Solutions to Top 10 Service Provider Challenges

As a follow-up to my blog of the top 10 Service Provider Challenges, I will offer my solutions that service providers can apply to ease their aches going into 2014, with basic solutions they can use to help drive increased revenue and solve some of the main and major pain points in the world of telecom and supporting enterprise, SMB and consumer customers.

1) Invest in Network Security

• Invest in real-time and early-attack detection solutions that will help reduce the operational cost of network security issues.
• Address security from the consumer’s perspective. Many users feel they are being spied on and have little control over their data. Service providers should consider up-selling services, such as mobile phone protection, encryption, data protection, etc.
• Adopt services from companies focused on big data that combines analytics at low cost, high capability and low cycle time to detect hacking across the network. Implementing applications such as Intrusion Prevention, Firewalls, Anti Spam, Deep Packet Inspection and Web Filtering can yield dramatic increases in performance at the edge of the network, but more sophisticated network-based solutions that can scale and create anomalies to prevent loss of IP and corporate espionage are critical to the success of any company in the 21stcentury.
• Turn security upside down and focus more on real network-based security solutions to eliminate creating a false sense of security at the network edge. In today’s world, one person’s core is another person’s edge, so outside of all edge-based solutions, which are certainly essential, but not necessarily sufficient enough to prevent against all sophisticated hacking.

2) Alleviating Network Congestion

• It is imperative that SPs start to offload mobile data traffic from the cellular network to Wi-Fi,but make sure it is integrated into the LTE network versus another network, in order to manage which will become complex and non-scalable.
• Provide network flexibility by embracing LTE (TDD/FDD), Wi-Fi and Cellular, including all edge-based technologies from 3G to 3.5G (HSPDA, HSPA+), moving into LTE and ultimately true 5G (LTE-Advanced), using IMT-Advanced (OFDMA-based) and small cell size-based technologies.
• Create a cross-layer feedback loop with the applications and devices. Establish your presence on the device itself, so they can automatically alert when the network encounters capacity problems. This is proactive much more effective at dealing with network throughput issues.

3) Curbing All-You-Can-Eat Connectivity Services

• It is becoming a necessity to deal with the heavy users and move to a plan that is usage-based. Lite users can have the option of picking plans that meet their usage requirements. At the same time SPs can better protect themselves against heavy traffic user. A tiered plan should resonate the different qualities of experience, such as platinum, gold, silver, bronze, etc. It works for the electric company, and so, should be considered by the SP.
• My sense is that we will see more effective and creative ways to deliver content. This may not happen immediately but the status quo has to change over time.

4) Putting Up With Peer-to-Peer Traffic

Peer-to-Peer traffic is growing very quickly, and as yet, there is no way to monetize it. The industry will have to develop some practical examples, such as adding insertion and other value-added services such as recording, reply and deep packet inspection. Another less liked alternative is the usage-based model.

5) Monetize Over-the-Top Video

• Charge for OTT video traffic by moving to a usage-based service plan.
• Leverage OTT capability to drive your own video product agenda.
• Create personalized and analytical ways to provide marketing and advertising data and extract value, versus letting OTT players using network almost for free. Why not use the data they have to create value-added services and create billions in top line revenue across the entire service provider market?

6) Fixing Flat ARPU

• SPs need to be more diligent at pushing up the Average Revenue Per User (ARPU). This can be done through vertical integration and moving into higher-margin services, such ascontent and advertising. They should look at building additional products around education, e-health and mobile wallet, etc.
• Reconsider engineering SP networks and better manage traffic. I would suggest a cap on traffic growth from legacy technologies and focus in on cost-reduced technologies. The trick is to look for a horizontal capital unit cost reduction across services. In the past, SPs have looked at cost reduction one box at a time, and this practice should be revisited going into 2014 and beyond.
• SPs can also improve margins by focusing in on optimization, cycle-time reduction, defect reduction, automation, just-in-time provisioning, inventory management and churn reduction.But if they focus on the 4 C’s (Cost, Cycle Time, Capability and CAPEX), they will be able to manage not only growth on top line revenue, but also create much better margin by minimizing churns and customer data.

7) What to do About IPv6

Just do it? This is the cost of doing business. But on more positive note, the key to delivering value-added services is the huge number of applications, such as security, providing top line revenue able to use the technology to lower costs, especially by converging mobile and wire-line networks.

8) Regulations

• Keep pushing back on net neutrality. Recent news stories are compounding the pressure on this issue worldwide.
• Consumers are reaching a pain threshold. SPs should focus less on milking more out of the consumers and start looking at providing additional value while leveraging their platform. It is proven that the value of network is squarely proportional to number of endpoints. For example, look at Facebook with over 1.2B endpoints. They have over $100B in market cap and are now focusing more on using mobile as a way to increase their revenue in advertising. Of course privacy becomes a big issue and cause for concern, but if this is done correctly, SPs can generate billions given all the endpoints connected to their network.

9) Monetizing Packet Traffic

SPs are living with low-margin “dumb”-pipe revenues, while Google and others are gaining high-margin traffic via over-the-top applications. This isn’t sustainable for SPs, especially on wireless networks where spectrum is constrained.

Get advertising revenue from packet traffic for both mobile and non-mobile endpoints connected to SP networks worldwide. Leverage the last-mile connectivity (combine wireless and wireline) and utilize either deep-packet inspection technology or other forms of packet inspection technologies to compete with the many other companies trying to grab this huge advertising market, which will exceed over $150B by the end of 2014.

10) Curing Customer Churn

Take care of items 1 through 9 above, and this problem will be significantly less critical to manage. Train customer care reps to teach the masses which applications and platforms would benefit them more. Sell platforms and apps at the stores instead of just the device. SPs need to learn that that the margin isin software and services not the subsidized gadgets. As I predicted almost a decade ago, the battleground in the 21st century is all about software and nothing else. This is where SaaS will and has become the key to growing and increasing revenue with both virtualization and cloud based technologies.

Sounds like a lot of work, doesn’t it? What do SPs should do first? My list explains how I would point out some of the ways I will attack the pain points, but I am sure there are even more innovative solutions SPs can use to drive higher revenue and neutralize all pain points going into 2014 and beyond.

Dr. Eslambolchi