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It's time for telecom to embrace the digital revolution

A woman looks at a ZTE N61 mobile phone at a showroom in Shenzhen, China's southern Guangdong province April 16, 2010.

A woman looks at a ZTE N61 mobile phone at a showroom in Shenzhen, China's southern Guangdong province Image: REUTERS/Tyrone Siu

Yogesh Malik
CTO, Vimpelcom
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The Digital Economy

Everybody talks about digital transformation. It has become a buzzword - especially within the telecom industry, which is in real need of change. While many sectors moved into digital long ago, including banking, airline and even furniture and clothing, telecom - despite having a significant technological advantage - stands still. It’s time for us to move, too, and shift into digital gear.

There is an obvious need to transform and improve the services telecom companies provide and the way they do business, but providers need to understand what they are doing and why. They need to establish what digital transformation means, embrace this vision and let it drive changes in the sector and empower the customer.

Looking at the fundamentals, digital transformation is dramatically changing the paradigm of typical ways of working for telecom companies. Three key dimensions are driving this change: purpose, mindset and culture.

1. Purpose

Purpose can be defined in one word – the customer, who should be the central component and driver of industry change.

There is an ongoing debate about virtualization and digitalization while the industry is stuck in outdated mentalities, and struggles to create disruptive innovations that truly answer customers’ digital needs. Systems are layered over systems, and the valuable customer and application data lies buried somewhere below.

Telecom providers need to build an interface to free up “customer data flow” that will allow them to tap into customers’ digital universe. Take the network, for example: it could be 2G, 3G, 4G or Wi-Fi – the customer doesn’t care if providers combine bandwidth or switch to an available channel, as long as their experience is seamless.

2. Mindset

The second dimension the industry needs to tackle in order to disrupt is mindset. It is time to drop incremental business models. Having the full programmed value chain in every country from design, planning, and deployment to operations is not efficient in today’s consumer era.

Telecoms should learn and borrow from other industries that have undergone disruption - for example, retailers who centralize design, architecture, and operations so that local stores benefit from the latest clothing designs, and can plan and order with fast turnaround times. I call it “clean sheet” thinking: being fresh, innovative, agile and thinking out of silos.

3. Culture

Finally, clean sheet thinking should become a part of a cultural change within global organizations. Disrupting the “continue to do what we did yesterday” mentality and really challenging people to think about new ways of looking at an issue or process will produce much more interesting results. A new spirit which encourages efficiency and enrichment is what will get people behind real change.

Today telecom providers use large global technology suppliers to manage network upgrades and maintain infrastructure. If they keep running their networks, infrastructure and product development processes and systems the same way, the outcome will be the same. Those who continue to maintain old practices will be at a disadvantage, while agile competitors come out with new data services that are free and funded by advertising, or launch over-the-top video channels with broadcast quality that consume a lot of network bandwidth.

Virtualizing the network and functions is not an easy task. But companies need to make their network assets work better for them, make them more cost efficient to run and easier to maintain, upgrade and operate. They should be able to roll out new services easier and faster. This is how networks operators will compete in the future.

The telecom industry is embarking on the journey of transformation to benefit from the opportunities digital disruption brings. It will succeed only if embraces these three dimensions - focusing on the customer, adopting a mindset open to innovation, and promoting a culture of openness and efficiency - as fundamentals for all its endeavours.

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World Economic Forum

May 21, 2024

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