From VAS to Digital Services Transformation

From VAS to Digital Services Transformation

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Amarendra Kumar Singh
VP-Digital inCloud, Huawei carrier Software

A few years ago, I was talking to the Chief Digital officer of a leading Telco in Malaysia. This meeting happened during the Mobile World Congress in Barcelona. He said, "I am responsible for uplifting the continuously falling VAS revenue and really feeling pressed to meet these challenges. The ecosystem of partners is not growing, customers are moving on to apps on smartphones, most of them are free and the entire VAS spectrum which looked so lucrative until a few years ago, looks like crumbling." This story was repeated in every conversation that I had with VAS partners, Telco CXOs and everyone connected to this ecosystem. The more I travel to meet CXOs across the world, the more I get to hear similar stories. On first look, the situation seems scary.

However, the overall scenario is not that gloomy. There is a big boom in the communication industry with 6.5 billion users, 8.5 billion smartphones, and more than 10 billion connections. It is predicted that by 2020, 80% of users will access the Internet through their mobile phones. It is significant to note that Internet users are increasingly accessing content, socializing, buying and working within their enterprise using their mobile phones and tablets putting the operators in a very envious position.

In this new era, as CSPs strive to take a pivotal position in industry digitization, the ecosystem is being disrupted by the increasing role of third party OTT players who are bypassing the traditional CSP model and becoming hugely popular with subscribers. This in turn has put a great stress on CSP business models, pushing them to become bit-pipe players rather than digital enablers. It is now all the more important for CSPs to reinvent themselves as digital service providers (DSPs) and offer a better and improved experience to their customers. Many of our Partner Telcos have reinvented themselves and have started reaping the benefits. 

Telcos have a much bigger scope in the Digital World

Traditional VAS has always focused on the retail customer segment and serving them with games, audio, video, images, news, information, and many other services. The primary focus has so far been on information and entertainment. Because of feature phone and basic network limitations, real life use of mobile networks was never thought of. With the onset of powerful data networks, this has changed completely. According to Gartner, in the first decade, Digital economy transformation is around consumers and in the next decade, it will be around Enterprise & Machine. Things are changing so rapidly in the digital world that, although there is a huge market potential of around $15,000,000,000,000 projected by 2024, unless Telcos take the right steps quickly, it will be grabbed by competing OTT players and data network providers.

What Telcos Need to Do to Regain the Pedestal

Transform from Traditional CSP to DSP

  • Digital services - innovation is the key - offer diversified digital services with speed, for example, data, video, and enterprise services.
  • Build digital ecosystems - the larger the scale is, the better you are - build a value chain alliance to enable the success of all players.
  • Enable digital operation - keep it simple yet effective -use big-data solutions to enable digital business and transform traditional support systems.
  • User experience improvement - smart user experience - real-time, on-demand, and all-online service experience.

While traversing this journey, Telcos need to focus on 3Ps, for example, Platform, Partners and Processes.

Platform: An open, robust and easy-to-integrate platform enabling partners to seamlessly connect and utilize network capabilities through standard interfaces to offer their services to Telco customers, is the need of the hour. Unless Telcos make it simpler for partners to use their network capabilities, it will be difficult to grow the partner ecosystem and offer quality services to their customer base.

Partners: Apple's App Store and Google Play are prime examples of the supersonic growth of a partner ecosystem. For Telcos, it is important to give partners an internet-like experience, in aspects of registration, contracting, service launching and subscription. Complete partner life cycle management needs to be smooth, quick and easy to implement. Unless Telcos start building a large ecosystem of partners, both domestic and international, with a variety of service offerings, it will be difficult to compete with OTT players.

Processes: Telcos usually follow the same processes for VAS partners and services that are applicable for large IT projects. However, in the new digital world, things are changing dramatically and customers are looking for much quicker service launches. Traditional processes need to go through transformation and the key to success is rapid execution.

Boost Legacy VAS Revenue

As it is important for Telcos to transform themselves and be the provider of choice for the rapidly digitizing world, it is equally important to continue milking the VAS cash cow. It is true that revenues from VAS have rapidly declined in recent years, but at the same time, if Telcos take corrective steps and be nimble-footed like OTT players, there is still a lot of scope for VAS revenue improvement. The key challenges are as follows:

Partner Acquisition: Partner acquisition is not quick enough with traditional processes and closed integration platforms delaying the whole process. The key to success is to acquire new partners quickly and in large numbers.

Optimize Business Processes: It is important to optimize and make your business processes lean and free of non-value added steps.

Marketing Management: There is lack of focus on promotion resources and execution for VAS services. There are very few examples of data-driven precise campaign management for VAS services. The general tendency is to provide more attention to voice and data services which hampers the growth of VAS services.

Operation Analysis: There is less focus on operation monitoring, analysis and reporting mechanism for VAS services. Telcos need to develop and establish mechanisms to understand the situation and trigger operation action more efficiently.

Content/Service Management: QoS management needs to be strengthened. Few Telcos have set up SQM tools to ensure QoS and customer experience but these are exceptions rather than the trend. This is a must for improving customer experience.

Huawei Digital inCloud Helps Jump Start Transformation

Huawei, with its long history of partnership with CSPs, has an innovative E2E ICT solution that aims to help CSPs build and monetize their digital ecosystem by exposing the core digital assets to a multi-sided business model.

Huawei Digital inCloud provides a unified open digital platform, aggregates and distributes ready-to-go digital services and contents of various domains (individual, home, enterprise, and industry) from global players, and manages the agile business operations to improve efficiency and reduce OPEX. This solution works as an enabling multi-sided brokerage service seamlessly connecting CSPs at one end and service providers and content partners at the other, helping both ends of the spectrum enhance their global footprint.

Huawei Digital inCloud platform:

This is an On Demand Open Digital Services platform which enables capability exposure and service innovation. It allows developers, service partners, and individuals to quickly define, develop, and deploy a range of digital services using service templates and a comprehensive range of E2E business process. This service creation simplification activity results in a reduced TTM while enhancing the ability of both carriers and their partners to innovate and manage a broad range of digital services.

Huawei Digital InTouch partnership program:

This program aims to create a large pool of partners at local, regional, and global levels providing content and services. Today we are focused on seven key domains such as TV and video, traffic monetization, mobile games, open API, enterprise and industry, and digital music. Its objective is to build CSP service malls activating their distribution channels.

Huawei Digital Transformation service:

It helps CSPs reduce their cost of operations and improve customer experience through smarter operation and improvement of integrated processes involved. The operation service framework is cyclical in nature and its different elements are: partner acquisition, product design, promotion plan, operation analysis, customer care and maintenance. It is based on standard processes that undergo continuous improvement based on accumulated global experience, helping shorten TTM and save the cost of operations.

In summary, Huawei Digital inCloud helps service partners with carrier billing exposure, service distribution channels, and big data services for profiling the user base of prospective subscribers, exposure to telecom capabilities through simple APIs and cloud services in countries where Telcos conduct operation. It helps CSPs to quickly establish their service mall and jump start monetization of their network resources. It offers local market insight, service planning, process optimization and business operations assistance. It helps rapidly increase the value chain, improve business efficiency, and improve TTM for services, quickly improving the overall business performance for digital services.