How do telecom operators cut costs while maintaining QoS?

4G users want HD voiceRajesh Mhapankar, director – Innovations, Alepo Technologies, says the telecom industry is at risk of becoming a low-profit, commoditized business in most developed markets, while operators in emerging markets are witnessing squeezed profit margins from hyper-competition.

This has led telecom operators around the world to re-think substantial changes in their business / operating models. Here we list a few strategies being employed by telecom operators to reduce their Opex and Capex without any effect on Quality of Service (QoS).

Network Function Virtualization: One of the strategies effectively being used by telecom operators to reduce costs has been Network Function Virtualization. In network planning discussions, proof of concepts and lab evaluations, and soon-to-launch projects, operators are looking at their networks and businesses through the lens of this major technology disruptor. It isn’t difficult to understand why network operators are so invested in the exploration and evaluation of network function virtualization. It is a paradigm shift in how network operators design, build, manage, and monetize their networks and data centers. At a time when the cost to operate a carrier data center threatens to overtake network profitability, NFV provides a glimmer of hope, showing great potential for outcomes that will afford network operators the leverage they need to drive innovation and profits in today’s data-driven world. These outcomes include:

Significant savings in Capex and Opex

Rapid service innovation and time to market

A flexible and agile network architecture

BSS Transformation: In today’s world, the telecom operator is not only facing the burden of squeezed profit margins but also the challenge of meeting the subscribers’ ever-changing demands, like personalized offers. In addition, competition is forcing operators to come up with differentiated services to increase customer satisfaction and fight churn. This is the reason major telecom operators are undergoing BSS transformation projects. Operators view BSS transformation as a solution to their challenges of meeting customers’ digital expectations and reducing costs.

Most legacy systems are built using complex proprietary code, which drives up operational touch-points and complexity, perpetuating slow organizational processes. Further, the legacy systems provide limited features, and cannot keep up with the demands of customers and an adaptation to a digital lifestyle. With BSS Transformation, operators can create, launch, deliver, and manage services efficiently in just a few hours with a flat IP-centric architecture and features enabling swift changes and testing. In addition, operators can streamline their operational and business processes by reducing the dependencies on multiple vendors and systems, allowing faster changes. A digital BSS also offers a comprehensive portfolio of modules for preparing, delivering, and measuring customer experience throughout the entire customer lifecycle, enabling CSPs to create personalized offers. With most legacy systems, the initial capital expenditure and operational expenditure are both very high.  Conversely, a digital BSS framework can be deployed easily and requires far less maintenance than a legacy system, translating directly into lower total cost of ownership and lower ongoing operational expenditure.

Network Sharing: The whole concept of network sharing can be an important tool to increase the coverage area with significant CapEx savings. Network sharing can be in many forms, including active sharing (operators sharing spectrum with each other) or passive sharing (operators sharing their towers). Operators can get into short-, medium- and long-term network-sharing agreements in various parts of the globe. In many markets, active infrastructure sharing may not be allowed by the regulator. But, passive sharing agreements have become popular, because they reduce costs and speed up service roll-out. Passive infrastructure sharing is viewed as an effective solution to save on time and money as well as reach more markets. However, it must be noted that finding strategic partners (operators) willing to share the network is a complex task and finalization of the whole process can be very time-consuming.

For example, in India, mobile operators have been sharing passive infrastructure, such as towers and related facilities since 2007, at the recommendation of the Telecom Regulatory Authority of India (TRAI). The recommendation was made to assist the expansion of mobile services into the remaining 60 percent of India’s geographical area where the commercial viability of competitive and separate mobile infrastructures was in doubt.

Government support: In many countries, Governments are committed to bridge the digital divide. Many governments are helping operators through subsidies. For example, in the United States, The Universal Service Fund (USF), a system of telecommunications subsidies and fees managed by the United States Federal Communications Commission (FCC), works to promote universal access to telecommunications services in the United States. Their programs include:

The Connect America Fund – subsidized telecommunications services in rural and remote areas.

Lifeline – a subsidy program for Americans below the poverty line for land line or cell phone service.

Rural Health Care – subsidized telehealth and telemedicine services, typically video-conferencing infrastructure, and high speed Internet access, to rural hospitals.

E-Rate – subsidized internet access and general telecommunications services to rural and low-income schools and libraries.

Strategies for Telecom Operators to Improve Customer Experience

However, it is important for operators to remember that they should never compromise on QoS or customer experience in the process of reducing their OpEx and CapEx. To stay in sync with their subscribers, operators need to offer differentiated services that resonate with customer demands. Here are few strategies that can be employed by Telecom operators to improve customer experience.

Digital Service Provider: With mobile data traffic showing an upward trend as people increasingly use their smartphones to watch games, listen to music, and share photos and videos, telecom operators need to respond to individual tastes and the variability of people, to become a digital service provider. Digital service providers offer their subscribers tailored made, personalized services that resonate with their digital lifestyles, as a solution to increase customer satisfaction and reduce churn. They segment their users based on their digital lifestyle, device type, traveling patterns, and more to cater to their needs and provide them with an enhanced, personalized experience.

Engage with Customers: Today operators need to engage with customers.  They need to send real-time alerts about new offers, data usage alerts, and give customers the power to control their data usage.

Conclusion: By employing the above strategies telecos can reduce their Opex and Capex without compromising on the quality of service to the subscribers.

Rajesh Mhapankar, director – Innovations, Alepo Technologies

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