The business landscape of mobile operators has become an increasingly tough environment with decreasing margins and increasing competition from new entrants. While MNOs and Communication Service Providers (CSPs)have until now generally been successful in running profitable operations with hefty margins, challenger operators are changing the dynamic of the telecom market. With little or no legacy systems to consider challenger operators are far more flexible to pursue new ideas and are forcing a rethink of the traditional telco business model by questioning the costs of delivering communication services and by adapting to the changing behavior of customers.
CSPs have responded to these changes by starting to implement digital transformation programs that in the early stages focus on the customer and internal processes. However, as in many other industries the propagation and success of cloud services has made inroads into the telecom industry and CSPs are primed for a mind shift of their own by adopting these telecoms cloud services in an as-a-service model.
An important example of this development has been the emergence of could services for core network functionality in a Core Network as a Service (CNaaS) model. The availability of carrier grade core networks at a fraction of the traditional cost and with significantly faster implementation times is allowing CSPs to adopt radically different business models to keep up with the pace of change and be competitive.
There very is good reason why the CNaaS model has become an increasingly viable option for CSPs and here we highlight the main issues.
Short Time to Market
The success of any business case is heavily influenced by the total time to market. Traditionally deploying a core network requires a lengthy process of procuring core network components and a significant amount of time to implement and set it up. This lengthy process invariably has a negative impact on ROI in a business where the acquisition of subscribers is notoriously tough. With a carrier grade Core Network available in an as a service model the same functionality can be made available without shipping or installing any hardware in a much shorter time. As the service is already up and running with the CNaaS service provider CSPs can potentially be live in less than 2 months as opposed to often longer than a year.
Lower Initial Investment
Deploying mobile networks and services in the traditional sense has always been an expensive undertaking. Traditional telco platforms are hosted on costly hardware that also requires expensive technical resources to set up and run. The platforms are often designed and priced for high traffic and subscriber volumes which works well for established MNOs but is far from optimal for CSPs starting out or exploring new business areas. The CNaaS model bypasses these obstacles as the CSP does not need to make the hardware investment. The service is instead consumed in a pay as you grow model with minimal initial set-up costs.
Together with the expensive and time-consuming complex task of deploying mobile networks come inherent risks. With no guarantee of commercial success and grim statistics on the long-term fortune of new CSPs, betting significant financial resources and time on the implementation of a core network is something that few investors are willing to do.
The Environmental Factor
Finally, in a world where the environmental impact of businesses is becoming more and more important both to the businesses themselves and to the customers that they serve, corporate social responsibility is in many cases becoming part of marketing strategy. With this trend individual instances of power-hungry core network infrastructure are beginning to present themselves as the elephants in the room. Few vendors if any build infrastructure suitable for smaller scale operations and CSPs in smaller countries or with smaller scale operations often end up deploying infrastructure that far exceeds the required capacity. Even CSPs with big aspirations to create large networks similarly have to deploy huge capacity infrastructure to safeguard for their future expansion. The disproportionate deployment of infrastructure and their excessive power demands all have a noted impact on the environment.
Since CNaaS can be offered by the service provider on a multi-tenant platform shared among several CSPs resources are consumed far more efficiently. The environmental benefits of CNaaS is therefore also a consideration CSPs with high Corporate Social Responsibility standards and is a good model for the telecoms industry as a whole.
Download your free copy of our whitepaper Core Network as a Service (CNaaS) – The Exciting New Cloud Service Alternative to a Traditional Mobile Core Network to discover more, and watch this space for more insights into CNaaS.