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360 VISION

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2019

DIGITAL ECONOMY

LEARN HOW TO HARNESS THE DIGITAL MOBILE - GIGABIT - PLATFORM ECONOMIES

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S p o n s o r e d b y : Te l e f รณ ni c a I nte r na t i o na l W h o l e s a l e S e r v i c e s


table of ContentS MOBILE ECONOMY

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GIGABIT ECONOMY

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PLATFORM ECONOMY

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EMBRACING CHANGE

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Harnessing the mobile economy Nothing is worse than missing an opportunity that could have changed your business for ever. Throughout our lives and careers this has likely happened to all of us, either because we were not astute enough to recognise it or we were not bold or quick enough to take advantage of it. In this day and age of everything mobile and digital, it is clear that one of these business changing opportunities is the growth of the digital mobile economy and the opportunity to use new approaches and technologies, such as artificial intelligence, to maximise its potential.

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OPPORTUNITIES, OPPORTUNITIES, OPPORTUNITIES Opportunity #1 - The traffic storm Firstly, addressing the digital mobile economy is about supporting traffic growth and evolution.We live in a world where 4G users are now dominant and commercial 5G networks and services are ready for launch. While the number of unique mobile subscribers is levelling off and will reach 5.9 billion in 2025, the number of mobile internet users is growing rapidly at over 5% per year, from 3.3 billion in 2017 to 5.0 billion in 2025. At that point, smartphones will be used by 77% of mobile users and 4G/5G connections will represent 67% of the total. In effect, today’s digital consumers will become tomorrow’s augmented customers as they adopt these emerging capabilities.

and carriers’ networks. Based on the latest statistics from Ericsson, mobile data will increase eight-fold over the next 5 years, reaching 110 Exabyte per month in 2023. One can only imagine the impact that IoT traffic will have, as it takes off and is added to this mix. For example, last year operators in the USA connected more cars to their network than people - a sure sign of how the business is changing. Added to the mix is the expected proliferation of Instant Apps, launched last year by Google. These mobile applications reside in the cloud and not on your phone, meaning that each and every time you connect to the app, you generate internet traffic, at home or abroad. One can only dream of how much data traffic this will generate. As a result, operators and carriers serious about playing a central role within the mobile ecosystem, must focus on building a network fabric which supports high quality secured connectivit y, available anywhere on a global basis.

‘Mobile internet users will reach 5 billion in 2025’

On the international front, data roaming traffic has also exploded, partly stimulated by the introduction of Roam-Like-Home plans in Europe and North America and the expectation from customers that everything they do should be available wherever they are.

For example, Telefónica has reported a remarkable increase in the past 2 years since regulation changes in Europe: triple digit growth in data roaming by July 2017 and further growth through 2018. These significant statistics provide a clear indication that the roaming market framework has changed. These are all elements to the perfect data traffic storm that is already hitting operators’

For carriers, this means deploying high quality IPX networks, which can be upgraded almost in real-time, taking advantage of automation and virtualization capabilities. For those with strong domestic transmission networks, it could also be a good opportunity to provide fixed mobile backhaul, to help remove the pressure on mobile networks as they rollout larger and denser wireless capabilities, especially with 5G around the corner.

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Finally, roaming in the 3G world always meant that the data traffic was carried back to the home network to connect to the internet. Although LTE networks don’t require this, many deployments to date have maintained this home routing approach. Now might be a great time to review how the high levels of roaming data can best be handled before the growth really kicks into gear. Taking this to another level, using Artificial Intelligence (AI) capabilities to predict the type of traffic that certain types of customer are likely to generate and use network features to, for example transcode the video components to better fit their device and minimize network load, might equally generate significant gains in efficiency. Opportunity #2 – The IoT revolution Secondly, the mobile opportunity must certainly include the Internet of Things and the rise of smart “everything”! According to the GSMA, the number of IoT connections will increase more than threefold between 2017 and 2025, reaching 25 billion devices. These are not, by any means, all via cellular connections, as many smart home devices use short-range connectivity such as Wi-Fi, Z-Wave and Zigbee. A lot of the growth is also seen to be in the increasing use of IoT devices in industrial, rather than consumer applications, with an almost five times growth in that area through 2025. The need to access and control these devices wherever they are, especially in supply chain applications, will drive a significant growth in licensed cellular connections, which is expected to reach 3.1 billion worldwide - around 12% of the total IoT connections. Smart homes, Smart cities, Smart cars - the

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innovations are piling up rapidly in all parts of the globe. Asia Pacific is leading the way with the largest increase in IoT connections from 2.8 billion in 2017 to 10.9 billion in 2025. But other developed areas, such as North America and Europe are not far behind, as we saw with the car example earlier. The end result will be a massive opportunity to help global enterprises to establish and manage not only the deployment of such two-way devices but, critically, the management of the vast quantities of data that such devices will generate. This is where artificial intelligence and machine learning can come to the fore. Simply carrying all the data from the device to some central facility is both costly and adds significant latency. Using AI enabled analysis at the point of collection and close to the device to identify the key elements of the data flow and make decisions there and then, with minimal latency, makes much more sense. From there, you can use cloud computing capabilities to review and store the results together with high quality, high capacity links to bring the intelligence back to the companies that need it. What companies are increasingly looking for is not just reliable networking, but reliable outcomes. They want partners who understand what they are trying to achieve and deliver services that guarantee that the need is met, not just that lost packets met their SLA. Carriers able to bridge that gap in expectations, especially using the latest technologies with machine learning, will be head and shoulders above the competition. With those close relationships with major customers in place, technologies such as Blockchain can play an enhanced role, especially across supply chains with many


