The shift from traditional voice to web-based communication is beginning to affect the revenues of telecom service providers, even as India’s internet services segment continues to progress. Telecom operators must now change their approach and learn to collaborate with over-the-top (OTT) players, so as to share the new revenues. Telecom operators, who can provide cloud services and mobile broadband services, possess valuable knowledge of end-users behaviour, but they cannot create innovative applications that can use such information to make it attractive for consumers. By harnessing the innovative power of OTT, sharing such knowledge can deliver strong business growth to all concerned.

The progress of any society is driven by users’ needs and innovative technologies, and India is no different. The advent of of mobile services has been a game-changer for the industry over the past decade. Today, we are living in a connected society, where global mobile penetration has touched 100 per cent and the requirement of ubiquitous mobile connectivity, and reliable and seamless data access is transforming lifestyles of many Indians in an economy that could leapfrog the personal computer (PC) era.

Big Data is improving decision making and is having a great impact on the competitive differentiation of enterprises and their ability to avert business risks. A recent study reveals affirmation to this trend as more than 90 per cent of surveyed Indian enterprises believe that better usage of Big Data technologies will lead to improved decision making, and hence Indian companies will continue to look to IT innovation to compete better on the global stage.

The combination of Internet and mobile is a key driver for the economic growth of any emerging market and particularly for India, which has a broadband penetration of just over 1 per cent. World Bank research reveals that for every ten percentage points increase in the penetration of broadband services, developing countries can witness an increase in economic growth of 1.3 percentage points.

Affordable broadband service is critical for India’s economic growth, given its trend of economy stagflation. However, the strong growth in the consumption pattern of India’s rural markets, which is an important indicator of the country’s long-term economic stability, has been encouraging. With proliferation of mobile broadband accompanied by accelerated affordability of smartphones, rural markets will further witness a boost in the spending pattern. All these will have an overall positive impact, and will boost global investor confidence in India.

India presents a significant growth potential for telecom industry, which is currently struggling to overcome challenges related to declining average revenue per user (ARPU), market saturation, hyper-competition, emergence of OTT players, and stringent regulatory conditions. As we witness slowing growth and declining revenues on connections associated with traditional voice and SMS services, technology and business innovation will drive the new wave of growth. 

Principle of new business model

If we look at the usage of broadband applications today, we can see innovation brought about through ‘Terminal + Content’ collaboration, which has overshadowed the pipe-based model (Network) that is followed by telecom operators.

This collaboration is reshaping the world and has opened up delivery channels leading to improvement of customer experience and value. The shift in value chain is obvious, considering the telcos’ constantly eroding revenues from traditional voice and text services. With Moore’s law (processing power doubles approximately every 18 months) prevailing over Shannon’s (the rate of information transmitted over bandwidth noise), telecom operators need to bring in service innovation and drive a multi-sided business model that results in several revenue opportunities, to sustain in this transforming market.

Earlier, in the Telecom 1.0 era, downlink content was predominant, and internet was primarily used as a medium to get access to stored content. Today, with social applications and video content driving the next generation user-experience, coupled with affordable smartphones and lower cost of storage, we are entering an age where uplink content from retail video and enterprise storage applications will be significant. Today’s networks architecture is not optimised to support such ‘data traffic’. We foresee that a three-layer ‘Cloud-Pipe-Devices’ model needs to be adopted, to facilitate collaboration between operators and content/OTT providers and drive industry momentum. 

Enabling Network Architecture – Openness is the key

On the Christmas Eve of 2012, there was a dramatic 22 per cent reduction in voice and SMS revenues, as compared with the figures of 2011. This was due to social networks and over-the top applications, which now offer voice services over the internet. This is an alarming percentage, given the fact that these services represent more than 90 per cent of the telecom operators’ business.

In order to bring back lost minutes into the network, telecom operators need to capitalise on customer experience and bring in service innovation by building cloud platforms, backed by user analytics and web behaviour patterns that are orchestrated by long-tail Web 2.0 services. After all, telecom operators possess precious information about the end customer. Content and OTT providers are looking at such user-centric data to keep their marketing campaigns focused and be more relevant to end user requirements. By having open access to such information, content providers are also able to command more advertisement revenues as they become context-specific. A portion of revenues earned from push advertisements and specific services, could be shared with telecom operators. This way, telecom operators have not just met the end-user requirements of a superior experience, but also have capitalised on collaboration with content/OTT providers.

