‘CSPs are Going to Reassert Themselves as Cloud Leaders’

Communication Service Providers in India are struggling with revenues, in the wake of falling voice and data rates. But with 5G looming on the horizon, they should start thinking about a new set of innovative services for businesses and consumers, that bring in new revenue opportunities.

BW CIO World met Shekar Ayyar, Executive Vice President -  Strategy & Corp. Dev., GM Telco Group, VMware to discuss how CSPs should be preparing for those new services.

BW: Revenues for Telecom companies in India are under a lot of pressure even as margins from voice and data services continue to sink further. One particular Indian telco has disrupted the market, severely impacting the revenue of other telcos in the country. Do you see a similar trend globally?

Shekar Ayyar: Even as we look globally and not just the Indian market, I think the general tendency of voice and data services to the consumers in a very standardised way, is getting pressured globally. It’s not just India. India has got its dynamics, and there is a move to elevating in a couple of adjacent directions. One is, looking at the businesses and enterprises, and how to service them better, as a Communication Service Provider (CSP). The second is, the delivery platform for a rich set of add-on services that continue to use the basic infrastructure data voice as a leverage point, but not as the end gain. Traditionally, the OTT (over the top) players have benefited mostly from that domain. They have taken the core plumbing and layered themselves on top and delivered this.

Increasingly, CSPs are starting to ask the question how can we do the same thing? How can we be the platform? How can we provide the APIs and the interfaces for people to build technologies on top of it or solutions on top of it?

Think about the transformation globally as one where the CSPs enjoyed the very sort of long run for 100 years or so, delivering basic voice and then data. That journey is coming to an end in that sense because it is all raced to the bottom in terms of ARPU (Average Revenue Per User). 

BW: What is the next set of innovative services and revenue opportunities for CSPs?

Shekar Ayyar: The next existence I think will be this rich set of enterprise focused, as well as consumer focused services that are delivered using that (existing) plumbing and infrastructure as a basis.

The trends I see are one, from a cloud standpoint -- there is essentially a current architecture for the cloud that people typically think about as Amazon, IBM, Azure and Ali Cloud. They don’t actually think Vodafone, China Mobile and AT&T.

With the emergence of transformative technologies like NFV (Network Functions Virtualisation) for example, I think globally, CSPs are going to be in a new position to reassert themselves as cloud leaders, in this next generation of the cloud evolution.

Think about a service like IoT. Simply speaking, IoT takes a whole bunch of end points -- whether they are industrial end-points, machinery operating in factories or their thermostats operating in people’s homes. There is a level of automation and intelligence that is provided in managing that, in understanding how that operates and works better; in communicating that back to central points and then doing some analysis here and then communicating it back to the end points.

Today the CSPs don’t play a big role in that architecture. There are many examples today and I think there will be many, many more coming down in the future -- things like connected cars, connected cities, sensors -- these are all the examples people have today.

By doing their technology transformation for the future, CSPs including the ones in India will become a much more relevant part of the landscape in terms of IoT services. The trick is how will they then figure out the right business models? How will they basically charge for this and how will they extract revenue and margin dollars from this, to get out of the rut that they are in right now?

BW: What kind of innovative services can they provide to enterprises and businesses?

Shekar Ayyar: Now the business service part of that – historically, the business services have been limited once again to just bandwidth. So a company could go in and say, I want connectivity and who can I get that connectivity from? And often that CSP would offer IP Connectivity like T1 lines, IP connectivity or newer technologies like SD-WAN etc. They are all giving you rich forms of business connectivity.

There is now a layer above the connectivity; the type of services that a CSP can offer the business as a managed service, that I think will become a rich set of new monetisable proposition for the CSPs, even in India. The reason I am stressing ‘even in India’ is because there is a little bit of a feeling that, while 5G takes over in many parts of the global landscapes, India is just barely coming to grips with 4G. Often that 4G movement is precipitated by Reliance going in and saying this is 4G, and everybody else now jumping on the bandwagon. But even with that said the technology landscape I think is not going to be an issue.

I think India is very capable of going in and delivering highly evolved services to the business consumer on top of this architecture. Now the services could be security or conferencing services. These are all things that they can build on top of that infrastructure, and that’s what I think CSPs are going to elevate themselves into. It is a set of managed services that they can provide on top of their infrastructure, for the use of more efficient business.

BW: What about consumer services?

Shekar Ayyar: To the first question, I focused intentionally more on enterprise and business services. But there is also a whole set of consumer services. As an example to my earlier comment about the cloud and how the cloud is largely viewed as an Amazon Cloud etc. in most of the world. Think about a new world where you are creating a new video game for example, or if you are creating a virtual reality application. Rather than going in and saying, I am going to build this on top of Amazon, or I am going to build this on top of a different infrastructure, what if you say, I am going to build this on top of a Vodafone infrastructure or on top of a Reliance or an IBM or an Airtel Infrastructure? That I think will be the reality of tomorrow.

And again, there is work that the CSPs need to do to get there; but assuming they do it right, then I think in tomorrow’s world, you as a creator of something, and you could be in the enterprise or you could be just an individual consumer; you will now have access to a completely different set of bells and whistles and hooks, that you can go, construct this new useful thing out of, as opposed to what exist today.

Today any of us would have a very siloed environment that says look if I want mobile connectivity and if I want voice and data, prepaid, postpaid, etc. than I am dealing with Airtel, Vodafone or Reliance Jio. If I want a business service, then maybe I have certain business services, managed SIs (system integrators) that are my kind of partner. If I am an application developer, then I am dealing with Amazon or Google.  And these worlds are all separately existing.

BW: Can the CSP provide all this?

Shekar Ayyar: Yes. The short answer is that they can provide all this in two ways; one, maybe there will be one or two that can provide all this end-to-end without a partner. But they are more likely to create the infrastructure in a way in which some things can get plugged into that infrastructure. Not unlike what an Amazon does today, and not unlike what an Apple Store model is on the consumer side today.

There will be an ecosystem with ecosystem players, and I think the better thinking telcos will go in that direction and create that early enough so that they are the preferred ecosystem for somebody to go in and attach themselves to.

Now if you just take even the Indian market and if my vision essentially becomes a reality, then you have got two to four major players; all of who have rich infrastructure to offer you or me as an application developer or as a creator of an application.