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interconnected players. Consequently, tying data gathering and analysis, with secure sharing of key information, will also be a major competitive advantage. One thing is certain - the world will never be the same again and the opportunities to get in on the ground floor of the IoT world are there now. Opportunity #3 – The customer is king Thirdly, addressing the mobile economy opportunity is also about enabling mobile customers’ thirst for control. The digitalization and empowerment movement, which has swept our society in the last 10 years, has created what we like to call the ‘me-me-me’ generation. Now it is all about what we want, when and where we want it and on the device of our choice. We

want to be in total control. This means that operators must develop the technology and systems necessary to offers a self-serve, realtime experience, tailored to each and every one of us. Furthermore, the “me” here is not just at an individual level. Companies have similar expectations. They want partners which understand their ultimate goals and that provide the services to meet that outcome, rather than provide solely the pipe to then take a step back as long as it is meeting its SLA. Tailoring services for commercial customers is all about understanding their use case and meeting that requirement as it evolves over time and distance. To address this opportunity, mobile operators and the carriers that support them must deploy intelligent and intuitive systems that

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put digital customers at the centre of their experience. This means offering solutions such as data sharing plans, locationbased offers and evolved data package management capabilities.

But more widely, the serious breaches of user data reported by some of the major social media and internet giants are prompting governments everywhere to look at how this can be managed and even controlled.

For carriers, this means enabling operators to bring on needed capacity as their requirements evolve. It also means offering them a catalogue of Business Intelligence and analytics tools, enabling operators to monitor and get a 360° view of their business in real-time.

This potentially results in more protection for the end user, but in other ways it is creating a chaotic and more challenging environment for service providers.

When it comes to usage, as stated earlier in this article, mobile devices have become not only a tool to communicate, but more importantly, one used to be entertained and informed. It is estimated that over 70% of digital media consumed is done so using a mobile device and this is expected to accelerate with the advent of 5G. To take advantage of the mobile content opportunity, operators must become the trusted intermediary that creates an endto-end ecosystem which includes not only the connectivity and the device, but more importantly, tailored, meaningful, upto date content and information. Building partnerships with content providers, while moving towards a platform business model, is therefore also a key requirement here. Opportunity #4 – Changing rules Finally, the rising involvement of regulators, and governments more widely, is having a growing impact on the mobile ecosystem and its services. Three recent events come to mind. The introduction of the Roam-Like-Home concept and the tightening security and privacy rules brought on by GDPR have transformed the European telecom space.

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GDPR, and the increased focus on privacy and control of user data, is putting limits on one of the ways that companies have monetized the services that appear, to the consumer, to come for free. While early implementations have resulted in many “click to continue” implementations, perhaps there are ways to collaboratively develop approaches where the consumer more actively buys into the offerings that a mobile operator can put forward. It is early days, but there is definitely a shift towards more privacy protections, more consumer control of what their data and usage patterns can be used for, which perhaps will mean that consumers need to directly pay for services that were “free”. That change alters the balance of power between “over the top” services and mobile operator provided services which could play to the operators benefit because of their existing contractual arrangements with those customers. Nevertheless, as I often say, through chaos come great opportunities for those who have the courage and the wit to do what it takes to capitalize on it, so now is the time to equip yourselves with the necessary tools to lead in this rapidly evolving environment.


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MOBILE ECONOMY SUCCESS MANTRAS I often say, if you don’t have a competitive advantage don’t compete. So, what does a competitive advantage look like in today’s mobile digital economy? Below are four mantras that any operator or carrier should follow to gain the edge: Mobile Customer centricity: In the mobile economy environment, customer centricity is all about enabling customers to tailor their mobile experience at all times whether at home or abroad. This also means enabling them to not only consume content but also to create it. Mobile-centric partnerships: Operators and wholesalers need to build partnerships that enable them to create end-to-end

ecosystems that will provide mobile users with a 360° experience, not only enabling them to communicate, but also to be entertained and ultimately to control all aspect of their lives through their devices. Mobile Service fluidity: The mobile service evolution is only starting to gain speed with the move to 5G and the widespread deployment of IoT devices. Operators and carriers have to equip themselves with tools that will foster this constantly fluid environment. Mobile Network fabric: Finally, last but not least, the fabric supporting this mobile economy is the network. Operators and carriers must therefore build mobile networks, and backbones that support them, which can expand in real-time to support the exploding needs for data connectivity.

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Harnessing the GIGABIT economy Today, more than ever before, mankind is breaking down the barriers and creating a connected social fabric without borders. This not only helps us better communicate and work wherever we are, but increasingly it enables all layers of society to share content and create new ideas. Whether it is good or bad, the globally connected social fabric is ultimately changing the world order as we know it. As a result, this puts connectivity at the core of all of our daily lives and it is therefore fast becoming one of the most crucial building blocks of our civilization. From connectivity being seen as the least exciting segment of the telecom world only a few years ago, it is now becoming sexy again.

