Geoff Unwin, the new chairman of network software provider OpenCloud and former CEO of Cap Gemini Ernst & Young, shares his thoughts on the state of the telecoms sector.
Eurocomms.com: What do you view as the most pressing challenge facing operators today?
Unwin: The last few years have seen the telecoms landscape transform. The greatest challenge for operators now is to bring about change on that scale themselves. Operators must now innovate and evolve freely and quickly, at a vastly reduced cost, in order to compete effectively.
How should they be looking to address this challenge in your opinion?
In order to innovate and evolve successfully, operators must factor in the cost of innovation into their TCO calculations when choosing new vendors. Operators must give ‘the cost of change’ factor the weighting it requires to reflect current market conditions. The systems that will have an advantage here are those that enable change and development by independent third parties or by the operator themselves, without a pseudo-monopolistic dependence on the vendor.
With regard to networks, there is much talk about how they will be able to cope with the increase in data; how serious a problem is this from where you stand?
The proliferation of smartphones is driving data traffic up and this is putting immense stress on operators’ networks. This is a big problem for operators and in one sense the solution is very simple – LTE. But what is less straightforward is how to fund the deployment of LTE bandwidth when margins from data are so low; and if operators choose to divert spare capital into the roll-out of LTE and not to invest in differentiating their services, they risk becoming ‘bit pipes’. The solution is for operators to cultivate data margins in order to fund the move to ward LTE. In order to raise data margins operators will need to use innovation to differentiate their data tariffs. For example, the offer of unlimited YouTube streaming, or Twitter usage, for a small, fixed monthly charge.
Are operators doing enough with their existing networks currently to ensure they are sufficiently equipped for this so-called data tsunami?
I do believe that operators are doing as much as necessary to ensure that global networks are robust enough to cope with increasing data traffic. I don’t believe operators will see a ‘data tsunami’ that will leave networks vanquished in its wake. However, the bigger problem is that operators are not set up to profit from LTE. That will only happen if they innovate to improve the margins they receive from data services through rate plan innovation.
How do you see the battle between content providers and telcos playing out?
The real battle is not with pure content providers, where the tussle is over agreeing the correct commercial model. Agreement here is possible and I believe content providers and operators will resolve their differences. The genuine battle is with OTT communications providers, such as Skype, and service differentiation is a critical factor for operators in that skirmish. Network operators have powerful assets in their customer and billing relationships, real-time knowledge of their subscribers’ profiles, their location and connectivity status. OTT players do not enjoy such strengths. However, these operator advantages are being eroded. If operators can quickly leverage these advantages to creatively add value and differentiation to their service offering they can protect their market share.
You recently joined OpenCloud because you said they are producing disruptive equipment. What makes a product disruptive in your view?
I class a product as disruptive when it breaks the traditions of the telecommunications space; a product that radically alters TCO, functionality, implementation time, ease of use and adaptability.
We have seen consolidation recently in the vendor side of the telco ecosystem; what role do you see OpenCloud playing?
OpenCloud will play a significant role in the acceleration of change in the telecoms space. I say this because the solutions we provide help operators to become more agile and flexible; crucial traits to have in the current market landscape.