The Future of Enterprise Telecom Services in India
Telecoms is once again in the limelight for less than desirable reasons. The tug-of-war among telcos and the regulatory and financial eco-system is exasperating.
For an economy at the forefront of digitalisation, this has grave implications and a lot has already been written about it. Having been in the business of ‘telecoms for business’, I think the current spotlight is a good trigger to revisit how enterprises’ use of telecommunications is shaping up for the future.
Enterprise Telecom – An Add-On to the Big Mobile Play
Once upon a time, RCom and TTSL were significant service providers until their flagship business of consumer telephony went under water. And therein lies the rub. Other than Tata Communications and Sify, all the other companies that have achieved a remarkable share of the enterprise telco market, have been big mobile phone operators. Enterprise business teams have ridden the huge investments made in the mobile phone’s reach out to deep rural and semi-urban areas.
A purely enterprise telco would find it unviable to lay its network in thousands of towns with less than 10,000 people. But as a mobile operator, back-haul is already established in the form of a nearby Base Station (BTS). From there, the last mile is covered mostly on Unlicensed Band Radio or UBR for short. This is great for the telco business because it provides additional revenue for the BTS at a small incremental cost, helping them sweat the assets better. For enterprises, it enables enterprise grade network for their remote branches, warehouses, factories and mines.
Can a Stand-alone Enterprise Telco Survive on its own?
With the mobile service provider set of telcos now down to 3 and potentially a duopoly in the future, this old model of enterprise services riding on the investments in mobile networks is under a lens.
Here is why the situation could be different going forward:
1. The enterprise telecoms’ market is itself consolidating geographically with the spread of cloud computing, digital and apps driven UI.
2. OTT platforms are driving enterprise telco revenue growth reducing their dependence on capex intensive retail projects.
3. Large data centres are springing up and these require fat pipes of data on robust fibre ring architecture.
4. SD-WAN adoption is leading to a greater proliferation of hybrid networks where the spoke network may be different from the hub.
5. 4G LTE, 5G, SatCom and bandwidth bonding technologies have the potential to disrupt enterprise thinking for remote locations.
6. Enterprise voice applications are migrating to data or collaboration platforms that run on data rather than pure voice infrastructure.
That RCom and TTSL have their enterprise businesses continuing to operate more than 3 years after their mobile businesses were forced to shut down should offer hope to enterprise-only telcos of the future.
Suggestions for Enterprise’ Networks Managers
Knowing that enterprise is not the driving force behind some of the key decisions at telcos, network heads of business enterprises will do well to take some pre-emptive steps.
I offer a few suggestions:
1. Move away from an MPLS-only network
MPLS has been the network administrators’ insurance against security breach. Cloud and work from home have taught us that security can be achieved in other ways too. Besides, SD WAN is a great enabler of security in a hybrid environment.
2. Divorce Network Ownership from Network Performance
Hitherto, enterprises dealt only with telcos that owned the underlying network infrastructure. Soon, telcos themselves might separate the physical network ownership from their service providing entities. This has already happened for passive mobile infra and there is talk about carving out and/or merging fibre assets into stand alone companies. Network managers need a new contract paradigm to enforce performance without mandating ownership. We expect a whole new genre of agile service providers focused on the needs of enterprises innovating fast and investing in network management rather than burying dollars under the ground in laying fibre or creating mega capacities. This is what we are endeavouring to do at Axon Networks.
3. In-source + Strengthen Security and Outsource Network Management
I have said this earlier in some of my blogs that managed network services will be the norm rather than the exception. It will be too cumbersome, difficult and not worth the effort of enterprise IT to manage its own WAN. IT should aim to add value to business through applications, digital programs and data security.
4. Create Agile Architectures
Digitally connected systems require a modular approach where networks may not necessarily be in control of enterprise IT. New business models and growing complexity of relationships among entities require systems to be integrated and re-modelled in days and not in months. New age telecom companies can be great allies in helping create networks that enable agile architectures.
Rapid digitalisation of businesses and the upheaval in the telecom industry might just be a perfect setting for structural changes in the core connectivity infrastructure of business entities in India.