Service providers everywhere are suffering severe margin crunch

In a full and frank interview, Nick Green, Marketing Director of Three says the move from selling a connection to selling connectivity will have far reaching consequences for CSPs, partners and vendors alike. To begin with, going cloud native is an absolute and immediate necessity as CSPs transform into DSPs. If the move isn't made now, subscribers will churn away to providers able to offer the best services - and the best services will, of course, be cloud native. 

Three itself is in the process of going entirely cloud native because the company fully understands that it's the only way to achieve real network scalability, capacity, speed, consistency and reliability. Last summer Three launched it's 5G home broadband service and the reaction of subscribers has been hugely positive. Three's experience to date is that 80 per cent of all traffic on the service is streaming video. Nick Green says this will only increase and the demand on the network is incredible. He adds, "Our network capacity and usage charges look terrifying. You wouldn't want to ski down them." 

He says it is no longer good enough for a service provider to have a server in just one location routing traffic back and forth. Scalability is the name of the new game and services need to be as close as possible to customers, wherever they are. The way to ensure that is through edge computing and cloud technology. A bonus for CSPs is that by putting services exactly where they need to be, the development of tailored, differential and customised pricing models is enabled and that will help ameliorate the severe and deepening margin attrition that all CSP's are suffering.

Meanwhile, for CSPs the hyperscale companies are both a blight and a boon. They are viciously serious competitors and yet, simultaneously, may well develop into future business partners of the telcos so it is impossible for them not to work with the OTTs. For Nick Green the trick will be to deliver hyperscale services that are beneficial not only to consumers but also to the telco itself.

Nick Green reckons that if telco transformation is ever going to be achieved in any meaningful way, CSP/vendor business models must change and new ways must be found of working with partners and vendors to enable the likes of Three to deliver better services that the operator can, at the very least, charge the same for them whilst devising novel new ways to add value and so increase charges going forward. He says, "If we don't change we (the CSPs) will become a minor part of the whole, not a key piece."

Filmed at: Great Telco Debate, London, December 2019