Future Scenario Planning: The “Regulated Innovation” Scenario (part 3)

We’ve embarked on a journey of trying to plan for the future of OSS/BSS, not by predicting the future, but by seeking ways to be ready for possible future situations by using Peter Schwartz’s scenario planning technique.

Using this technique, we’ve identified four possible future scenarios for telco based on two high-impact variables (tech growth and regulatory control) as well as high-impact certainties (geopolitical influence and climate change pressures).

The next step is to now drill down into how these scenarios could impact telco business models and changes to the OSS/BSS industry in turn.

In today’s article, we take a closer look at #1 – Regulated Innovation:

We’ll start with a recap of the features of this scenario:

1. The regulatory environment is tight, with strong privacy laws, strict net neutrality enforcement, net-zero targets and heavy regulation of new technologies. Despite this, technology advances quickly, with breakthroughs in AI, quantum computing, Augmented Reality and LEO satellite communications. Companies navigate a landscape where compliance is crucial but innovative tech provides competitive advantages
2. Western and non-Western countries operate in increasingly separate technological spheres. Suppliers and telcos must navigate complex, region-specific supplier networks and potentially develop different technology standards, supply chains and systems that cater to different markets (if they’re able to navigate the complexities of operating in different markets)
3. Western telco markets are already saturated, highly competitive and even regulated to keep end-user costs controlled, leaving little room for revenue growth. This makes  operations efficiency even more vital than today
4. Driven by net-zero emissions targets, telco infrastructure becomes highly resilient and energy-efficient, with significant investments in renewable energy sources and disaster-resilient designs

Possible impacts to Telco Business Models

Under this scenario, telco business models would likely transform in response to a challenging mix of:

• Strict regulations and compliance (adding further OPEX burdens)
• Having to stay abreast of careening technological development (adding further CAPEX burdens) as well as
• Market segmentation and fostering closer ties with local suppliers due to geopolitical tensions

If today’s telco business model was already under pressure then this “Regulated Innovation” scenario will only exacerbate these tensions.  But how is the business model likely to change under this scenario:

1. Operational efficiency – We’ve recently discussed how a Private Equity (PE) playbook could be applied to drive operational efficiency gains and cost reduction
2. Strategic refocusing – TM Forum has talked about Delayering the (telco) Business, from the vertically integrated models of today into structurally separated models. One example could be an asset light model, spinning off network infrastructure into separate entities (akin to the Infraco model), which would reduce CAPEX burdens and unlock capital for investment in new technologies and services. By specialising in only one aspect of the value chain through delayering, each entity can potentially be more responsive to market changes and focus on its core competencies, driving profitability, efficiency and innovation [As an aside, in addition to TM Forum’s suggestion of InfraCo, NetCo and ServeCo, we’d also suggest the possibility of further segmentation into SalesCo and ContentCo as well. Depending on the level of geopolitical isolation, we may even consider telcos stepping up to provide TechCo services, platforms and innovations, such as AI, analytics, edge compute use-cases such as immersive tech and network security solutions]
3. Financial restructuring – to improve cash flow and balance sheet health whilst still needing further investment for the new waves of technology as it becomes available
4. Service Diversification – using heightened regulation and local presence as a benefit rather than a constraint – to offer services such as cybersecurity or digital content delivery by leveraging local partners / subscribers to replace sanctioned services

Re-framing OSS/BSS Design to Accommodate this Scenario

In light of the diversity of possible business model transformations under this scenario, the design of OSS and BSS would be re-framed for new operational realities and strategic directions. Here’s how these considerations might shape the future design of OSS/BSS:

1. Further Deconstruction of Monolithic OSS/BSS – This is a trend that’s already been underway for a decade or so anyway. Modular architectures are a must, enabling telcos to easily adapt to potentially rapid changes in technology and regulatory requirements. This would require taking flexibility to another next level, but would need to avoid the micro-strangulation cliff potentially looming from microservices architectures. Hyper-flexibility would also allow telcos to integrate new technologies and/or divest large chunks of data and functionality in response to strategic shifts, such as delayering (structural separation). This would also be required to support dynamic scaling.
   Generative AI shows great promise to shrink the code-base of OSS/BSS by doing away with swathes of hard-coded business logic
2. Enhanced Support for Technology and Service Diversification – With rapid technology evolution paired with new monetisation models to support the different delayered businesses, it’s likely that OSS/BSS systems will need to support a broader range of services far beyond traditional connectivity. Highly flexible and elegant data model designs will be required to accommodate technologies, services and revenue models that we can’t even foresee yet
3. Regional Supplier Consolidation – The OSS/BSS supplier market is highly fragmented, with no vendor providing the full gamut of possible functionality. However, there are currently a small number of suppliers that provide a comprehensive array of functionality to a global market. If this “global market” is divided by geopolitical tensions, then this is likely to facilitate stronger integration with smaller local partners and suppliers. This could involve enhanced support for multi-vendor environments and localisation of services as well as compliance with regional standards, regulations and customer expectations. Moreover, seamless multi-supplier ecosystems and workflows must be accommodated by OSS/BSS solutions [However, one important question remains – does the concept of open-source bridge any geopolitical divides?]
4. Dynamic Automation – This model makes wide-scale automation a necessity to overcome financial pressures. The rules-based automations that prevail today (ie automations based on hard-coded rules) simply can’t be re-coded fast enough to adapt to the rapid changes described earlier (including new tech, new business models, structural separation, new regulatory regimes such as data protection and net neutrality, etc). Even today’s learning algorithms (AI/ML) require model training on large datasets with a stable baseline. Future automations will need to cope with far more transient scenarios and will likely rely on future technologies.  Dynamic automation is also an important mechanism for overcoming the problem of knowledge locked-up in the heads of an aging telco workforce. Rules-based automation still relies on that knowledge. Next-generation tech must overcome that knowledge dependence
5. Trust and Security – OSS/BSS and even telco networks / services more broadly are underpinned by the premise of trust. Attention on trust and security only amplify in a highly regulated, politically-charged world. A breakdown of either will have significant ramifications under all scenarios, but this one in particular. Post-Quantum Cryptography (PQC) must be on the design agenda for OSS/BSS of the future
6. Exponential Technologies –  Under this scenario where technology proliferates, but within regulatory constraints, we’re likely to see a rapid impact of exponential technologies (eg AI, Augmented Reality, quantum computing, etc), albeit not quite as quickly as scenario #2. Each one of these technologies has the potential to impact OSS/BSS (eg immersive presentation of telco data by AR, design of OSS/BSS user interfaces that leverage generative AI, etc), but also impact the networks managed by OSS/BSS (eg immersive data generation has large bandwidth requirements, but also potentially needs low-latencies offered by edge compute). Perhaps the more stark aspect of exponential technologies is that legacy enterprises (telcos, OSS/BSS suppliers) may be unable to build necessary / critical capabilities and will be usurped by exponential start-ups, changing the markets into which we operate

What do you think? What considerations did we miss from this scenario (and we’re in no doubt that we missed lots of possible considerations)? Leave us a comment below with the ideas you have that would enrich this first scenario of four.