The Sustainable Telco: Creating Value for Business and Society through Digital Transformation

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2023-05-04 Mark Newman, Chief Analyst, TM Forum
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Sustainability has gradually snuck up on the telecoms industry as an issue that shapes its future decisions and actions. But recently, telecoms operators have begun to act with an increased sense of urgency and prioritisation. Indeed, CSPs’ annual reports consistently allocate larger sections to the efforts that they are pursuing and the initiatives that are still to be undertaken. It was also a hot topic at this year’s Mobile World Congress.

Sustainability can be applied to all functions and aspects of the telecom operator business. It sits squarely within the overall culture of the enterprise, in how CSPs treat their employees, their partners and their customers, how they see their future growth, how they act upon their opportunities and also how they build long-term sustainable capabilities. A CSP organization, that fails to commit to a sustainable way of doing business will have problems recruiting the right people with the right skills, signing up new partners and building the type of brand with which consumers want to identify. And that’s not all, it will also have consequences on their product portfolio and operational processes.

There’s no question about the sustainability of telcos’ core connectivity products. But can CSPs fully exploit all the assets and technologies that go into delivering innovative services? New customer demand and upcoming technologies require CSPs to transform themselves, to be able to adapt to a changing market. Old tools and methods will deliver the same old results. In telcos’ case, legacy systems and traditional approaches can only take them so far. A switch to sustainable technologies through digital transformation, however, will offer both the operational resiliency and the technological flexibility needed for continuous development, and for capitalizing on next-gen tech opportunities, like 5G. Cloud-based digital BSS, with AI in the background will provide CSPs with the tools to become the innovative providers that their customers expect them to be, offering a new level of services and experiences.

There are many elements to building flexible, scalable architectures, including the use of public cloud for requirements and workloads that are unpredictable, and where the ability to scale/descale rapidly is essential.

Software-as-a-Service provides the ultimate solution in sustainability by offering a practically evergreen software, that is constantly updated by the supplier. Besides that, it offers a huge level of scalability, with the elasticity of the cloud and the financial flexibility of consumption-based offers. It allows CSPs to only use the computing resources that they need rather than building systems designed for peak capacity and utilization.

Moving away from having owned, on-premise solutions to shared resources will also bring an additional sustainability benefit: that of reduced environmental impacts.

Sustainability can also be viewed through the lens of the products and services that CSPs offer. That is, how products and services can help customers to be more sustainable in their daily life, eg. with self-service options, smart solutions, etc.

Another aspect of these offers is that, to an increasing degree, customers require more complex solutions instead of simple products. Therefore, telcos will need to form new partnerships with other providers offering capabilities that sit outside of CSPs’ core competencies. Operating in the cloud makes it easier to identify and onboard such partners, to work in new ecosystems, and offer innovative solutions to customers. These business models require a new level of transparency in IT stacks, and a frictionless partnering through the use of open APIs. Such high degree of interoperability is a prerequisite for any service provider in the digital economy. Telcos need to transition from slow, high-up-front-cost product development to a cycle of continuous innovation using partners with a whole range of skills and customer relationships. Building long-term, durable relationships is a more sustainable approach than undertaking huge projects alone from scratch and then abandoning when initiatives don’t work out, but by then investing – and wasting - significant amounts.

CSPs make a significant contribution to sustainability through the technology used to build and operate their networks as well. Less power-hungry networks are good both for the environment and for CSP profitability. Energy-efficiency initiatives such as better cooling systems in base stations and data centers, turning capacity up and down dependent upon traffic levels and open-RAN technology that consumes less energy than traditional end-to-end 5G systems can all contribute to a more sustainable and cost-efficient operation.

The effective deployment of AI-enabled solutions will deliver benefits across multiple functions. In doing so, it will help CSPs manage their energy consumption and their environmental footprint. AI can be leveraged to track, and optimise energy usage, but better management of equipment lifecycles resulting in reduced e-waste is also a great example.

A smarter approach to deploying new network capacity and investing in computing resources can also drive the sustainability agenda. Operators are already making use of analytics and AI to make smarter decisions about incremental network investment.

For operators, using new technologies across their network and IT estates offers a holistic approach to sustainability, as they embrace digital transformation, move to the cloud and utilize the power of analytics and AI on a larger scale. Using more open, scalable and flexible architectures will allow CSPs to experiment, innovate and decide how and when to scale based on the success of a specific initiative.

Focusing on sustainability is not about following trends, and it certainly should not be considered another greenwashing exercise. CSPs genuinely need this to look after their long-term business interests, and while doing so, they must find the right balance between short-term financial targets and a longer-term focus on sustainability.

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