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The Burning Platform of African TelecomThe need for transformation While the urge to block OTT is strong, what the above trends really highlight is the need for African operators to transform their operating and business models. For one, our research suggests that initially negative data revenue contribution is a feature of the evolution towards data-centric models. While the data net revenue contribution starts in negative territory, it really is a U-shaped curve that turns positive over time as more people use data services, thanks to network effects, accelerated usage and an operating model that becomes more optimized for data services. Once data revenue hits a given level (generally higher than 30% of revenues), its broader contribution should actually be positive. In effect, the negative net contribution phase is a transitionary phase to a data-centric model; how long it stays negative is really more of a commentary on each operator's operating model and innovative approach.
Blocking OTTs could also hurt more than it helps. Even acknowledging the challenge to operators represented by OTT services, such services are now so intricately integrated into usage patterns that they would be extremely difficult to regulate without a materially negative impact on customers that have come to rely on them. Besides contributing to the broader spirit of innovation, the widespread usage of Skype, Viber and WhatsApp have made them critical to small business collaboration and consumer interaction. This is even more critical in Africa where small business (including the informal sector) is critically important for economic development -- and highly price-sensitive. Blocking OTTs is an indiscriminately blunt and shortsighted instrument for a challenge that, in effect, cannot really be legislated away.
African operators have to burn their SMS and voice platform This is where African mobile operators are increasingly finding themselves. But they are victims of their own success at driving profitability so effectively over the years. Investors (and company boards) have become so comfortable with high margins that they look uncharitably at anything that appears to threaten them, notwithstanding how artificial they might have been in the first place. In turn, management is often more rewarded for playing defense than going on offense. Addressing the OTT challenge requires the smart, long view, at the time when operator decision-makers, unfortunately, often appear obsessed with the short view. Many are yearning for market conditions that no longer exist. In a memo that is now part of corporate lore, Nokia Corp. (NYSE: NOK) then-CEO Stephen Elop once told its staff that they were standing on a "burning platform" and needed to jump off it, transform themselves and move forward. This is where many leading African operators find themselves today. They should forget the deleterious regulatory dilly-dallying on OTT services and jump off that burning platform -- and their boards should let them do it, stock price be damned.
The case for Africa-centric net neutrality For this reason, we are highly wary of a blanket application of US net neutrality rules to African markets. We believe a deeper introspection of net benefits has to take place, and a framework put in place that, while not blocking OTTs outright (for reasons highlighted above), at least favors companies with local staff and operations more explicitly. The alternative is that governments will look for other ways to address real or apparent revenue shortfalls: regulatory fines, increased taxation, more aggressive tax collection, high spectrum costs, etc. And that, in our view, would be even worse. — Guy Zibi, Principal Analyst, Xalam Analytics < Previous Page 2 / 2 |
In part two of this Q&A, the carrier's group head of network virtualization, SDN and NFV calls on vendors to move faster and lead the cloudification charge.
It's time to focus on cloudification instead, Fran Heeran, the group head of Network Virtualization, SDN and NFV at Vodafone, says.
5G must coexist with LTE, 3G and a host of technologies that will ride on top of it, says Arnaud Vamparys, Orange Network Labs' senior vice president for radio networks.
The OpenStack Foundation's Ildiko Vancsa suggests that 5G readiness means never abandoning telco applications and infrastructures once they're 'cloudy enough.'
IDC's John Delaney talks about how telecom CIOs are addressing the relationship between 5G, automation and virtualization, while cautioning that they might be forgetting the basics.
On-the-Air Thursdays Digital Audio
ARCHIVED | December 7, 2017, 12pm EST
Orange has been one of the leading proponents of SDN and NFV. In this Telco Transformation radio show, Orange's John Isch provides some perspective on his company's NFV/SDN journey.
Special Huawei Video
Huawei Network Transformation Seminar The adoption of virtualization technology and cloud architectures by telecom network operators is now well underway but there is still a long way to go before the transition to an era of Network Functions Cloudification (NFC) is complete. |
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