publishers and sports
broadcasters. These have not typically proven to be ultimately successful gambits.

Future success, Geldmacher suggests, depends on telecoms businesses shifting

to thinking like IT strategists, and, to do that, they will need to act like them as
well to get in front of the right people.

“As B2B and B2B2C becomes more important, my advice is to not leave the
strategic positioning to the IBMs of this world, but to claim a position by
augmenting the commodity telco proposition with adjacencies and moving
up the value chain.
B2B teams and carriers and telecommunications providers must become
the trusted advisors for their customers. That means moving from pure
transactional approaches into consultative approaches, consulting your
customers on how they can make use of the new features that 5G brings to
the table when it comes to adjacencies. Artificial intelligence, robotics and
autonomous business models build an amazing opportunity for that, as low
latency and availability and density are foundational.” — Geldmacher.
8 5G’s existential question

Monetisation
beyond connectivity and communications

The harsh reality is that telcos have very little option other than transitioning to
providing value-added services because revenue from connections is just too low.

It is this realisation that average revenue per user (ARPU) is remorselessly

contracting around the world that prompted launch of the Rakuten Mobile 5G
network in Japan in 2020, and then for its pioneering technology platform to be
Rabih Dabboussi
offered to operators across the rest of the world through Rakuten Symphony.
Chief Revenue
Officer
The company’s Chief Revenue Officer, Rabih Dabboussi, revealed that it is Rakuten Symphony

through creating the 5G infrastructure and business model from scratch that
Rakuten understands that telcos have to be involved in the services that are
delivered through their connections.

“The ARPU we have seen from connectivity and communication is just not
viable for telcos anymore.
So, what do you do to monetise your network, to defend against the OTT
[over-the-top services] that have been monetising your network without you
getting a cut for two-and-a-half decades?
Well, you have to bring your own digital experiences and services.
That’s why we now focus on not just providing the connectivity platform
and communication systems, but also the upper layers of monetisation,
which [for the Rakuten group] is in fintech, digital experiences,
travel platforms, content, sports, entertainment, shopping, transactions
and communication systems.” — Dabboussi.

A core part of this combination involves collecting and processing data so the
telco’s business clients can offer personalised services to their own customers,
built around insights gleaned from their behaviour.

Hence, his advice to telcos is not just to be a significant part of the services that
the end-consumer uses, but also to leverage the data. “If you’re just sitting on a
goldmine of data and not using it, then you’re not monetising it”, he said.
9 5G’s existential question

Using a data mesh

to make sense of 5G

For telecoms operators to rise to the challenge of becoming more than a pipe,
data is going be key.

It is the ability to collect, process and analyse information for business clients
that is going to set operators apart as the roll-out of 5G gathers pace.
Enrique Moreno
This is not only going to allow smart telecoms operators to grow as
Head of Telco &
lower-latency, higher-speed connections become more common, it is also going Media Industry
to allow them finally to monetise previous investments. NTT Data DACH

According to Enrique Moreno, Head of Telco & Media Industry at NTT Data
DACH, telecoms companies know they can no longer just sink money into fast
networks that others then profit from. This turned them into “utilities”, each
offering a “simple tube”, but the tide is turning. Transforming customer data into
actionable insights is where leading telcos will differentiate their services.

“The data is where the gold is, where the value for the operator is.
So, they need to know how to extract the data needed to build the
digital services they want to bring to the customer.” — Moreno.

Truly realising the value of data requires telcos to change how they think about
the data services they offer to B2B clients. Instead of data being the product that
is repackaged and sent back to a client, Teradata’s Stephen Brobst has advised
businesses to think about a client’s data as the beginning of an entirely new service.

“If you think of the network as the plumbing, telcos have largely used data
to manage their plumbing more effectively, but have not for the most part
used the data to create data-as-a-product. I don’t mean gathering data and
then selling the data back, but, rather, taking the data and then creating new
services and capabilities that customers will want to consume.” — Brobst.
10 5G’s existential question

There are also new ways of thinking about data.

While there are many established uses around supply chains, marketing,
logistics and CRM, to name just a few areas, the future will require telecoms
companies to re-evaluate their understanding of data.
Inma Martinez
According to scientist, digital pioneer, and stakeholder advisor Inma Martinez,
Scientist, digital
the sector is in the process of understanding how vital telecommunications is pioneer, and
in everyday life at exactly the same time that data is starting to be collected and stakeholder advisor

transmitted by objects all around us in a data mesh.

