Bill Ahlstrom, who took up his new position as President and CEO of the TM Forum in June, gives his view on the state of European telecoms. How do you assess the current situation in Europe regarding consolidation?

Bill Ahlstrom: Last year at this time, we were starting to see the early wave of consolidation amongst some of the large European service providers and things are certainly picking up with operators being open to deals and companies outside of Europe looking to move into the region from North America and Asia.

That interest combined with pressures on regulators could make for an interesting remainder of the year.

But times are still challenging for the global communications industry after reaching an inflexion point in 2012. Globally, the market remained flat in 2013, with total revenues for the top 100 providers stagnant at €1.28 trillion, while for many net income continued to fall at an alarming rate.

The causes of this change in fortune are well understood. Fierce competition, market saturation, commoditization and over-regulation, coincident with major disruption from digital OTT alternatives are driving seismic changes in the type and profitability of services sold.

All of these factors continue to drive significant M&A activity, both in providers and in suppliers.

Where not buying each other, providers are forming strategic alliances and joint ventures.

What is the most urgent thing that operators in Europe need to be focusing on and why?

The industry is finally beginning to actually break down the borders. Partnerships and innovation are key focus areas, with 49 percent of CEOs surveyed saying they prioritise growing innovation ecosystems of partners over the next three years – significantly ahead of other industries.

Partnerships will form a bedrock for communications provider growth over the next decade. Those partnerships will come in many forms, but those who are successful will be able to offer true agility. For many, this requires a dramatic transformation of culture, people, processes and systems.

In short, digital transformation is now top of the agenda for the communications market. The winners in this next wave are acting now – investing in business and technology transformation, and the partnerships and acquisitions that will underpin their future growth.

What role do you see operators fulfilling in the digital world?

There remain many opportunities for growth for established players – if they can transform fast enough.

The first generation of consumer-oriented digital services such as social media, music and video streaming grew rapidly on a “best-efforts” level of service. Customer tolerance is naturally higher amongst early adopters, and problems can often be masked from the end-user due to resilient software.

Where issues are experienced, they are predominantly due to latency issues in access networks (the last mile) – beyond the control or knowledge of the digital service provider.

But consumers are becoming more demanding, and services and consumers alike are becoming more sophisticated. Premium content subscription services, such as Netflix, demand guaranteed end-to-end quality of experience across the increasingly complex digital ecosystem.

As the digital revolution spreads beyond the consumer content market, next generation enterprise-class digital services are becoming real. Enterprise IT services, wellness, healthcare, energy management, vehicle and building automation, transportation and logistics management, and a seemingly endless range of ‘Internet of Things’ opportunities are starting to flex their disruptive muscle, and meeting meaningful valuations in the process.

For these services to thrive they require enterprise-class levels of privacy, security, service assurance and quality, open but effective integration between the application, compute and network layers (through SDN and NFV) – a truly software-defined infrastructure layer.

They also require a high degree of flexibility, configurability and interoperability, allowing business and consumer audiences the assurance and freedom to combine services and switch at will.

To thrive in this market, established businesses must urgently undertake wholesale business transformation programmes if they are to be successful.

What's the most exciting thing you have come across in European telecoms this year?

NFV opens the doors to truly elastic, software-defined infrastructure, combining SDN with existing elastic cloud compute and storage capabilities. This scalable infrastructure will underpin the next wave of enterprise grade digital services, enabling digital providers to dynamically control and scale their infrastructure to meet their customer’s needs.

While NFV has gained significant traction with communications service providers, much of the initial focus and energy has focused on traditional virtualisation – moving away from dedicated network equipment to software running on commercial blade servers in order to reduce operating cost.

During the last year, the attention started to shift towards the significant potential for NFV to enable a range of new services and business models, and the associated impacts on management platforms.

The challenge now being recognised by the broad ecosystem is: how do we manage it all? While many companies and organisations are focused on enabling virtualisation and connectivity, the bigger challenge on the horizon is true interconnectivity, operation and management of a complex value fabric of partnerships and services.

A universal, zero-touch approach to management is needed – one defined by those with experience of complex service management environments, but with the agility of the digital world, and one that offers immediate benefit which grows through widespread adoption.

What do you intend to do differently at TM Forum?

It’s not a question of doing things differently, but more precisely focusing on the key issues in the digital services industry and marketplaces where the Forum can add value.

We also need to challenge our members, and the digital services industry at large, with provocative ideas and novel approaches, to collaborate with other organisations to solve problems, and to help accelerate global success for digital services providers.

This year we are expanding our membership to include the broader digital ecosystem by embracing a mixture of new thought leaders and established businesses across multiple sectors; and industrialising our practical, agile approach to delivering implementation-led, practical tools, APIs and “how-to” guidance. That focus on “how-to” is especially important to us moving forward.

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