Monetizing the enterprise services market is becoming a particularly lucrative opportunity for service providers amidst the digital economy.
January 22, 2019
Service providers are placing a renewed focus on their enterprise businesses, as the consumer side of their service portfolios is suffering progressively declining average revenues per consumer worldwide. On the B2B side, revenues are rising steadily and the profit margins that operators reap from those services are more significant than B2C, which is an obvious attraction to chasing more enterprise business. The growing digital service markets, such as IoT, are also incentivizing operators to pursue enterprise businesses, as many of the first waves of use cases in these new technology areas are heavily B2B-centric.
Still, B2B revenues only represent around 5 percent of the total income for many service providers in North America or Western Europe. However, this balance is set to change, as opportunities in the automotive industry, industrial IoT and smart city scenarios are spearheading a vast new wave of diversification for telecom.
New opex investments for service providers are often driven by networks’ consumer-connectivity requirements. But as the return on investment for these saturated consumer markets flattens out, opex is being diverted to establishing platforms for new digital service types in a B2B context. The 5G revolution, for example, is more enterprise-focused than it may have initially seemed, even as many wireless providers announce residential rollouts first. Consumers do not need beam-formed, gigabit connections to their smartphones to run their daily consumption of media and messaging, and even the most data-hungry home does not need an SDN-powered solution to provide TV and broadband internet. Many of the digital transformation-oriented operational leaps that the industry is making—SDN/NFV, 5G RAN, network slicing, self-service configuration—have found the first wave of revenue-generating service use cases in the enterprise domain.
The First Wave of the B2B Digital Shift
SD-WAN is a NaaS solution which can provide smaller businesses with cloud network characteristics that were previously only available to big businesses, helping them deal with traffic spikes and offer on-demand cloud applications from a digital marketplace at a vastly reduced cost. In replacing or augmenting their existing MPLS networks, enterprise customers can run a branch network across any geographic spread with huge flexibility, programmability and availability. SD-WAN was the first commercial success story for SDN, allowing service providers to rationalize wide-scale SDN/NFV investments.
Likewise, 5G RAN deployments are the inevitable focus for wireless network operators in 2019 and the early 2020s. Using the millimeter band spectrum for the first time will allow previously unachievable data rates to become standard, while evolution in radio transmission techniques will make wireless cellular broadband ubiquitous and focusable. In isolation, this may seem like gilding the lily, as the current generation of LTE networks are sufficiently powerful. In reality, 5G RAN is the key wireless component in enabling digital operations platforms and the holistic end-to-end networks of the future.
Network slicing requires 5G RAN and an SDN/NFV-enabled core/transport/edge network with an overarching domain orchestration architecture. Once all of these elements are in place, it is possible to provide guaranteed end-to-end service characteristics in an enterprise-grade, secure, private network slice. While these slices can be used in consumer digital service settings (e.g., guaranteed wireless broadband bandwidth to a connected car for passenger HD video content), the more compelling and high-revenue slice options will be B2B.
Emergency services, for example, have shown great interest in network slicing as they undergo digital transformation. Scout drones can be quickly dispatched in a smart city, enabling emergency services to optimize their response to any situation long before road vehicles and police, paramedics and firefighters can arrive on the scene. Providing all of those vehicles and drones with a dedicated network slice, orchestrated centrally with artificial intelligence engines crunching video and sensor array data will vastly optimize the appropriate response selection, thus optimizing and driving cost out of their operations.
The Long-Term Goal to Modernize Operations
For service providers to engage in any of these digital B2B concepts and service plays, it is now imperative to engage in a strategy to modernize all hardware, software architecture and business processes which will play a part in providing the next generation of enterprise services. In many cases, this means scrapping the methodology of current B2B operations, which were wholly focused on simply providing connectivity, and start making investment decisions that lay out an agile operational strategy that creates long-term benefits for growth in yet-to-be-defined services.