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With large data pipes being delivered directly to the end users, a data-hungry world is leading to the deployment of multiple subsea cables across the globe. Data centers are popping up everywhere and public, private and hybrid clouds are multiplying at lightning speed.

video traffic, coupled with the advent of IoT and M2M solutions, will undoubtedly put pressure on the edges of the network. However,

expanding the number and distribution of data centers housing this content, together with the analytics associated with IoT, also has a big knock-on effect on core transport solutions. This is especially true as the data in each and every center must be synchronized and backed-up in ever faster timeframes. As a result, the demand for global connectivity shows no signs of a slowdown.

‘IP traffic will reach 4.2 ZB in 2022’

However, if many companies can build connectivity or clouds, only a few can connect everything into a global ecosystem. The next few years will therefore be decisive. Will operators, OTTs or media companies win the connectivity war to deploy global capacity to meet their growing customers’ needs. One thing is certain, the connectivity opportunity is big, the question is: ‘Who will be able to truly harness it’? OPPORTUNITIES, OPPORTUNITIES, OPPORTUNITIES Opportunity #1 - The connectivity storm It is not a secret, data traffic is exploding. Estimates from Cisco, for example, state that global IP traffic will grow to 4.2 ZettaBytes in 2022. However, what is more startling is the fact that video traffic is growing so rapidly that it will account for 82% of the total IP traffic by 2022. This surge in all content type will safeguard the sustainable long term growth in terms of bandwidth demand. May it be to consume music, video or gaming, digital consumer services will continue to demand better connectivity services worldwide. The location of the traffic flow is also on the verge of a transformation. The massive increase in

Furthermore, the exponential growth also applies to access speed - that is, our ability to gain access to this data in the shortest possible time. For example, mobile download speed is expected to more than double to 28.4 Mbps over the next 4 years, while fixed internet speed is expected to grow from 45.9 Mbps to 75.4 Mbps over the same period. This increases internet content and high bandwidth applications consumption, which will, itself, stimulate the traffic explosion further. Of course, users are also expecting to benefit from these digital services when they travel abroad, so demand for higher international mobile roaming traffic will also increase. A direct result of this data storm, coupled with the continued decrease in the cost of leasing transmission services, is the requirement for bigger and bigger pipes by operators supporting this demand. Ethernet has long been valued for the ease of use, and demands have risen such that 10Gbps connections are becoming the norm. In optical networks, the traditional 10Gbps wavelength grew to

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100Gbps a long time ago and now 400G optical services are being offered around the world by the leading players. In some cases, operators have been able to upgrade their underlying optical networks to realize massively increased capacity perhaps by as much as forty times what they originally expected when the fiber was installed. In response to these demands, carriers are enhancing and rolling out new capabilities on a global scale. Ethernet based private LANs can offer flexible bandwidth from as low as 1Mbps, all the way up to 10Gbps, to give their customers multipoint to multipoint connectivity. For larger demands, Ethernet private lines can increase that available bandwidth up to 100Gbps, providing guaranteed capacity around the world. Finally, offerings based on access to the optical wavelengths themselves are available for customers that need that flexible and cost effective solution. Opportunity #2 - The cloudification of everything Another key stimulus of IP traffic is the race towards ultimate efficiency, with the virtualization of our information world. Nowadays, almost all content, information or applications we interact with resides in either a public or private cloud, which results in the explosion of Cloud IP traffic. Again, as per Cisco’s estimates, the global cloud IP traffic will reach 19.5 ZB per year by the end of 2021, which will represent pretty much half of the total IP traffic generated globally. Unsurprisingly, consumer IP cloud traffic will mainly be generated by video streaming and

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social media consumption, while enterprise IP cloud traffic will come from compute and collaboration applications. Much of this is driving the growth of large cloud providers such as AWS, Google or Microsoft Azure, which are reporting growth rates of 50% annually. Additionally, enterprises will continue to demand reliable and secure connectivity from their cloud providers, as more critical applications are being moved to the cloud, representing a new opportunity for carriers. With the explosion of the cloudification of everything comes the emergence of everything as a Service. In the connectivity world, this translates into such offers as Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and finally Software as a Service (SaaS). However, enterprises must ensure they can gain the efficiency benefits of virtualizing and moving critical parts of their business to the cloud, while, at the same time, controlling for any security risks that may come with it. Not a simple problem to solve in large globally dispersed companies. Of course, one way to minimize the risk is to partner with experienced global operators for whom security is second nature. Some global operators have established their own cloud environments in secure colocation sites, fully integrated into their transport services, and make that capacity available to other operators and to their commercial customers. Carriers with their own investments in service providers around the world have the added advantage that their cloud centers can be in locations that are perhaps not as well supported by the more commercial cloud operators, which can be a major advantage if the business is in those regions.


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To gain a competitive edge, major carriers should establish one-stop shop arrangements, whereby enterprises can gain secure, resilient, quality managed connections to major commercial cloud services, as well as the carriers’ own offerings, to provide a fully managed hybrid environment. This can be complex, as it requires an understanding of the many regulations and the requirement from governments for secure and regulation-compliant policies. This required mix of national/international cloud process/applications will, in addition, require the growth of international traffic to synchronize back-end applications and data.

source of the goods or services. Blockchain is one example that comes to mind and many others exist such as Uber and AirBnB, to name the most obvious. We seek disintermediation because we are seeking empowerment. While a similar trend is also taking place in the telecom industry, with large enterprises going directly to wholesale carriers for many large requirements, there is also a shift in the type of customers that carriers are now serving.