“Data is no longer ‘warehouses’ or even ‘data lakes’, it’s all in the ‘data mesh’
and the potential to tap into this data will be available to us for the first time
with 5G.
Right now, a room is dead to me, but, in five years’ time, it will be able to
share with me so much, beyond temperature, beyond everything else.
All of a sudden, 5G will become super relevant. You will see 5G as the layer
where the products sit.” — Martinez.

The huge business leap telcos need to make is to help clients make the move
from collecting and understanding data, to empowering them to decide what
actions to take with it.

After years of businesses believing that just understanding data was the future,
Martinez insists telecoms organisations now need to help clients move beyond
insight to action.

“The future is not about artificial intelligence, as in IQ. It’s about cognition,
which is very different. Cognition is to know what’s going on, but also, what
to do about it. It’s that step forward.” — Martinez.

Inma Martinez
presenting to a
hybrid audience at
the REACH telco
transformation forum.
She described how
telcos are crucial for
providing the invisible
connective tissue
that has the power
to change lives, and
how telcos must help
clients move beyond
insights into action.
11 5G’s existential question

Security is key
to new B2B services

If telecoms companies are going to avoid the mistake of building a better

network for someone else to monetise, they need to think about how they can
add value for business clients.

This means thinking strategically and getting in front of the IT decision makers.
Boris Maurer
In fact, it means getting as high up the chain of command in a business as
EMEA Comms &
possible. When this happens, telcos will find the C-suite is not just interested in Media Industry
buying services or a product from a telco. Whatever they buy, not only must it Lead
Accenture
work and add value, it must also be secure.

As telecoms providers have moved from just providing voice services to offering
ever-faster connections to data, the need to ensure a service is not going to
embarrass the CEO, or even destroy their business, is critical.

This is a barrier to market entry that telecoms operators do not always consider
when they introduce value-add services but, because the security concern has
moved on, they very much need to.

Rather than being a bolt-on service a customer could add to a telecoms service
once installed, the latest trend is for services to be “secure by design”.

This means security is an essential element from the earliest planning stages,
right through to delivery and after-care. By missing this critical element,
telecoms companies make it too easy to have great value-added services turned
down, Geldmacher warned.
12 5G’s existential question

“I’ve talked to many CIOs in my career and many have said, when you introduce
new ideas to them, ‘that’s fine, that would help us to increase productivity or
efficiency, but we cannot do that because the cyber risk is too high’.
If you can take that hurdle away by really building up competence in
cybersecurity, I think that is something that telecommunication companies
should do. This is your infrastructure that is under attack. It’s your devices.
It’s your endpoints that are under attack. So, protect them yourselves build
up that competency, and don’t fall behind in that space.” — Geldmacher.

In this ‘never normal’ post-pandemic period that savvy telecoms operators are
becoming accustomed to, every challenge should be seen as an opportunity to
grow. It may sound like a cliché from a self-help book for frazzled executives
but Boris Maurer, Accenture’s EMEA Comms & Media Industry Lead, has run
the numbers. These show that adding security to services is essential because
it is what B2B customers require, and it is what will propel telecoms operators
into a field of huge growth.

“Today, about 20%–30% of telco revenues are in the B2B area through
providing connectivity for customers, but they only have a global market
share of about 5%–6% in ICT services.
Either those revenues will go away, or telcos will seize the opportunity to
combine connectivity, compute and security into a new value proposition.
Then almost naturally, they will gain market share, from 5%, to 10%, to 15%.
If they gain their natural market share, they will double their B2B revenues
over the next 5–10 years. This is the opportunity that is out there, it’s a ‘lose
it’ or ‘gain it’ decision.” — Maurer.

Martin Willcox (left)

from Teradata leading a
discussion of 5G-driven
data analytics with
Accenture’s Boris
Maurer (centre) and
Enrique Moreno (right),
from NTT Data DACH.
13 5G’s existential question

Conclusion:
Telcos can win the talent war
through ‘transformation with purpose’

It is an understatement to point out the roll-out of 5G in the post-pandemic era

is a massive opportunity for telecoms companies to rethink their propositions.

Rather than take part in a race to the bottom by providing ever-faster,

always-cheaper connections that other companies monetise, it is time for telcos
to transform themselves.
Keri Gilder
CEO
This will change from one business to another, depending on core competencies Colt
and where its strategic decision makers believe there is room for most growth.

The top advice from Keri Gilder, CEO of Colt, is to transform the business
around purpose. This does not only mean picking a worthy cause, such as
Colt’s focus on the environment, but also deciding on the organisation’s core
competencies to decide its future direction.

