By: John Brooks

Everywhere we turn, there is constant industry chatter around the leap to 5G, or the paradigm shift to Software Defined Networks (SDN) and Network Function Virtualization (NFV), or even the explosive growth in the Internet of Things (IoT). These are all valid issues facing operators, yet they aren’t the issues that will have the largest, most significant impact on their bottom lines. Impacts are measured in revenue stability, decline, or preferably, growth. These issues have a far greater chance of causing revenue declines if not adopted and implemented properly; in fact, they may fuel little, if any, revenue growth. Revenue growth and margin improvement will come to those operators that successfully learn how to efficiently deliver and then monetize new, in-demand, digital products and services.

Technology Transformation – A Question of Necessity

The mobility industry has experienced technology transformations on an almost continual basis since the late 1980s. Revenue increased significantly only when subscriber growth occurred. The march through 2G, 2.5G, 3G, 4G, and now into 5G has only served to advance the demands of the users. ARPU however, has not necessarily grown; in many markets it has actually decreased over the decades. The conclusion? Technology transformation becomes a necessity to stay in business. Pressure on improving margins, however, must be relieved elsewhere.

Moving to SDN/NFV Networks – An Exercise in Operational Agility

If there is one constant that the industry can count on, it is the growth in traffic. Standard voice-based traffic has quickly given way to data traffic, and the consumption of data by the consumer has grown almost exponentially. Additionally, customers have grown to expect near real-time fulfillment of services, even at the enterprise level. This has forced networks to continually increase bandwidth, performance, and automation, which consumes budgeted Capex at an astonishing rate and has subsequently created a market opportunity to revolutionize network operational agility. SDN and NFV have emerged in direct response to these needs. By deploying SDN and NFV technologies, operators can now virtually (and even automatically) provision and de-provision products, services, and even capacity, while also replacing costly specialized network systems with less expensive and often higher-performing commodity platforms. Even with all these network advancements, however, the conclusion still remains the same: Operational agility, like technology transformation, is also a necessity to stay in business. While some incremental growth in revenue and decrease in internal costs are realized, market pressures will erode those gains quickly as those same networks must invest and expand to support surges in demand.

Providing IoT Support–An Industry Evolution

Many experts have labeled IoT as the new source of excitement in the industry. While there is some validity to that storyline, realistically the growth in IoT started years back when we Wi-Fi- and Bluetooth-enabled devices playing a key role in our lives. IoT took this a step further by accessing mobility networks directly while simultaneously broadening the categories of devices and sensors that were available to be deployed. But most IoT devices are extremely small producers of data. As a result, many of these devices are landing in low revenue-per-unit plans. The net result: The anticipated growth in revenue by supporting IoT will only serve to offset the expense incurred to expand and support the networks to which those IoT devices are connected. Put more simply, operators still haven’t moved the margin needle in a positive direction.