While traditional fixed operators may be in decline, demands from new disruptive providers such as MVNOs, cloud computing providers, UCaaS providers and the very large multi-national corporations are significantly Opportunity #3 - The ecosystem revolution growing. The shift by very large technology Throughout society, a significant wave of enterprises to partner with international disintermediation is taking place, with multiple carriers, even to the extent of sharing the attempts to remove layers to close the costs of building new global cable networks, distance between us, the consumer, and the is providing significant new opportunities.

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As a result, a growing portion of international traffic will now be transported over hybrid networks or newly developed undersea cables in partnership with the largest global carriers. As some sources estimate that as much as 70% of the inter-continental traffic is generated by technology companies, this trend could have a transformational impact on the connectivity industry. This evolution also changes the dynamics within the operator-carrier ecosystem. More and more enterprises are reaching out directly to wholesalers for their connectivity services, getting rid of the retail service provider as a middle-man. They want to benefit from wholesale prices, capacity and service activation times. In return, wholesalers must learn to address this new segment with flexible, tailor-made, user-friendly interfaces to their software defined networking services. They will also need to be in a position to do much more hand-holding to some extent, as enterprises get to grips with building and managing their own networks. This can also be achieved by making this increasingly flexible. Offering secure SD-WAN and global multipoint Ethernet services to major enterprises will therefore become a key focus. Opportunity #4 - The on-demand world Finally, we now live in an on-demand world where everyone expects everything in realtime and as per their specific evolving requirements. Gone will be the days of rigid and static networks, dimensioned to meet the expected demand scenario. The urgent need for ultimate efficiency and minimal capital expenditure, coupled with the rise of virtualization of the network, is triggering an unprecedented revolution in the connectivity space: the creation of fluid networks. The explosion of traffic, discussed earlier in

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this article, is unpredictable. Who really knows what traffic patterns will be generated by the proliferation of augmented or virtual reality applications, IoT or 5G enabled services? In today’s reality, operators cannot afford to have long term fixed plans and overdimension networks and certainly enterprises cannot do so either. No-one has the luxury of going through lengthy ordering and provisioning processes to meet sudden demands. With increasingly automated interfaces, customers can expect high quality connectivity from everywhere, and only the operators meeting these expectations will remain relevant. Rolling out enterprise-friendly services, such as IP-VPN and the various forms of Ethernet capability, provides a strong underlying infrastructure. However, equally important is the provision of systems that allow customers to dial-up the bandwidth where and when they need it for their urgent requirements. Carriers wanting to be at the center of the connected fabric will therefore need to move to a bandwidth on-demand type of business model. In fact, the deployment of many network functions on-demand, accessed via flexible and secure APIs, is likely to be a trend for the coming years. For example, large customers and service providers will want access to on-demand network infrastructure giving them the opportunity to make use of virtual services such as firewalls, remote access servers as they need them. Furthermore, carriers should consider going one step further by implementing such flexibility at all network levels including the optical network layer. Recent developments by leading vendors are enabling softwaredefined optical networking with the ability


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to “program” rather than “configure” their key underlying technologies. Then, and only then, will a fluid on-demand network become a reality. GIGABIT ECONOMY SUCCESS MANTRAS As we have seen in this article, there are multiple opportunities waiting to be harnessed. But not all organizations will be able to tackle them. Only the ones who have a focused connectivity strategy will be able to do so. There is no magic recipe, however for the carriers or service providers wanting to win the connectivity war, here are four key mantras to follow: Network fluidity: Demands can change in an instant as trends develop and consumers adopt the latest technologies. Connectivity services that are flexible and available on-demand to meet those evolving needs will give major players the edge they need.

Cloud centricity: Major customers are looking for solutions that simplify the entire ecosystem around the adoption of cloud technologies, from diverse and secure access to simple management systems for hybrid public/private storage and analysis. Customer-Partner centricity: As the customers of major carriers evolve, the new reality of transforming the way global networks are financed and built requires flexibility and partnerships with this new breed of customers. A key requirement for the future is a highly flexible and customer/partner focused approach at all levels of global networking. 360° security: Everything must be designed, from the very first product outline, with security and privacy in mind. Connectivity solutions are so key to the modern world that nothing less than 100% security will be acceptable.

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Harnessing the platform economy The earlier articles in this series have discussed a number of significant opportunities coming from the evolution of the Mobile Economy and from the massive growth of data consumption triggered by the progression towards the Gigabit Economy. Both discussions pointing to the same conclusion - the use of data in our everyday lives is not only growing in leaps and bounds, but we are expecting this connected fabric to be present wherever we are in the world. The opportunities generated by this are significant. As we will explore further in this article, transformation is required in everything - from the types of customer that are addressed, the service breadth that is offered, the customization and integration options available and, underneath all that, the flexibility of the platform, the processes and, yes, the people that are deployed to meet those needs.