“When we started thinking about what the future looks like, the
first thing that we thought of is ‘what is the purpose of the modern
telecommunications company?’.

We started with our core, which is our innovations, our infrastructure, this
element of software defined networking and the disaggregation of hardware
to software and the disaggregation of platforms to infrastructure. The cloud,
of course, played a huge part in that.” — Gilder.

This heavy leaning on the core competencies an organisation possesses, or

needs to develop to remain relevant, is crucial to plotting a route to future
growth, according to Accenture’s Boris Maurer. For him, much of the reason
telcos have not prospered as well as they should have, is down to organisations
not deciding where and how they can fit into a developing industry.
14 5G’s existential question

“Telcos didn’t seize a lot of the opportunities they had in this in the past
because they didn’t know the space they want to own and where they need
to partner and bring in other people to be successful.
Do [telcos] want to be the guys who orchestrate connectivity, compute and
security on the edge and build a business that enables the hyperscalers
to bring in partners that have the industry understanding, and then open Steve McMillan
up APIs and platforms or marketplaces to service providers to the end CEO
Teradata
customer? Or do they want to be all over the place?
Telcos must be absolutely clear on the role that they want to play in the
future so it will be easy for them to partner with the hyperscalers and
innovators in the industry. This is where they need to decide where their
differentiation is.” — Maurer.

Once a business has decided how it can adapt its core competencies to drive
growth, it is imperative to ensure staff are fully included in the required
transformation. This means the process must embrace a purpose that employees
can support and feel proud to be a part of as they help the company make the
changes necessary from top to bottom.

This will not only help keep existing staff engaged in the journey, it will also
show new talent that the organisation has strong values, and encourage them
to join. Modern employees want to work for a business that not only is well-
positioned for growth, but also somewhere they are motivated to work because
the board and colleagues share their values.

Transforming a business, therefore, is not only about preparing the business for
future growth but also espousing and sticking to core values. In Teradata’s case these
are being market-driven and agile as well as everyone in the organisation being
accountable to one another. Communicating and embedding these principles was a
key part of Teradata’s transformation, according to its CEO, Steve McMillan.

“In a market where there’s the war for talent, we need to be able to attract
world-class people. And we do that because our culture enables people to
learn and feel included, connected and supported. That’s absolutely essential.
Transformation is not just about slogans. It’s about translating our purpose
to strategy, and then encouraging all our leaders and the wider company
to have a change story, so they can communicate what the transformation
means to them personally.” — McMillan.

The key to future growth is to find this balance between focusing the business
on a new strategy for growth and then communicating the purpose behind the
transformation to all within the wider business. Only then can the process work
throughout an organisation, and only then can the culture at a business and the
values it shares with employees engender loyalty and help the organisation fare
well in the current war for talent.
15 5G’s existential question
5 key take-outs and
action points for telcos
1 2
Monetise beyond
connectivity
• ARPU is diminishing, making
it harder for telcos to rely on
connectivity revenue without
joining a race to the bottom
on tariffs, which tends to
damage quality, margins, and
ultimately viability.
• Massive infrastructure investments
made for 4G were monetised by
OTT players not by telcos.
• Now that the industry is again
required to make huge redefining
investments in 5G, telcos
must monetise their outlay by
becoming solutions providers.
4 5
Leverage and
extend security
capabilities
• Telcos are deeply experienced
at providing security for their
networks and should now use this
expertise in offering customers
value-add services that come with
the reassurance of being secure
and trusted.
3
Think like an Data is key
enterprise IT • Thinking like an IT player will
business mean tapping into data.
• But rather than just handing
• Do not leave it to consultants
off raw information to third
and technology enablers to
parties, it should be turned into a
monetise 5G.
new services.
• Smart telcos need to think like
• This is likely to involve not just
IT companies, moving customer
customer and market data, but
conversations away from the
also tap into the vast realm of
procurement office as a buying
IoT and the emerging world of
decision, and into the C-suite
data mesh, where the objects
to initiate discussions around
around us also hold and share
providing value-adding B2B
data about themselves.
services — not just a connection.
Purpose-led
transformation
is the first step
• To progress from connectivity
provider to value-adding B2B service
provider or project consultant, telcos
must start out on a new course.
• This requires a process of
transformation.
• The most effective change
programmes ensure a business
aligns corporate values with
those of its staff, and ensure all
employees are taken on the journey
through constant consultation and
communication.
• This reliance on purpose is also
highly effective for attracting and
retaining staff, greatly aiding a telco
in the battle for talent.