4 minute read 4 Feb 2021
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CSP to DSP: Why one letter makes all the difference in telecommunications

By Peik Schulman

Senior Manager, Global Business Development, 5G and IoT, Ernst & Young Oy

Excited about cross-industry innovations with emerging tech. Driver of collaboration with a motto “you are stronger as a team.” Soccer dad.

4 minute read 4 Feb 2021
Related topics TMT Telecommunications

Communications service providers (CSPs) need to find new ways to remain relevant to their customers.

This article is part of the EY NextWave Telecommunications Journal

In brief
  • Communications service providers (CSP) must transform into digital service providers (DSP) to remain competitive.
  • No matter where they are in their transformation, CSPs must work together with partners from different sectors to create their own ecosystem.

While there are almost certainly too many initialisms in our industry, these two are well worth our attention: communications service provider (CSP) and digital service provider (DSP). But, despite there only being a letter’s difference between them, the journey to get from one to the other isn’t as simple as it sounds.

As someone who works predominantly within the areas of 5G, internet of things (IoT) strategy and business development at EY, I can tell you that to make the most of the opportunities that these new technologies present, CSPs must transform into DSPs. And no matter how large or established they are, they need to move away from simply selling voice data packages to becoming true enablers. Why? Because it’s the only way to keep up with a market that’s currently more competitive than ever.

Although it’s true to say that no one really knows what the future holds, what we do know is that competition is fierce, with everyone from private network providers to small newcomers all vying for a bigger share of the market. Disruptive by nature and agile by design, these businesses are staying close enough to established enterprises to learn the way — but remaining nimble enough to take flight and soar ahead.

Choose your transformation

If you’re a CSP looking to keep up with the high-flying over the top (OTT) competitors, while avoiding the erosion of your legacy revenue streams, you need to think of new ways to maintain relevancy. So, here are four main transformation types that you can consider:

  1. Infrastructure focus
    Move away from your traditional operating approach to become more of an infrastructure as a service (IaaS) provider.
  2. Consumer play
    Redefine your consumer approach to become a digital experience provider, using key partners and third parties to enable the change.
  3. Enterprise play
    Become a digital enterprise partner, working closely with specific, targeted verticals and focusing more on scaling use cases.
  4. Futuristic model
    Transform into a disruptive telco by employing a platform-based business model, and turn your existing services into a toolbox of sorts that can be used to help up-and-coming spin-off businesses launch quickly.

Build your own ecosystem

While many CSPs have already embarked on the journey to become DSPs, they remain vulnerable to shifts in technology cycles, competitor actions and customer needs. So, no matter which type of transformation you choose to pursue, working together with partners from different sectors to create your own ecosystem is a key strategy.

Despite a traditional focus on the consumer, it’s important to understand how to take advantage of other markets in a business to business (B2B) or a business to business to X (B2B2X) context – and this is specifically where the 5G opportunity lies. So, consider where and how you’ll apply 5G, what it means to your business, how you’ll price it and who’ll pay for it. Break down the value chain and discover the opportunities.

Similarly, if you consider 5G by itself, then you’ll just see a technology. But when you combine it with other leading-edge technologies — such as AI, AR and VR — suddenly, you get something new to bring to the table. After all, consumers will expect new experiences if they’re to pay more for a service, so you need to consider the art of the possible.

For example, is there a gaming treasure hunt app you can develop to promote new incentives, with embedded videos and interactive elements that only 5G can enable? Or what about a tailored sports experience where people can watch a live event and track individual players in real time via body-mounted cameras? To enable any of these things, you must operate in an ecosystem with partners who understand the sector-specific business problems.

Work with a trusted advisor

As with anything new, it’s wise to take guidance from a trusted advisor — to help transition from CSP to DSP by delivering value in three key areas:

  1. Understanding hype vs. reality
    Keeping track of every single new piece of technology in a rapidly evolving world is a daunting task. That’s why you need a partner to help you assess the relevance of the latest trends – so you don’t have to. Yes, telcos quite often have exciting use cases and ideas lined up already, but the right partner can help to put them into the context of reality and make them actionable.
  2. Being aware of the business impact
    Telcos must understand what change means for them — and how it’ll affect their business. An impartial but knowledgeable advisor can introduce the possibilities and define how an operating model might change as a result and also use cross-vertical knowledge to help assess the impact in a broader market sense.
  3. Assessing the risk factor
    Crucially, an outside advisor should have the deep experience with risk to highlight the threats that 5G and IoT might bring — and not just cyber threats, but whether or not it will allow new players to step into the fore and compete for revenue.

Summary

While many CSPs have already embarked on the journey to become digital service providers, they remain vulnerable to shifts in technology cycles, competitor actions and customer needs. No matter which type of transformation they choose to pursue, working with partners from different sectors to create their own ecosystem is a key strategy.

About this article

By Peik Schulman

Senior Manager, Global Business Development, 5G and IoT, Ernst & Young Oy

Excited about cross-industry innovations with emerging tech. Driver of collaboration with a motto “you are stronger as a team.” Soccer dad.

Related topics TMT Telecommunications