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The next question that comes to mind, for people in the wholesale industry such as ourselves, is: What are the opportunities that this transformation will bring to wholesalers? OPPORTUNITIES, OPPORTUNITIES, OPPORTUNITIES Opportunity #1 - Transformation of the wholesale customer We have explored, at length, the transformation of our customers, their requirements and hunger for real-time, tailored, self-served and elastic types of experiences. For this to take place on a global basis, what customers therefore need are wholesale partners that are able to understand their specific requirements and deliver end-to-end global solutions - not just provide some parts for the middle of the chain.

As a result of transforming from being simple middle-men to end-to-end global solutions providers, companies we currently call ‘wholesalers’ will transform into something much more relevant. Subsequently, they will move up the value chain, away from basic transport or termination support, which will open up a whole new set of target customers. As these global carriers spread their wings, the addressable customer groups to whom they offer solutions will naturally expand. The tidy world of the past, where wholesalers solely met the needs of retail service providers who themselves met the requirements of all users of telecom services, has vanished in many countries.

‘Global coverage, scale and worldwide agreements are key to new partnerships’

For example, instead of just taking a message and delivering it to a distant telephone number, transformed ‘wholesalers’ are able to fully understand their operator customers’ requirements in terms of integration into their systems, latency, success rates, security and real-time feedback on status. This can then ultimately be fed back to end customers so that the transaction, of which the message is just one part, will be successful. Looking ahead, all the components that ensure the transaction is successful are what end-to-end partners should strive to deliver from their platform, rather than just transporting a simple, low margin component over a basic network.

As a matter of fact, a growing number of technology companies now have communications needs that are larger, in aggregate, than many service providers. Some of them are developing their own underlying infrastructure of fiber and submarine cables and looking to offer surplus capacity to other companies - in effect turning themselves into service providers for some capabilities. As such, these technology companies naturally want to deal directly with providers that can meet their global end-to-end communication needs at the scale that they now require. Global coverage, huge scale and worldwide agreements are key to that new partnership. In fact, it is unlikely that in the future any one company will be able to provide all required services in all necessary geographies. Consequently, partnerships with other carriers, as well as with some of the large customers themselves, to create and efficiently manage an ecosystem that provides the reach of end

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to end services, is an essential step. The first stage towards this perhaps started when the companies we call OTTs were required to meet the full requirements of their own customers and looked for international termination to provide tailored solutions, slightly different to what they were offering other traditional fixed or mobile service providers. Since then, the range of potential customers carriers can address has expanded relentlessly. Fintech companies, online retailers, giant ecommerce companies, cloud based communications, platform providers, technology unicorns and financial companies can now be addressed directly by carriers. This represents a significant growth opportunity and we believe that fully meeting their needs is key to the growth of global carriers going forward. However, these new opportunities also come with a set of challenges for carriers who have spent the last 25 years offering a set of generic, basic, non-tailored services. For this necessary transformation to take place, the evolution of the wholesale business model towards an end-to-end flexible platform solution is essential. Opportunity #2 - Transformation of the wholesale services While we often think of growth as being a big driver in meeting the communication needs of customers, perhaps the more pressing underlying need is flexibility. New applications can appear from virtually nowhere and, in a short space of time, they are everywhere. A growing number of companies, who are endlessly in search for profitability and growth, are expanding their supply chains

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globally and are, at the same time, seeking a global customer base for their products and services. As a result, they can rarely plan with confidence far into the future and so they need global solutions providers that offer them flexibility in capacity, locations, contracts and business models to meet their evolving needs for connectivity and end-to-end service. What this means for carriers is that everything in their network and systems environment must be designed with this in mind. In an article a couple of years back, we mentioned the word fungible. Basically this word means that the solution is “readily changeable to adapt to new situations”. How many of us can say that our networks, systems and processes meet that requirement? But if the major customers are dealing with that complexity in their own businesses, then carriers must have a mindset that builds ‘fungibility’ and fluidity into everything they do. Fluid networks and technology This means that network elements should increasingly be designed as software functions running on standard or cloud based hardware and overall orchestration systems designed such that new capacity in terms of volume, features or locations can be turned up quickly - and via APIs from the customer’s own systems. This also requires the transformation of the backend, with the aim of achieving ultimate efficiency using solutions such as blockchain, automation and big data analytics. Taking this a step further, this level of network fluidity must also be extended between carriers involved in the delivery of the solution.


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To that extent, automated, agile connectivity between carriers must be implemented. Fluid services Evolution isn’t only towards the agile technology that underpins the network. We believe that services need to similarly evolve from being a specific capability that is provided as required - such as terminating a message, or setting up a roaming session, into a platform-based, often virtual, end-to-end solution.

in maintaining that visibility (if the customer agrees) of how well the product is meeting the needs of that end user and if improvements can be made in how it does that. This end-to-end tracking of the life of both the components and the product needs a great deal of technology expertise, system capability, flexibility and finally processes to track at the level and detail required.

For example, rather than solely providing A typical illustration of that is in the area of the roaming SIM cards, an end-to-end solution Internet of Things. It is clear that everything is could involve not only the roaming technology, increasingly being connected to the internet but the edge computing to track and record and, for companies, this often means that all transient data, blockchain systems to maintain the assets they use in their business need to an immutable lifetime history of that item as be tracked as they move from their suppliers it passes between companies involved in its through the supply chain into manufacturing creation, analytics to help the manufacturer to understand how the product is being used and then out to the final customer. (perhaps in terms of its location over time) Even there, they are increasingly interested and so on.

