Cloud BSS in telecom will transform the economics of smaller operators

Cloud BSS in telecom will transform the economics of smaller operators

By Caroline Gabriel, Research Director, Rethink Technology Research

Small and medium-sized businesses (SMBs) in many sectors have transformed their economic model by turning to services hosted in the cloud. In telecoms, the shift from in-house to hosted platforms has been slower, but it is now an accelerating trend. For smaller communication services providers (CSPs), this can mean the difference between survival and failure.

Smaller CSPs have the same competitive pressures as their larger rivals – the rise of over-the-top (OTT) alternatives, data price wars, the decline of telco voice, and so on – but they have fewer resources to leverage.

For many smaller CSPs, a cloud-BSS is the answer. It offers the magic combination of significantly lower software licensing and infrastructure costs, combined with real-time data to support agile business decisions and customer responsiveness, which are the keys to competitiveness.

A cloud-based BSS enables CSPs to scale operations up and down as required (and pay fees accordingly), while mixing and matching the functions they need rather than paying for those which are irrelevant to their particular market or target customer base.

In a recent survey of smaller CSPs, conducted by Rethink Technology Research for Amdocs, respondents were clear that flexibility is their most important asset when competing with larger providers. This is the key reason for a rising level of interest in a cloud-hosted BSS in telecom.

In total, 38% said a cloud-based system was a top three requirement for a new BSS, a percentage which had risen from 33% in a similar study conducted a year earlier. An even higher percentage in the 2016 poll, 68%, expected to deploy some element of cloud BSS within two Rethink Technology Research ‘Cloud OSS/BSS Migration Plans’ June 2016 years. This was higher than the result for the entire community at 61%, showing that smaller CSPs are leading the way.

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Smaller CSPs are moving quickly for several reasons. The impact on their business is often more immediately visible, and they typically have fewer barriers to make the change – though of course they do have reservations, notably around security/privacy, which is cited as the number one risk by providers of all sizes.

And while the initial motivations revolve around increased OPEX efficiency, cost predictability, flexibility and improved customer response, many are also looking for a second wave of longer term benefits. For instance, some CSPs are targeting an improved ability to introduce entirely new types of services, such as those for the Internet of Things (IoT), or to move towards highly personalized bundles or ‘as-a-service’ options for customers.