We are likely to see merging of telecom and IT budgets with the emergence of software as a service.
Whether we like it or not, there will have to be a wholesale shift in thinking, not just to keep up but to survive. This is not just about a jump in network speed; 4G wireless is a leap into uncharted territory.
It wasn't until 3G's High Speed Packet Access (HSPA) arrived on mobile networks that customers saw any value in accessing the Internet via their mobile devices. It coincided with the release of Apple's market-altering iPhone, with its brilliantly effective Web-surfing capability via any wireless network.
For the first time, surfing the Web by mobile phone didn't mean you had to find a Wi-Fi hotspot. The device itself could automatically pick and choose the best way to connect.
Operators developed attractive new data plans to capture this market, and before long, their networks were inundated with data traffic, putting stress onto backhaul and back office infrastructure.
4G LTE wireless ups pressure on the network
But 3G iPhone traffic will pale in significance when 4G/LTE wireless access becomes commonplace. The concept of being connected anywhere, anytime, via any type of device will put enormous pressure on service providers, and they will need to reinvent themselves to avoid becoming the dreaded "big fat pipe" the analysts keep talking about.
So what can operators do now to prepare for this onslaught of high-volume, low-return business? It really depends who you talk to. Understandably, everyone wants a piece of this pie. Juniper Networks, the master of core network components, talks about creating "low cost per bit" at the network level and "high value per bit" at the retail level. Sounds great, but how will this be achieved?
It seems revenue growth in the future could be clouded. Excuse the pun, but by offering managed services bundled with telecommunications contracts, telecom service providers may be in a good position to take advantage of the growing cloud computing market, whose whole existence depends on fast and uninterrupted Internet access.
Telecom and IT budgets continue to merge with SaaS evolution
We are likely to see merging of telecom and IT budgets with the emergence of software as a service (SaaS) as the new IT delivery model for the small and medium business (SMB) market. Operators like Telstra in Australia are moving quickly into managed application services to better monetize their networks. Telstra is already offering Microsoft online services, including Exchange Online, Office Communications Online, SharePoint Online and Office Live Meeting as a subscription service hosted by Microsoft and delivered across Telstra's next-generation HSPA++ network and its next-gen IP network.
At the same time, software and hardware IT companies and systems integrators are eyeing this space and getting into the business of network-based applications delivery. We could well see infrastructure as a service (IaaS) looming.
But for the SaaS model to really succeed, it will require a low cost base that can come only through a partnership between communications service providers and IT providers. This would be a marked contrast to the existing over-the-top (OTT) models, where content and application sellers utilize the operator networks but bypass them in the revenue chain, Apple's AppStore being a prime example.
For communications service providers, mobile operators and even ISPs, providing everything as a service (EaaS) could be a real lifeline, but it will need a shift in thinking and business models. After all, 4G/LTE is just around the corner, right?
About the author: Tony Poulos, Revenue Management Sector Head at the TM Forum, has been involved with software development and systems integration in travel and telecommunications for more than 20 years. He was involved in the development of convergent billing system in the early 1990s in Australia, and from there he worked in a business development role with Unisys' Telecommunications Practice in Europe. Tony was co-founder of Copernicus Global Billing Services, a London-based, Web-enabled managed service provider for outsourced billing and payments collection. He has worked in the areas of revenue assurance, billing, payments, mobile Internet access, mobile email and content delivery.
This was first published in October 2009