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Not all global carriers are able to create such end-to-end solutions tailored to each vertical addressed, but it should certainly be an aim to meet as broad a set of requirements from this new breed of customer as possible and the move towards a cross-vertical wholesale platform, and at least part of services offered from the cloud, is one part of the equation. Fluid commercial arrangements Equally importantly, contractual arrangements must be established that are flexible enough to support more real-time usage of global capacity and service capabilities. If the customer no longer needs that 10G pipe, then they will not be keen to continue paying for it for the rest of the contractual term. Systems and processes that are able to decommission or re-assign capacity to another purpose can only achieve their full benefits if they are tied into the commercial and contractual frameworks. Consequently, pay-as-you-grow type business models must be considered throughout, and global carriers are well versed in supporting these types of models. Prices per message or per minute are ingrained in the DNA of carriers and that mindset needs to be extended to support any international on-demand service requirement. Fluid workforce Finally, to become a reality, this fully flexible environment must be underpinned by a fluid workforce; by teams that have the necessary knowledge, tools and mobility to support the business, its customers and partners efficiently and dynamically as they evolve. This means that we need a workforce that is permanently learning and evolving to be able to design, operate and commercialize new products as part of an expanded carrier portfolio. From Cloud to IoT, Blockchain to AI,

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new services will demand a real-time learning workforce. Opportunity #3 - Transformation of the carrier organization As hinted above, as we continue this evolution, the final opportunity is to transform the wholesale model itself to create global companies that are providing flexible end-toend, often virtual, solutions for a wide range of companies and entities. To achieve this, a number of organizational changes must take place within carriers. Digitalization of the front-end Communications is all about connectivity between people and applications, which means that providing solutions to as wide a range of potential customers as possible is an important step towards the future. To that effect, digitalizing - the front end processes and systems via fully integrated APIs into the customer systems, and frictionless processes that potentially use blockchain technologies, will add to that. Creation of an intelligent operation Furthermore, we believe that using artificial intelligence analytics will add to this value, both internally and externally. • Internally by spotting trends which can highlight an opportunity to lower cost or improve service will be critical. • Externally, of course, identifying opportunities for the end customer that are visible because of the centralized nature of the communications business. This has multiple rewards in terms of cementing the relationship by providing value that customers could not have identified on their own.


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Building an agile corporate structure Streamlining the structure of your organization and business will equally pay dividends. Not every technology company has the right approach to the organization and responsibilities of the people in the team. As the industry moves towards flexible customer centricity, the approach to the structure and the business should similarly evolve. Increasingly, leadership will be all about encouraging and supporting risk and the rapid response required when solutions don’t work exactly as planned. An agile, resilient and innovating human resource is a key requirement in this business environment. Similarly, the leadership must recognize their new role in the carrier of the future. A leader that is able to instill a clear vision

and empower the team to drive relentlessly towards creating this fungible platform that is able to meet both current known needs and, with tweaking, those ill-defined needs that could be the next “big thing.” As we have seen, in this industry, the leadership needs to encourage collaboration, but not just within the company, it is equally critical to collaborate with customers, suppliers, partners and competitors to create the endto-end solutions that are required. Opportunity #4 - Transformation of the goto-market strategy But before concluding this discussion, let us pause for a moment to think about the actual use of the term ‘wholesale’ to describe our industry. You probably read, hear or say the term ‘wholesaler’ without giving much

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thought to the terminology used - but that word “wholesaler” is a prime example, in our minds, of how a name can, to some extent, define an outcome. Now just changing a word is not going to change an industry, but we, in some way, invite you to think about the challenge and importance of rebranding your business. As often everything starts with one person, one idea and one word. But pushing this a step further, as wholesalers evolve their portfolio and customer focus, they should not only re-think their brand, but rather their whole go-to-market plans to, in some way, apply distribution channels, marketing and sales strategies similar to the ones used by enterprises and consumer service providers. This could mean increasing wholesalers’ use of digital and social media, creating partner co-branded marketing campaign and using a set of online, digital tools to interact with their whole ecosystem, from employees to suppliers, partners and customers. PLATFORM ECONOMY SUCCESS MANTRAS To summarize, here are the key mantras a digital wholesaler should follow to successfully address the opportunities triggered by the platform economy: End-to-end partnership ecosystem: It is unlikely that one company alone will be able to create the wide range of solutions expected by global customers. So integrated, flexible and fluid arrangements with strategic partners to build the complete solution value chain is essential.

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Platform model: Designing and implementing a fluid (and often virtual) range of network elements, systems and solutions that are able to meet the global end-to-end requirements of major customers is going to be critical to success. Agile and intelligent organization: Flexible, streamline, agile, resilient and innovative, organization and people are key to success. A leadership team able to set a clear goal and direction, while accepting that the path to it is likely to have risks and failures is also vital. Digital go-to-market strategy: A serious rethinking of wholesalers’ go-to-market strategy and brand is mandatory to ensure their digital sales strategy mirrors their portfolio evolution and customer focus.


