PARTNER INTERVIEW: Daniel Kurgan, CEO of wholesale carrier services provider BICS, discusses key challenges mobile operators face in shaking off the effects of Covid-19; coming to terms with a broader shift in their business brought about by new technologies, trends and services; and the key role companies like his can play in helping them leverage these shifts.
Mobile World Live: You have been CEO at BICS for more than a decade now: what changes have you seen in the sector during that time?
[1]Daniel Kurgan (pictured, left): When I took the reins as CEO, the world was very different to what it is today.
Much of the technology driving digital-first lifestyles today was only venturing onto the scene: the iPhone had just launched, 3G networks were beginning to roll out worldwide, Facebook and Twitter were testing global waters, and Android and Airbnb were only getting started.
Mobile operators had just invested huge sums of money in 3G spectrum, but most of their revenue was still coming from core services, including voice and messaging. Across most global markets, their attention was on building and protecting market share from challengers, new entrants and aggressive MVNOs.
Consequently, providers like BICS were really focused on supporting them by providing core and interoperability services at the right cost and quality. Our strategy was to grow our network aggressively, to build our reach and portfolio.
Today, the playing field has transformed. MNOs are looking for the value you can deliver on top of the network-driven quality and value proposition. How much can telecom wholesale experts like us help MNOs to grow revenues? What new services can we help enable? How can we support revenue diversification? These are the kinds of questions MNOs have on their minds.
What do you see as the main issues and challenges currently impacting mobile operators? What do they need from their wholesale partners?
Mobile operators’ primary goals are to increase revenues and operating efficiencies in a complex and changing international mobile ecosystem.
One of the key issues affecting MNOs is that the subscriber roaming business is under severe temporary strain due to Covid-19 restrictions. However, devices connected under the IoT ecosystem have continued to grow throughout this year, and are expected to continue to do so. The key to capturing this opportunity lies with operators equipping themselves with real-time advanced analytics for roamers on their networks. With this, operators are able to maximise both subscriber and device roaming opportunities going forward.
The second main imperative is network evolution. The huge increase in mobile data use seen in recent years is driving the need to accelerate the rollout of 5G, in order to access more spectrum, and deliver greater bandwidth to subscribers. They will also need to consider strategies like freeing up 2G/3G spectrum in the medium term.
In this context, the key priority for MNOs is how to drive sustainable growth in the next era of mobile technology. How do we find new revenue streams, serve the enterprise business, monetise 5G, participate profitably in the IoT ecosystem and gain an increased share of wallet?
This goes hand in hand with the need to streamline operations and protect the network and bottom line from fraud. Our vision is to be a trusted partner to mobile operators as they move to this next stage of growth.
What plans does BICS have in place to help mobile operators succeed in the face of these challenges?
At BICS, we are continuously evolving our offer to meet the needs of MNOs across four core pillars:
Helping operators achieve sustainable revenue growth
Operators can still expect opportunities to derive further value from their assets, especially when bridging their network towards the cloud and digital world. This is where BICS can facilitate exchange of traffic and revenues around Voice, Messaging A2P, Data Connectivity and Mobile Numbers. Our recent acquisition of TeleSign puts us in an even stronger position to serve as this bridge, aggregating more than 500 of the world’s largest Internet companies and mobile applications, for use cases such as identity verification via mobile phones and one-time disposable numbers for in-app communications.
Streamlining operational management and maximising profitability
Our suite of solutions helps MNOs stay agile and adapt to technological trends and customer needs. Whether through hubbing services for voice, SMS or IPX, offering Managed Services to streamline operations, or informing on international operations to enrich business models, we have an extensive portfolio of solutions.
To give just one example, mobile operators are facing an influx of inbound machine roamers, which are indistinguishable from human subscribers. To address this problem, we recently launched an advanced analytics solution, enabling operators to identify and pinpoint all traffic on their roaming network. This arms MNOs with the insights necessary to harness the growing inbound device roamer opportunity, anticipating the right quality of service and providing new revenue streams from M2M roamers.
Quality of experience
We provide MNOs with the advanced infrastructure needed to deliver excellent customer experiences, spanning peering, remote peering and satellite connectivity, to VoLTE interworking. Our real-time analytics solutions allow operators to proactively diagnose and resolve issues, thus ensuring a higher quality of experience.
Reducing risk
Telecoms fraud is an ever-present threat, with MNOs losing over €29 billion [2] per year. Our FraudGuard tools and expertise protect MNOs by detecting, alerting and blocking fraud attempts in real time. Our solution also facilitates intelligence-sharing among operators – a critical weapon in the lines of defence against fraud. By protecting their networks, operators can deliver reliable services to customers, and safeguard revenues. We have seen our solution successfully block over 1.1 billion calls to date, saving operators some €2.5 billion.
What should operators focus on next in a post-Covid world? Who will the winners be?
There are numerous factors, but I believe that it is essential for operators to focus on how to monetise the continuous rise in mobile data use from human subscribers and machines, introducing new use cases like Virtual Reality, gaming and other real-time cloud-based applications. Global mobile data usage will grow almost fourfold by 2025 [3]. Now is the time for mobile operators to ready their businesses for future growth.
