Communications service providers compelled to adopt new technologies and business models

Accenture conducted the survey, “Evolutionary Trends in the Operations of CSP Networks: How the Migration to Broadband Data Services is Shifting the Paradigm of Network Operations”

April 15, 2013

Faced with ongoing economic challenges, declining voice and text revenues, and the need to address customers’ quality of service expectations on data-intensive networks, communications service providers (CSPs) are being compelled to consider revamping their operating models and adopting new transformational technologies to survive and thrive, according to a survey from Accenture (NYSE:ACN).

Accenture conducted the survey, “Evolutionary Trends in the Operations of CSP Networks: How the Migration to Broadband Data Services is Shifting the Paradigm of Network Operations,” to understand and explore the evolutionary trends in CSPs’ network operations, including the main drivers of change and the lessons learned from new operating models that companies are using. Thirty of the world’s leading communications and media companies were surveyed.

CSPs see the need to invest in network tools and technology

The survey confirmed that new technology introductions, quality issues, and cost pressures are among the key drivers forcing CSPs to shift toward more accurate models for controlling network planning and enhancing quality of service, supported by new capabilities such as analytics. In fact, the overwhelming majority (93 percent) of CSP executives surveyed identified the need for new or improved tools to plan, design, and track traffic on broadband or cable networks. One-third (33 percent) said they need to significantly revamp the tools used for broadband deployment, while another 60 percent would consider adding some tools.

When asked about technology investments, three-quarters (75 percent) of wireless operators and integrated services providers plan to implement long term evolution (LTE), a standard for wireless communication of high-speed data for mobile phones and data terminals, in the next three to five years to increase network capacity for faster data transmissions. In addition, all wireline providers said they would swap all or part of the cable used to connect homes and businesses from copper to fiber optic, also over the same time frame.

All interviewees plan to invest in network analytics tools, and more than half (53 percent) cited customer experience improvements as the most important reason. These tools are typically used to analyse network data alarms, performance measures, trouble tickets, and customer churn due to dropped calls in an effort to improve network service quality.

To reduce network operations spending while transforming operations, CSPs favour a variety of approaches. Thirty-three percent prefer to manage the transformation internally, while 27 percent prefer transformation by outsourcing (managed services) and 40 percent prefer a combination of both.

“This survey paints a picture of a telecom industry in transition, buffeted by a storm which is both economic and technological in nature, with an impact across the entire value chain,” said Annu Arora, Accenture’s Network Services Lead – Africa. “A challenging global economic climate, combined with reduced consumer spending for telecommunications services, is driving a rapid decline in traditional voice- and text-based revenues. Data traffic continues to rise, but data revenue is growing at a slower rate.”

“Plus, over-the-top services, such as substitutes for traditional SMS text messaging and other services, are continuing to put pressure on carriers’ overall revenue. And although some CSPs totally embrace the new realities, others are taking much more of a ‘pick and choose’ approach to dealing with the challenges swirling around them.”

Operating models to consider: managed services and network sharing

The survey found that a large majority (80 percent) of CSPs have entered into managed services agreements using a range of models and incorporating different scopes of work, with 43 percent in both mature and emerging markets willing to outsource some of their tasks. When asked for more specifics regarding managed services, more than half (58 percent) said managed services/outsourcing deals met their expectations for quality compared with their own resources, and half (50 percent) said implementing a managed services approach delivered expected savings.

Regarding network sharing, which helps reduce costs using a shared infrastructure, the survey revealed differences between mature and emerging markets. CSPs in emerging markets are much more likely to deploy network sharing for their mobile broadband networks (56 percent), compared with the mature market operators (nine percent). CSPs in emerging markets are also more likely to use network sharing for new and existing infrastructure, rather than only existing infrastructure. Regulatory concerns (77 percent) and competition (73 percent) were cited as key factors that can preclude network sharing in emerging markets.

Quality of service is the overriding challenge

Most respondents (77 percent) said managing the quality of services is the biggest challenge in today’s communications environment, especially in a shared network environment. All wireless CSPs cited quality of service as the top challenge, as did most wireline (83 percent) and cable (75 percent) providers.

“Clearly, traditional operating models cannot completely meet current CSP requirements,” Arora said. “Instead, CSPs need a more industrialised and collaborative approach, with the right strategy, execution support, and transformation initiatives that can enable them to adopt new operating models, becoming leaner organisations that use shared services that leverage network analytics.”

Methodology:

Accenture surveyed CTOs, network directors, COOs, EVPs/VPs of operations, and other senior executives from 30 companies in 22 countries. Included in the survey were cable providers, wireless service providers, integrated service providers, and wireline service providers. All of the respondents indicated that they were decision makers or influencers in decisions regarding their company’s network operations strategy. The report is available at www.accenture.com/broadband-network-migration.