Why Service Providers Must Focus on Network Transformation

Service Providers globally are challenged with growing their revenue while managing their increasing costs in the midst of a rapidly evolving telecommunications market. Additionally, recent heavy investment in 5G license and equipment, and the lack of monetization opportunities, have further exacerbated the situation.

To maximize the benefits of infrastructure without falling behind the industry’s best practices is a challenging path. As such, Service Providers (SPs) are now seeking solutions to make their networks flexible enough to meet current customer Service Level Agreements (SLAs) while also cutting down on capital expenses (Capex) and operational expenses (OpEx). This means lowering their cost per bit.

To achieve that, though, they need to move away from traditional network building methods. The current situation is an ideal chance for them to review their network architecture and infrastructure. This review will help them understand how to better serve their customers and meet new key priorities. These include reducing service costs, improving energy efficiency, optimizing infrastructure, and adhering to broader sustainability measures. Above all, it will also help them achieve their ultimate goal: to maintain high-quality service for their end customers.

Cisco has extensive global experience and has been collaborating with some of the world’s top Service Providers (SPs) to realize their vision of building future-proof networks.

The key drivers for this new, efficient method of network construction include leveraging smarter equipment powered by technologies that are more energy-efficient, flexible, and scalable. Another focus is on converging network layers by anchoring their ecosystem on automation and Artificial Intelligence (AI) to enable effortless optimization. Additionally, building security and observability into the network is crucial to protect users, regardless of their use case nature.

Understanding the dilemma SPs face today

SPs have traditionally been keen to invest in transformative technologies to address evolving use cases to benefit their customers. Their mantra has always been ‘the network’ is ‘the business’.

Their focus has always been on delivering better experiences to end users – be it enterprises or retail consumers. To that end, everyone is focused on making big investments in 5G.

After all, 5G powers solutions such as Enhanced Mobile Broadband (eMBB) which helps users anywhere get high-speed data, Ultra-Reliable Low-Latency Communications (URLLC) which enables autonomous cars and tele-health use cases, and Massive Machine Type Communications (mMTC) that bring the internet of things (IoT) and Industrial IoT (IoT) to life.

However, despite their best efforts, the interest consumers have shown in new-age use cases driven by 5G has not translated into a rapid uptake of services and roll-out of some of the cutting-edge use cases. The delayed monetization of these use cases has definitely resulted in a stagnation of average revenue per user (ARPU).

Further, SPs are realizing that the route to 5G implementation they might have chosen has led to a rise in infrastructure & operational costs, which is compounded by the rise in per unit energy prices in most geographies around the world.

Driving change with network modernization

The bottom line is SPs are facing increasing pressure to manage and reduce their operational expenses (OpEx) while simultaneously meeting the growing demand for high-speed, reliable, and innovative services. That’s a truth everyone agrees with.

To change the situation in their favor, SPs need to accelerate the modernization of their network infrastructure. This will enable them to embrace more energy-efficient and high-performance products & technologies like Cisco’s Silicon One coupled with network layer convergence and AI powered data centre. By upgrading the transport & data centre infrastructure that leverage this architecture, telcos can benefit from reduced energy consumption and a smaller physical footprint, directly impacting OpEx through lower utility and real estate costs.

Additionally, Cisco’s spine-and-leaf network architecture offers scalability and flexibility, which is critical to address the surge in data traffic and supporting the diverse needs of 5G networks without exponentially increasing operational costs.

Automation is a key area where telecommunications companies can significantly reduce OpEx. By using network automation tools, they can simplify various network management tasks such as configuration, provisioning, monitoring, and troubleshooting. This leads to a quicker deployment of new services, thereby improving the time to market.

By reducing the reliance on manual processes, SPs can not only cut down on labor costs but also minimize human errors, leading to a more reliable network that requires less reactive maintenance and support which will eventually help them achieve higher SLAs and delight their customers.

Further optimizations in the network operations and maintenance space are possible by leveraging advanced analytics and AI technologies. Network analytics tools, for example, can provide deep insights into network performance, user behavior, and potential security threats. This information enables SPs to make data-driven decisions, optimizing network resources, and pre-emptively addressing issues before they impact service quality or lead to costly downtime.

Finally, any solution offered without a clear focus on sustainability is no solution at all.

Industry-leading, energy-efficient platforms like Silicon One and Cisco Modular Compute are essential for building highly efficient transport networks and data center infrastructure, consuming the least amount of power. These platforms are invaluable tools for Service Providers (SPs) today. They help in significantly reducing utility costs and operational expenses (OpEx), with some accounts indicating reductions as high as 75% – a remarkable achievement. Additionally, investing in sustainable technologies can boost an SP’s brand and attract customers in a market that is becoming increasingly environmentally conscious.

Overcoming challenges with network transformation

SPs are at a pivotal juncture where the demand for innovative, high-speed services and the imperative for cost-effective, sustainable operations converge. The path forward is network transformation, embracing the cutting-edge technologies like network convergence, optimize data centre operation with AI powered data centre, also achieving scalability with spine-and-leaf network architecture offer.

By doing so, service providers can build highly scalable transport infrastructure while significantly reduce their energy consumption and operational expenditures, which is vital in today’s economically and environmentally conscious global market. Modernization through Cisco’s solutions empowers service providers to manage the increased data flow of 5G networks efficiently. Automation and AI-driven analytics further streamline operations, reduce costs, and enhance service reliability.

This proactive approach to network management can help service providers break the stagnation in ARPU and fuel new revenue streams. Moreover, the move towards more sustainable network practices isn’t just a corporate responsibility—it’s a strategic business decision that resonates with the values of modern consumers and sets a precedent in the industry.

By integrating Cisco’s energy-saving platforms & technologies and committing to sustainable operations, service providers can not only carve out a competitive edge but also contribute to a more sustainable future for all. By taking bold steps in network transformation, SPs will not only future-proof their businesses but also drive the industry forward to a more efficient, sustainable, and interconnected world.