5 reasons why CSPs should move service delivery to the cloud
New technologies, the digitization of services, changing consumer demands, and increased competition are disrupting the landscape for Communications Services Providers (CSPs). To remain competitive and differentiate in this evolving market, CSPs can no longer rely on existing business models or legacy hardware and software solutions. 20-50% of revenues for some CSPs now come from nontraditional services.
With the commoditization of basic connectivity services, CSPs face both challenges and opportunities. By embracing digital transformation, they can harness the power of the cloud and create new sources of revenue.
Here’s why CSPs should look to the cloud as the enabler for growth and transformation.
Respond to changing consumer behaviors. Consumers are increasingly seeking over-the-top (OTT) content that’s easily accessible via their TV screens. The abundance of streaming content has led to a massive number of subscribers “cutting the cord” altogether.
31.2 million estimated US households cut the cord in 2020 35.4% of US households are projected to be cord-cutters by 2024. At the same time, consumers are embracing smart home devices and services, as well as shifting more interactions online. 1.4 billion smart home devices are estimated to be shipped per year by 2025. For CSPs, these converging trends create an opportunity to figure out how to deploy new services that can meet consumer demands—and the cloud unlocks those opportunities. Increase competitiveness in an evolving market. The market is seeing dramatic changes. According to Gartner, “Cloud-native CSPs are emerging as aggressive challengers, and leading incumbent CSPs are expanding on efforts to virtualize their networks and adopt cloud-native capabilities.” But CSPs are no longer competing only with industry peers. Outside players—both OTT and technology companies—have been entering the market, offering services aimed at taking over the home.
Everyone from Apple to Facebook is rolling out new content and services, vying for consumer attention. These disruptors are:
Adopting innovative business models. Creating compelling offerings that divert customers away from traditional CSPs. Building out their own infrastructure, reducing their reliance on CSPs.
All these changes mean further erosion of revenue—and CSPs will need to turn to technology like cloud computing to catch up.
Develop and implement new services faster.
Percentage of businesses in 2020 accelerated digital transformation programs that reinvented how they deliver digital experiences to customers and employees. 38%. In today’s always-on world, customers expect their service providers to offer upgrades and new services faster than ever. Traditionally, however, rolling out new services has been a challenge for CSPs due to the costs and labor involved.
As consumers embrace more digital and personalized experiences, a cloud-based service architecture enables CSPs to:
Decouple the service delivery from hardware and move it to the cloud. Deploy new and future services quickly and efficiently through software updates.
Improve ability to deliver services at mass scale.
Traditional IT architecture creates barriers to reaching consumers at mass scale. Outside players such as technology giants have broken these barriers by embracing web-scale architectures. The cloud levels the playing field, enabling CSPs to do the same.
Benefits of a cloud-based service delivery platform include:
Delivery of new services at scale without expanding IT resources and hardware. Opportunities to expand not only services but also new market segments, such as small business subscribers.
The B2B market is especially promising as even the smallest businesses adopt technologies like the Internet of Things (IoT), artificial intelligence, and data analytics, creating a bigger demand for the digital infrastructure and services that CSPs can offer.
98% of businesses were using IoT by the end of 2021
Eliminate vendor dependency and lock-in.
The smart home has grown more sophisticated, requiring new technology such as mesh devices to maintain quality WiFi connectivity. But consumers have limited options for upgrades and new services because the hardware provided by specific vendors has limits.
A cloud-based services platform Removes those limitations by eliminating the vendor lock-in. Allows CSPs to deliver uniform customer experiences regardless of the hardware and firmware in the home. Many CSPs are already taking advantage of the power of the cloud to pursue new business opportunities, improve service to their customers, and create additional revenue streams. The new differentiators are technologies such as data analytics and AI. But to get there, the cloud is an essential step. CSPs that don’t take this step soon will be left behind.