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Don't FEAR CHANGE EMBRACE IT Juan Carlos Bernal CCO of Telefónica International Wholesale Services

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Juan Carlos Bernal is CCO of Telefรณnica International Wholesale Services. He has been spearheading this strategic group for close to three years now, focusing on embracing change and empowering the digital transformation, not only of his own organization, but more importantly of his customers. I recently had the opportunity to discuss with him the importance of flexible and ondemand platform-type business models, and how they give carriers the ability to change in real-time. EMBRACING CHANGE TO TRIGGER GROWTH

What do you think is the way back to growth for the wholesale industry? I believe that to make our way back to growth we must address two different paths. The first one is to aim for ultimate efficiency, as there is always room for improvement. In addition, new technologies, such as AI and blockchain, will enable us to go much further when it comes to agility. At the same time, I believe that wholesalers have the opportunity to offer new innovative services and address new customer segments. For example, at Telefรณnica we are focused on expanding our value added and digital portfolio of services based on platforms. We found that these help us better address the retailer segment. Some examples include our voice and messaging anti-fraud platform and our marketing campaigns manager, which is a platform that allows retailers to use a much more tailored approach to address the

roaming opportunity. When it comes to tackling new customer segments, as we are starting to benefit from the digitalization of our services, we are also expanding our traditional customer target markets to include aggregators and distributors as well as cloud and platform providers. These new target customers require us to use a new digital approach, but we see this as a great opportunity for growth.

How do you think the wholesale business must change to be able to offer these new services and address these new customer segments? We must rapidly evolve our current business model towards agility and flexibility to facilitate the evolution of our own customers and we must do this in a very short timeframe. This means offering services on-demand using fluid agreements such as pay-as-yougo, and to do so we must transform our networks, processes and tools. As the customer landscape is evolving rapidly, in addition, we must approach our customers differently, using self-served customer portals and APIs. To play a central role in the digital platform ecosystem we must also offer our customers transparency. This means opening-up our business and exposing our capabilities in terms of network elements, systems and solutions. It may even mean integrating 3rd party systems within our own. But in essence, we are focusing on three main

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digital transformation topics at Telef처nica. Firstly, network virtualization and everything to do around automation. Followed by a program to develop digital relationships with our customer, with the launch of digital marketing campaigns, tools and customer portals. And finally, we are also focusing on making sure that both of these things work together, as they are complementary and one needs the other to succeed.

The workforce is a crucial part of the digitalization puzzle. How are you addressing this challenge within Telef처nica? I think that the transformation of the people and their skills is the most difficult but also the key part of the digital transformation. The technology is there, but we must have the right people to make this transformation happen. At Telef처nica we have started to evolve the type of people involved in the planning and management of our network. From people who were often coming from the vendor side and focusing on the equipment, towards people who are experienced in software and who can actually program the network and its services. Then the second key pre-requisite is to get the right leaders in place who are confident enough to give the power to the people and allow them to take risks, which will in turn stimulate creativity. Finally, we must change the way we deliver our business by using agile methodologies to accelerate product development and decision making and to encourage collaboration.

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This is a very powerful tool that helps us on our transformational journey. This agile way of creating can also be applied when cooperating with our partners and customers, which is even more formidable. EMBRACING CHANGE TO ADDRESS THE FUTURE

The telecom world is moving towards use case focused solutions. Can wholesalers help in this evolution? We do think that orienting the wholesale business towards delivering use case driven outcomes is a significant opportunity. However, it is difficult today to seize this opportunity which will be generated by the upcoming explosion of data around IoT, gaming and content. Nevertheless, wholesalers definitely have a role to play in the creation of the vertical partnerships, cloud ecosystems and edge computing capabilities that will be required to deliver these specific end-to-end solutions. These vertically-focused applications will require high quality, high bandwidth networks, connectivity, storage and most probably processing capabilities, which are all functions that wholesalers are well positioned to deliver. I am also convinced that there will be a growing demand for edge computing capabilities, to get the content as close as possible to the device and I think that we can, as wholesalers, offer this kind of functionality. A lot of work needs to be done to make this a reality, but I think there will be a significant opportunity here, more specifically for


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wholesalers who are part of retail companies such as Telefรณnica.

When it comes to blockchain, what do you think is the most realistic use case that wholesalers should consider? I believe that blockchain will provide a frictionless framework for inter-carrier interconnection, at least initially around the voice settlement infrastructure. Telefรณnica is part of the initial Proof of Concept (PoC), led by the Global Leaders Forum (GLF), and the result have been very positive. I believe that blockchain could also be a strong enabler of the fight against international voice fraud. Going a step further, there are a multitude of other applications for the blockchain technology, both internally and externally. Within Telefรณnica we see an opportunity to apply blockchain to optimize our terminal management and to empower our supply chain evolution for example. We also see a very interesting use case around data and bandwidth management in real time.

What about the use of blockchain to generate new revenue. Is this realistic in the short term? There is an opportunity to generate new revenue using blockchain. The first that comes to mind is the deployment of a blockchain platform as a service. Maybe not so much in the wholesale space, but maybe more to address the B2B and enterprise opportunity.

What do you think will be the next big disruptor in our industry? The next big disruptor will be 5G and the range of applications it will enable. It will be

a challenge for us to adapt our networks to support these high bandwidth, low latency applications. But it will also be an opportunity for us to launch new advanced services to address new types of customers.

