The time is right for telcos to break free

Telecommunication service providers in fiercely competitive and saturated markets have a near constant two-pronged strategic mission: drive operational efficiencies to reduce costs and uncover new revenue streams.

Over the years, new technologies including network virtualisation, cloud-native architectures and API-driven monetisation have emerged with the potential to turn service provider ambitions into reality. But progress has been slowed by a number of hurdles, including the complexity of existing infrastructure.

Now, after all the groundwork, it seems like the landscape is shifting and the promised lands are in sight. Cloud-native technologies, industry-wide collaboration, and mounting pressure towards greater freedom of choice have created a pivotal moment. The question is no longer if service providers can transform their networks into efficient, revenue-generating platforms, but how quickly they can execute before competitors seize the advantage.

The shift to open standards

A decade ago, software-defined networking and network function virtualisation infrastructure offered to revolutionise service provider architecture by decoupling software from proprietary hardware. The vision was compelling: greater flexibility, reduced costs and accelerated innovation. Virtualisation has been widely adopted and now service providers are well-positioned to take the next step in the evolution, which is containers and cloud-native technology and methodologies. This has injected new momentum with network equipment providers introducing RAN and core solutions as cloud-native network functions. Gradually, the dynamic is shifting towards greater disaggregation, flexibility and choice. Leading service providers, including Turkcell, Orange, Safaricom and T-Mobile, are banking on the benefits of telco cloud platforms and open, interoperable architectures.

This move toward a common cloud-native platform delivers three critical outcomes. First, it enables greater control of cost, risk and complexity by consolidating and standardising infrastructure across IT and network workloads (including virtualised and cloud-native side by side). Second, it unlocks operational agility and faster deployment of new services through automation and cloud-native principles. Third, it restores strategic independence and control, providing pre-validation across suppliers so they can select solutions according to their needs.

The shift toward open, disaggregated networks has moved from a technical consideration to a board-level priority, driven by the urgent need for financial and operational flexibility.

The API opportunity

Running on almost parallel lines with the open and disaggregated networks paradigm, network APIs have long been heralded as the key to unlocking new revenue streams. The premise was sound: expose network capabilities and insights to developers to create innovative services that extend far beyond basic connectivity. Yet early attempts have been challenged by fragmented standards and a lack of engagement from the developer community.

The advent of smartphones ushered in a multi-billion-dollar application economy. Service providers have an opportunity to play a significant role in the next wave of apps powered by network intelligence. Initiatives like CAMARA, a GSMA-backed, open source API project, are finally harmonising standards, making it feasible for service providers to expose network capabilities in a developer-friendly way. Hyperscalers are also entering the fray, bringing their vast developer ecosystems into the service provider space.

This convergence presents an opportunity for service providers. B2B services are often cited by service provider executives as their biggest revenue growth opportunity, and APIs enable tailored solutions for industries like healthcare, logistics and smart cities.

Service providers are sitting on a goldmine of network data, location, latency and device behaviour that can enhance AI-driven applications. They need to analyse the massive amount of available and currently unused data to extract customer needs, preferences and identify business opportunities to guide new investments and launch new services and applications. 

Connecting service providers and developers

Red Hat’s role in this industry transformation is unique. We provide the open, hybrid cloud foundation that enables flexibility and innovation. Our approach is rooted in a fundamental truth: service providers must embrace greater openness and collaboration to succeed in the API economy.

Red Hat’s history has been built on upstream development, contributing to and collaborating with open source communities rather than walling off innovation. Developers trust our platforms and service providers rely on us to deliver the latest innovation in balance with carrier-grade stability. 

We are already seeing the industry move towards greater openness and collaboration. Service providers are making more contributions to open source projects and working more proactively within communities than ever before, gaining access to a mature ecosystem of tools and expertise.

A form of a digital marketplace is fundamental for service providers as they move to a techco model and look to drive revenue diversification. Most critically, by embracing openness, service providers can attract developers on a bigger scale, moving beyond their traditional role as connectivity providers and positioning themselves as enablers of innovation. 

Keeping options open 

The telecommunication industry stands at an inflection point. Technology today is mature enough to give service providers the operational flexibility that enables the business to experiment, refine and tune their business models. This applies more than ever in a world where service providers need ongoing freedom of choice between on-premise sovereignty and public cloud scalability. In regulated markets (see Europe’s sovereign cloud requirements), a hybrid approach is non-negotiable. A common cloud foundation helps make it easy to move data and apps across as needed over time. 

Service providers are already accelerating their cloud transformation to reduce costs and uncover new revenue streams. They must now harness open APIs, artificial intelligence (AI) and data to move into high-value services. And they must position themselves as enablers, especially in the enterprise AI space, becoming a destination for new businesses and attracting ecosystem partners to co-sell as well as data scientists and developers to innovate. 

Explore this further at Red Hat Summit in Boston this year, where numerous telco-themed sessions are scheduled, featuring customer presenters from ELISA, Telefónica, VodafoneZiggo and more.