COVID is accelerating digitalisation and the winners will be the ones who are agile. Agility is the main factor that will enable operators to meet the new needs created by transformation, and to tap into the huge opportunities created by cloud, 5G and IoT, among other things. They need to adopt the mindset of an internet or digital company, rather than a telco.
To provide one example: they need to develop new business models tailored to the needs of global enterprises deploying huge fleets of IoT devices. Many global companies might adopt a quasi-MVNO model, for instance. Operators need to pivot and design models which will serve the interests of these enterprises.
GSMA Intelligence [4] predicts 1.5 billion 5G connections by 2025: those capable of monetising and deploying 5G at the best cost will be at an advantage. If business models are not well-thought-out, operators will struggle to recoup the massive investments in 5G spectrum and infrastructure. It is absolutely crucial for MNOs to work out a smart business model, while ensuring that the customer journey is seamless, and operations are efficient.
What does IoT mean for mobile operators? How can they generate income from it?
IoT is the next big technological revolution which will drive the mobile industry. Ericsson predicts [5] there will be 5 billion IoT devices by 2025 connected via cellular 3GPP access technologies. Cellular connectivity, with its reliability, ubiquity and built-in security, is the best connectivity standard for many IoT use cases, especially for enterprises with large global fleets of devices to manage. Such businesses are going to demand a completely different type of relationship with the MNO: they will adopt an MVNO-like model with high levels of autonomy in provisioning and de-provisioning, managing, troubleshooting and monetising each SIM.
Agile MNOs which innovate are going to be the best placed to capture the IoT opportunity. They must support M2M SIM cards, and develop new business models to support and serve the needs of these global enterprises.
Working with a global enabler like BICS can help MNOs develop these business models and take their support for enterprises from a local to a global scale.
Where can MNOs find the next avenue for growth to offset stagnating income from traditional services like voice?
As I have said before, the rise of data and new data-based services, which 5G will facilitate, is the key driver for MNO growth. One aspect of this is IoT: the cellular IoT market [6] is expected to reach USD 5.31 billion by 2022. More than 155 mobile IoT networks have already been launched and we can expect to see many more in the years to come. Agility and a sustainable business model are key.
Cloud communications is a further area for growth: 2020 really saw an acceleration in digital transformation by enterprises large and small. Public cloud companies are moving into the core networks of MNOs to be closer to the edge and serve enterprises better. The public cloud and big tech sectors are making a number of strategic moves to be closer to MNOs and provide more services to enterprises and consumers. Around the world, we are seeing the world’s largest digital companies making investments into mobile operator networks. MNOs with ambitions towards the enterprise market have a clear opportunity with this migration to cloud through virtual numbers, and the provision of connectivity to the cloud. The cloud opportunity presents MNOs with numerous other avenues for growth. Firstly, MNOs can secure new sources of inbound revenue by monetizing assets such as mobile numbers to support cloud telephony. They also stand to gain termination revenues from voice and SMS traffic. And lastly, the cloud ecosystem stimulates increased use of data between cloud platforms and mobile networks, which in turns delivers more revenues to MNOs.
The messaging business has evolved and transformed more than any other part of operators’ business in recent years. From a P2P-dominated world when I became CEO of BICS, 2.5 trillion A2P messages were sent in 2019 (Juniper Research [7]), which are tipped to grow to 3.5 trillion by 2023. This is driven by use cases like two-factor authentication and customer service. But more change lies ahead: P2A communication is going to become ever more dominant with the increase in chatbots and IoT deployments. Operators must tap into the possibilities of rich communication services (RCS) and Rich Business Messaging (RBM) if they want to meaningfully compete with OTTs in delivering omnichannel engagement with customers. At BICS, we’re studying these trends closely and working with mobile operators to help them develop meaningful global offerings.
I also believe there will be an uptick in the roaming business as we move closer to the lifting of travel restrictions. Big data analytics and machine learning will help ready operators for the increase in demand, understanding network performance and roamers’ preferences, so they can offer value-added services, along with other tailored offers to stimulate roaming use.
I have seen this sector constantly transform and reinvent itself to serve new digital lifestyles, and today we stand at the threshold of the next transformation. The winners will be the ones who are both strategic and agile enough to seize this opportunity and turn it into sustainable growth.
[1] https://www.mobileworldlive.com/wp-content/uploads/2020/12/DK4_cropped.jpg
[2] https://www.europol.europa.eu/newsroom/news/hold-phone-threats-lurking-behind-missed-call-and-other-forms-of-telecom-fraud
[3] https://www.gsma.com/mobileeconomy/wp-content/uploads/2020/03/GSMA_MobileEconomy2020_Global.pdf
[4] https://www.gsma.com/mobileeconomy/wp-content/uploads/2020/03/GSMA_MobileEconomy2020_Global.pdf
[5] https://www.ericsson.com/4adc87/assets/local/mobility-report/documents/2020/november-2020-ericsson-mobility-report.pdf
[6] https://www.marketsandmarkets.com/Market-Reports/cellular-iot-market-232497754.html
[7] https://www.juniperresearch.com/press/press-releases/mobile-business-messaging-to-reach-2-7-trillion
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