Such a model where telecom operators emerge out of a traditional walled-garden approach and build on collaboration and shared content with OTT industry will drive the growth of mobile broadband in India. In fact, the telecom operators have the potential to generate additional revenues directly from retail and enterprise users as these broadband services have a direct impact on business efficiency and profitability of organisations. This is in contrast with the drive to hike voice tariffs in an effort to retain profitability, which may not be a sustainable strategy, especially in the upcoming voice over IP scenario. Content providers have also talked about of collaboration and revenue sharing, in cases where operators can enable such open architectures, coupled with convergent billing systems. Rich user experience can be delivered only in a collaborative atmosphere.

This approach leads to faster time–to-market, and improved service agility and also faster applications’ development for seasonal ‘push’ campaigns. A broader sense of a ‘pull’ effect is created, which will make it compelling for users to demand better data speeds and rich content from telecom operators. This model will ultimately drive a new wave of consumption, termed “India 2.0”. Further, the country with its large pool of IT and software development resources would do better than other nations and take leadership in service innovation. It will also have a positive spin-off for IT industry development. 

Software Defined Networking (SDN)

As traditional network architectures are are unable to meet requirements of today’s enterprises, carriers, and users, the broad industry effort driven by the Open Networking Foundation (ONF), called Software-Defined Networking (SDN) is transforming networking architecture, leading to a sustainable service delivery model. In SDN architecture, control and data planes are decoupled, network intelligence and state are logically centralised, and the underlying network infrastructure is abstracted from the applications. Consequently, enterprises and carriers gain unprecedented programmability, automation, and network control, enabling them to build highly-scalable, flexible networks that readily adapt to changing business needs.

The ONF is a non-profit industry consortium that is leading the advancement of SDN and standardising critical elements of the SDN architecture such as the OpenFlow protocol, which facilitates communication between the control and data planes of supported network devices. OpenFlow is the first standard interface designed specifically for SDN, providing high performance, granular traffic control across multiple vendors’ network devices.

OpenFlow-based SDN is currently rolled out in a variety of networking devices and software, delivering substantial benefits to both enterprises and carriers, including:

• Centralised management and control of networking devices from multiple vendors;

• Improved automation and management by using common Application Programming Interface to abstract underlying networking details from orchestration and provisioning systems and applications;

• Rapid innovation through the ability to deliver new network capabilities and services without the need to configure individual devices or wait for vendor releases;

• Programmability by operators, enterprises, independent software vendors, and users (not just equipment manufacturers) using common programming environments, which gives all stakeholders new opportunities to drive revenue and differentiation;

• Increased network reliability and security as a result of centralised and automated management of network devices, uniform policy enforcement, and fewer configuration errors;

• More granular network control with the ability to apply comprehensive and wide ranging policies at the session, user, device, and application levels;

• Better end-user experience as applicationsexploit centralized network state information toseamlessly adapt network behavior to user needs.

SDN is a dynamic and flexible network architecture that protects existing investments while future-proofing the network. With SDN technology, static networks can evolve into an extensible service delivery platform capable of responding rapidly to changing business, end user, and market needs.

Conclusion

As Einstein would have put it: “Imagination is more important than knowledge”. The time is ripe for a fresh new thinking on modernising the service delivery model in the mobile broadband context, as broadband business is not similar to providing dial-tones as used to be in a voice-centric era. The explosion of mobile devices and content, server virtualisation, and advent of cloud services are among the trends driving the industry to relook at traditional hierarchic telecom network architectures and client server IT architectures. With convergence of internet and mobile, services need to be delivered on a single platform, based on hosted and virtualised service model.

Telecom architectures are evolving towards an All-IP and IT architectures with cloud and virtualization integrated seamlessly into carrier grade networks.

Telecom operators in India need to embrace Carrier Cloud, as IT is under pressure to accommodate numerous personal devices in a fine-grained manner while protecting corporate data and intellectual property and meeting compliance mandates. A collaborative approach will enhance user experience, revenue and the profitability potential for the industry, leading to a stronger economy.