What do you think will be the next big challenge? For us as wholesalers, the next big challenge is to adapt our networks and legacy systems to the new digital needs of our customers, as well as to the exponential data traffic growth. We must ensure that we operate high quality, secure and elastic networks. It will be a significant challenge to offer that globally.

What do you think will be the next big opportunity? The next big opportunity will be to get closer to the retailers and remain relevant by helping them to develop a better relationship with the end-users. If we succeed in offering retailers services that enable them to add value beyond traditional services, we will become a partner of choice. For example, providing solutions around business intelligence and analytics or platforms that offer flexible and personalized data roaming plans is something we focus on. EMBRACING CHANGE TO HARNESS THE DIGITAL ECONOMIES

How do you think wholesalers should go about harnessing the opportunities generated by the mobile economy? Service providers and carriers alike are focusing on offering secure, flexible and always on connectivity which is a must to

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benefit from the mobile economy. Once this is achieved, you should focus on deploying value added services on top of the mobility application to create a personalized experience. The network will be a key building block of the mobile ecosystem and we should therefore open it to platform service providers and integrators to build their services on top of it.

How do you think wholesalers should go about harnessing the opportunities generated by the Gigabit economy? Customers today are looking for costeffective, real-time, tailored solutions. To enable that, we must move towards cloud business models that support flexibility and adaptability of on-demand connectivity. To deliver this globally, which is mandatory, it is key that we develop a global partnership ecosystem, as no one can deliver this on their own. Partnership is therefore key in the new digital platform economy. By nature, international carriers have a vast experience in creating partnerships, as we are an industry which is based on such partnerships. We must therefore translate our know-how and partnership mindset to facilitate the digital connectivity world.

How do you think wholesalers should go about harnessing the opportunities generated by the platform economy? Wholesalers must digitalize their front office, principally using customer portals and APIs. They must also focus on transforming their back-office, which means converting not only their network into a real-time platform, but also re-inventing their processes. This is

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the core of Telefónica’s digital strategy and we have succeeded in making significant progress in this regard.

What is the difference between a winner and a loser in our industry? With the rapid transformation of our society, I think that what will separate winners and losers in our industry will be their ability to change. No one really knows what the future will bring, what the business will look like and how the technology will evolve. So, in this type of uncertain, fluid environment those who have the ability to adjust to change in real-time will win big. We must learn to adapt everything, from our processes, to our systems, networks and people and create businesses that react as if they were living organisms.


International WHOLESALE Services

Connecting your world As a leading global provider of integrated communication solutions, Telefónica provides customers with high quality connectivity, digital platforms and a wide range of innovative, end-to-end solutions. When combined with our extensive international network, cutting edge infrastructure and global footprint, it means we are where you need us to be with the services you expect. Telefónica International Wholesale Services provides services to fixed and mobile operators, service providers, wholesale carriers and OTT-Media companies. With particularly strong presence in Latin America and Europe, our global portfolio includes new digital platforms and solutions for enterprises, as well as more established carrier services: • Voice • Carrier Enterprise • Mobile • Satellite • Security • Cloud • IoT • Big Data wholesale.telefonica.com sales.wholesale@telefonica.com

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ABOUT HOT TELECOM HOT TELECOM is one of the most innovative and creative research and consulting companies, which has been providing International operators and carriers with specialized intelligence and advice for the past 15 years. We understand the challenges faced by international carriers better than anyone, and have therefore developed a number of research and advisory tools and expertise to mirror these needs, and provide the support any wholesaler requires to survive and thrive in the current environment. To find out more about what we can do for you and how we can make the difference in your success, contact us and it will be our pleasure to provide you with tailored, real-life solutions that will meet your needs, challenges and objectives. For more information, please visit www.hottelecom.com

ABOUT TELEFÓNICA INTERNATIONAL WHOLESALE SERVICES Telefónica International Wholesale Services (TIWS) provides world-class wholesale services to fixed and mobile operators, service providers, carriers and OTT-Media companies. Our global portfolio includes Voice, Carrier Enterprise (including Cloud & Connectivity Solutions), Mobile (including IPX Transport, Messaging, IoT, Signalling, Roaming, Mobile VAS and Analytics tools) and Satellite services, as well as innovative Digital solutions (Security, IoT and Big Data) and end-to-end solutions for enterprises. As a leading global provider of integrated communication solutions, Telefónica has a global footprint, with presence in over 35 countries (particularly strong in Latin America and Europe) and service reach in more than 170 countries. For more information, please visit https://www.wholesale.telefonica.com

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ABOUT THE AUTHORS Isabelle Paradis President, HOT TELECOM Isabelle is President and Founder of HOT TELECOM, and has been working with many of the world’s telecom service providers to help them define their transformation strategy. She has published several articles and reports on the subject and has spoken at numerous conferences around the world to share her views on the future of the international telecoms business.

Steve Heap CTO, HOT TELECOM Steve has a lifetime of experience in designing, engineering and operating networks, both domestic and international. With leadership experience in small technology start-ups through to global service providers, he has deep experience in a wide range of products, technologies and geographies. He has the rare skill of being able to explain complex technical issues in easily understood concepts and uses that extensively in his consulting work with HOT TELECOM.

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