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Networks are the essence of connectivity and at the heart of telecom operators’ business. With increasing competition from OTTs and hyper-scalers, operators’ focus has shifted from coverage and speed to quality of experience and innovation.

In light of all the technological breakthroughs which transformed network architectures, operators found new sources of revenue and enhanced their capabilities. Against this backdrop, network performance and quality of experience (QoE) gained more ground and pushed operators to upgrade their network to create their differentiating factor.

According to McKinsey, a network upgrade will drive operators’ value creation and yield 2-3% improvements in ROIC and EBITDA, reallocating up to 30% of capital expenses and reducing time to market by up to 30%.

Three major trends drive the change that operators seek at the level of their network: customer-level QoE, cloudification and softwarization and active network sharing.

Customer-level QoE

This is one of the most important factors which can significantly affect both operators’ investments and ROI. User-level QoE data is crucial at this point so that the operator can tell whether they’re allocating the right capital in the right place. It also helps in improving customer experience and sales.

A survey conducted by McKinsey showed that network experience is one of the leading factors in telco customers’ decision making process. The percentage of respondents indicating network experience as the main reason for choosing the current provider reached 41% and 40% said they left their current provider because of the same reason.

Softwarization and Cloudification

Network softwarization is made possible with NFV, SDN, and vRAN and has the ability to reshape the ecosystem when deployed in the right conditions. Operators should opt for value creation and procurement excellence to avoid migration and integration costs.

Operators can also reap benefits from moving their network functions to the cloud especially in terms of reducing hardware costs and increasing capacity, thus allowing them to focus on value creation.

A McKinsey analysis shows that operators could gain up to 20% in total-cost-of-ownership savings over legacy deployment by leveraging softwarization (including oRAN) with cloudification over legacy deployment cloudification in the right conditions and context. 

Active network sharing

Most operators will likely resort to network sharing to optimize their rural network spend and multiple business models will coexist to satisfy the demand for more-active network sharing and edge computing. Network sharing will also allow operators to double the speed of a new technology rollout.

Readiness for the new era

A new operating model should be implemented by operators to gain network differentiation. New skills and competencies are a must in order to define the network of the future and elaborate an efficient transition plan while leveraging the power of innovative technologies and forging new partnerships to capture value.

If change is what drives leadership in a competitive market then immediate action should be taken to make it happen. Just like this industry, operators need to evolve and adapt to new market and customer requirements to win in the digital age.

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