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21.11.2016

CNews: IT drives operator business transformation

The telecom market is undergoing a dramatic change, thanks in no small part to advances in technology that make innovative, high-quality services available to a growing number of subscribers. CNews interviewed Igor Gorkov, CEO of Peter-Service, to find out about where the progress in technology will take us.

CNews: Which of the current technology trends will have the biggest impact on the telecom market? How will the market change in the next few years?

Igor Gorkov: The telecom market is seeing increasingly fierce competition between digital disruptors and traditional operators. Digital services have their strengths; they have managed to edge out operators in some areas. For example, the rise of messengers has caused a dramatic decline in SMS traffic. However, operators have already moved from merely being on the defensive to adopting a broader view of their own business and potential.

Operators are actively embracing digital transformation, which has a significant effect on their services and management models. They are learning to live in a paradigm where internet traffic and internet services are what their end users actually want. Finally, operators are taking steps to become more efficient in utilizing their infrastructure, which is a resource that no digital disruptor has.

With IoT expansion, widespread LTE adoption and 5G uptake, data transfer will play an even bigger role in the next few years

Those operators who are currently in a digital transformation phase have already realized that by going digital they can not only strengthen their position in their own market but also enter new segments, such as mobile financial services, content delivery and mobile advertising. And it turns out that the focus on data transfer is exactly what they need to succeed.

Every major company is trying to expand into new segments today, with banks getting into telecoms, OTTs launching projects similar to the traditional banking or network operator business models, etc. In the long term, we might expect to see boundaries between industries blur, with all sectors of the economy being increasingly bound together by many ties. Nevertheless, the main trend will continue, with the digital business principles being deployed both in products and services as well as in organizational arrangements and management models of all major companies. And operators will be among the first to adopt them.

CNews: How have the telecom operators’ ICT needs changed? What steps are you taking as a vendor to adjust to those changes?

Igor Gorkov: What operators are asking for now is largely determined by the same major trend, i.e. the focus on digital transformation. Firstly, operators want to replace their legacy business support systems, BSS systems. They reason as follows: if you maximize the efficiency of traditional services and minimize time-to-market for new products, you will be able to free up enough resources to create innovative services. Such services, in turn, require even more advanced IT infrastructure. Hence, they need to undertake a major BSS transformation.

Secondly, data is becoming a resource that a company can capitalize on. Operators collect quite a lot of data; but just collecting is not enough – you have to be able to store and process it. Consequently, big data projects are still relevant. In the big data storage and analytics segment, we have completed a number of large projects this year. We expect the demand for big data solutions to increase in the near future, especially as the Internet of Things market reaches its maturity.

Thirdly, operators are seeking a tighter integration between their core business and partner services. BSS transformation can be a partial answer to this challenge, but in some cases such transformation cannot be achieved without launching specialized platforms like an IoT platform or an MVNE (Mobile Virtual Network Enabler) platform that enables MVNOs to do business. Launching them allows operators to work more energetically to expand their B2B customer base and serve such customers more efficiently.

Overall, IT is becoming crucially important for operators

And if, for some reason, an operator fails to keep up with the pace of change in the market, the only way out to catch up with the competition is to use managed services, that is, to outsource IT tasks to specialist companies like Peter-Service which, having developed an in-depth understanding of the operator business, can make sure that IT projects are implemented in an efficient manner.

CNews: How has the OSS/BSS market changed? What new opportunities have opened up for operators?

Igor Gorkov: The market is in the process of consolidation and standardization. As a BSS vendor, we are striving to meet all of the modern standards and requirements, offering up-to-date solutions amidst stiffening competition.

We have redesigned almost all of our products to implement a new architecture that is based on the TM Forum’s framework standards, including eTOM and SID. It took us more than a year to complete this work; some of our products will be migrated to the new architecture in 2017; however, the changes we have undertaken allow us to offer digital-ready BSS systems to operators today.

What opportunities are available to operators? First, it is the chance to achieve end-to-end convergence. Our company can put together all of an operator’s BSS processes, such as billing or CRM, and arrange for them to be managed in a centralized manner, no matter how many and which services the operator is providing to its subscribers. The second opportunity is to use standardized open interfaces, which opens a way to multi-tenancy. Now an operator can provide its partners with secure access to its database in the manner and to the extent agreed. The third one is to switch to real-time procedures and always-on components that run smoothly even when the load on the BSS increases multifold. This allows the operator to launch any number of third-party services in addition to the traditional services it is already offering.

MegaFon’s bank card project is a good illustration of what I have just said. To launch it, we used the Mobile Commerce option that we had developed earlier as a component of our new BSS. The operator managed to enter the market of payment cards while keeping all of the operations needed to manage subscriber accounts, which became card accounts in the project, within its billing platform. This example demonstrates how our products empower operators and help them expand into new markets.

The key advantage of BSS transformation is that it helps an operator achieve a greater flexibility in managing its own business. With fast new service rollouts, facilitated partnerships, reduced time-to-market for new products and releases, new cost-cutting opportunities, centralized management and planning, the telecom operator edges towards the digital business model. Combined with NFV and SDN, this may have an incredibly powerful effect on the operator’s business.

CNews: What interesting BSS transformation projects have you had recently?

Igor Gorkov: As part of a joint greenfield project with MegaFon, we have just built a completely new environment within which the operator gets all the new BSS features. The BSS transformation at MegaFon is an extremely complex project that will take three years to complete, and the launch of the greenfield environment is just one of its stages.

