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Telcos To Transition Into Digital Service Providers Over The Next 5 years To Grow Enterprise Revenue: Research 

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Telcos To Transition Into Digital Service Providers Over The Next 5 years To Grow Enterprise Revenue: Research 

The service providers are slowly transitioning from competing solely as communications service providers to competing as digital service providers, says the recently released Enterprise Operator Benchmark of Technology Business Research.

To this end, the telcos are leveraging network architectures, such as cloud and NFV/SDN and new technologies including in areas such as big data and analytics, artificial intelligence and automation to provide value-added services separately or in combination with connectivity services. This is further made easier by using the upcoming technologies such as 5G and Internet of Things use cases to expand broadband coverage.

In their journey to transform themselves into digital service providers, the telcos would need to focus more on the enterprise customers. In this, they will be competing with players such as Cisco and other telecom vendors like Nokia and Huawei.

Carriers are jockeying for position, particularly in the US, to become the early leaders in the upcoming  5G era. “Operators such as AT&T and Verizon are aggressively investing in assets including additional spectrum and fiber to ensure they can support 5G services during their infancy,” said TBR Telecom  Analyst Steve Vachon. “However, the ROI on 5G is uncertain as demand for the technology and its use  cases have yet to be proved. The opportunity to monetize 5G will be limited initially as the technology  will be a ‘nice‐to‐have’ instead of a necessity for most businesses and consumers.”

Many prominent telecom firms, including British Telecom, have raised monetization concerns around 5G. Even as big telcos like AT&T, Verizon, SK Telecom, China Mobile and Deutsche Telekom are vying to take a lead in the evolving 5G ecosystem.

IT services remained the largest enterprise service segment in 3Q17 as IT services revenue among benchmarked companies increased 4.5% year‐to‐year in 3Q17 to $12.3 billion due to growth in segments including IoT, cloud and security. The benchmark examines how carriers are implementing IoT network technologies, including LTE‐M and NarrowBand IoT, to provide incentives, including enhanced connectivity and reduced power consumption, to attract businesses that are on the fence about implementing IoT as part of their operations. Offering the technologies will help facilitate large‐scale contracts, such as smart city deals, which will be essential for carriers’ IoT businesses to be viable due to the relatively low average revenue per user (ARPU) generated by individual device connections.

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