CSPs' business motivation in network transformation is primarily focused on lower capex and opex costs. So far, there is limited evidence of these benefits. They may be a long time coming, especially while CSPs run hybrid traditional and virtualized networks. CSPs also see their virtualized networks as much more agile in offering new services – a necessary but not sufficient step toward new revenues.

2.   Customer experience

For many CSPs, their public commitment to digital transformation is represented by providing a new digital customer experience. AT&T, Telstra and Veon are examples of CSPs prioritizing customer experience over other factors in their digital transformation journey. This usually begins within providing customer self-service, especially in the form of smartphone apps, customer web portals and interactive digital tools in shops. For instance, CSP spending on automated attendant solutions is expected to grow at a CAGR of 67% between 2017-2021. The digital customer experience enables CSPs to portray themselves as similar to webscale companies and to better appeal to younger, more digitally native customers. The digital customer experience most often applies to consumer services – particularly mobile consumer services. Increasingly CSPs are also providing digital customer experience for business services.

The primary business motivation for customer experience is in preventing churn and gaining market share for existing services. In some cases, CSPs see cost reduction as customers make greater use of self-service. These cost benefits are so far limited by the small percentage of CSP customers who fully shift to self-service.

3.   Digital services

CSPs have been trying to diversify beyond connectivity services for over 20 years – with limited success. For some CSPs, the primary reason to pursue digital transformation is to better enable new services, thereby creating new revenue streams. Telefonica is an example of a CSP for whom providing new services is a primary driver for transformation. In many cases, CSPs are trying to emulate the methods of internet-based OTT providers who have captured most of the connectivity-enabled business that CSPs had hoped to have for themselves. For many, virtual networks and digital customer experience are foundational in being more successful with new digital services going forward than in the past.

CSPs are also pursuing a wide range of consumer services, particularly in mobile payments and in video services. Now they often partner with other parties whom they once considered competitors for these services. Digital transformation allows CSPs to deploy more open platform approaches – with API interfaces for partners, for instance – than were possible before digital transformation. 

More recently, CSPs have put more emphasis on new digital business services, underpinned by their new virtualized networks. These services include cloud-based IT services, security, and new types of connectivity such as SD-WAN. For many, the digital business services push includes IoT.