The project deserves to be seen as unique, even on a global scale, – both in terms of the amount of resources Peter-Service has employed and in comparison to what our competitors have done. The uniqueness claim is supported by the number of subscribers that can be potentially served in the greenfield environment (over 80 million concurrent subscribers across the entire territory of Russia) and the breadth of features that will be available to the operator.

Operators of different sizes are keen on BSS transformation. In 2016, we completed a transformation project for Kuzey Kibris Turkcell, an operator in North Cyprus. Albeit modest in scale (in terms of the number of subscribers involved), it was a landmark project because it showed that our new BSS solution could successfully replace other vendors’ systems. Under a very tight schedule, we migrated the entire customer base to a new-generation convergent billing system that replaced systems from other vendors.

Operator BSS transformation is a key trend both in and outside Russia now; we have started working on quite a few new projects this year. I cannot tell you more about them because I am bound by non-disclosure agreements with our customers; however, we will share some details at the beginning of next year.

CNews: What will the Internet of Things look like in Russia? What can you offer for it?

Igor Gorkov: We have been actively participating in the initiatives of the Internet of Things Association, an organization that was launched not that long ago under the auspices of the IIFD. Now we are working on a national IoT roadmap together with the members of the association. Within our own company, this year we have reached a new level of understanding of the IoT market and made first steps to launching our own IoT platform.

Lack of standardization remains a problem both in Russia and in the global marketplace. If each device connected to a smart home uses its own custom protocol and fails to communicate properly with the rest of the ecosystem, the quality of people’s lives is unlikely to improve to any appreciable levels. The same is true for the industrial Internet of Things – the fourth industrial revolution cannot succeed without standardization.

In Russia, we have a unique situation at the moment where market players have managed to find common ground and have agreed to join forces to support the advancement of this hugely promising field. The Internet of Things has tremendous potential; so, many companies, including both device manufacturers and service providers, have a good chance to enter the market that remains largely untapped.

Telecom operators have an important role to play in advancing the Internet of Things

The structure of Russia’s economy and the country’s size make cellular M2M especially relevant. We have been developing M2M solutions for operators for 5 years now; we have learned a lot about this segment and reached the level of competence that allows us to make the next step, which is building an Internet of Things platform.

There is a degree of skepticism about the Internet of Things, both in Russia and elsewhere. But, a realization that the IoT can improve business performance will eventually lead to its widespread adoption. In some industries, for example, transport and healthcare, the Internet of Things brings much more efficiency improvement and cost-cutting opportunities than deploying any other information systems.

Our new architecture allows us to focus on a platform IoT solution. As I have already mentioned, it includes open interfaces that are integral to it; and smooth and quick integration between devices, services providers and communication service providers is exactly what you need to achieve an adequate level of availability and manageability. That is what the market is lacking.

CNews: What is happening in the virtual operator market (MVNO/MVNE)? How would you estimate the progress in this field in Russia as compared with that in the world’s most technologically advanced countries?

Igor Gorkov: Obviously, the MVNO market in Russia is far behind its EU and US counterparts. It took some time for Russian operators to recognize its potential. Until recently, it seemed that the market was going to suffer from cannibalization as the number of virtual operators continued to grow. But, we saw a different trend emerge as virtual operators started to focus on niches in which traditional network operators had failed to make any progress; and that had a dramatic impact on the market, leading to growth instead of share reallocation.

There was a positive shift in the attitude to virtual operators in Russia as a result. We could see this at this year’s Telco CTO Summer Summit where MVNO/MVNE was the most popular and discussed topic. We are now seeing how the market is moving beyond words to actions, with banks launching MVNOs and social media considering virtual operators offering zero-rated access. And those are exactly the niches that no operator has ever tried to enter: a bank can allow its customer to pay for communication service with bonuses, while social networking sites can provide content without any usage limits.

Faced with such developments, the big four operators may find themselves in a race to connect as many virtual operators as they only can. If an operator has such plans, it can launch an MVNE platform, that is, allow virtual operators access not only to their network infrastructure but also to billing. This will make connecting virtual operators easier and cheaper.

We have developed an MVNE platform that is based on the same component model as our main BSS that has a proven track record of reliability and performance backed by years of use by 50 operators in several countries. The key differentiator of a platform solution is the multi-tenancy option that allows the operator to serve any number of MVNOs within a single billing system.

For a virtual operator, being launched via an MVNE means that the operator needs fewer resources and can activate its first subscribers in the model it chooses in a shorter time

As an MVNE platform vendor, we are ready to join forces with the telecom operator to provide comprehensive assistance and consulting services to MVNOs making their first steps in the market to facilitate and ensure their rapid growth.

CNews: How has Peter-Service changed its strategy? How will relationships with operators change? What will change within the company? Which new products do you plan to release?

Igor Gorkov: We are focusing on BSS transformation, IoT implementation and MVNO/MVNE development. We are looking to expand our presence in other markets where we can offer not only cutting-edge solutions but also incredibly competitive pricing.

We believe that relationships with operators should become even stronger, and a wider adoption of the managed services model should be encouraged. It seems reasonable to develop it, especially if you consider using it together with an IoT or MVNO platform solution.

At the company level, we are continuing to implement the agile methodology and we are not going to stop at what we have already accomplished. With the introduction of new methodologies and approaches, such as Agile and DevOps in the first place, and participation in projects in other markets, our specialists have reached a new level in their professional development. We can see the dramatic positive impact these efforts have had on our company’s performance.

Overall, we are positive about the digital transformation that is underway, and are planning to continue helping operators in Russia and abroad rebuild their IT systems to meet the current market and consumer demands. Also, we are going to carry on releasing new products to allow operators to address the challenges they face in the most efficient way.

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