Digital Transformation in the Telecommunications Space

Digital transformation in the telecommunications industry is the digitalisation of services offered by telco companies such as text messaging and calling, offered through various competitor apps such as WhatsApp, Facebook and WeChat. The introduction of these apps is a threat to the telecommunications industry not only because it offers direct competition, but also because these competitor companies are often driven by strong customer relationships and brand loyalty. It is much more difficult for a telco to build brand loyalty through services considered “traditional” today with the onset of apps that have grown to be more popular.

To overcome this, telcos must engage their customers to build loyalty and improve services to outdo those offered by competitors. One way to do this is by providing services that are likely to build brand loyalty such as smart home and e-health services that allow the customer to do more than make calls and send messages.

Netherland’s KPN introduced the Asian social networking app – ‘WeChat’ to its network. This partnership enabled their customers to use WeChat’s payment app, buy tickets and make hotel reservations. It has also enabled the network to cater to over hundreds of thousands of Chinese visitors – the country of WeChat’s origin. KPN started their transformation by digitising their business. They consolidated backend systems and unified the digital layer. The process started at the front end and worked with cloud technology and open-source software. [1]

Furthermore, telcos must use traditional services for non-traditional outcomes and applications in IoT settings, such as by building partnerships with health insurance companies to offer e-health services or with home electronics manufacturers to offer connected home services. Hua Liang, Chairman of the Chinese Information and Communication Technology company Huawei, estimates that in 2025 digital services will be 20% of the revenue of the telecoms industry.  [2]

Many telecommunications companies already offer unlimited data plans to attract customers, however, telcos will now need to take a step further by offering a specialised customer experience, flexibility in plans and personalised services. This will further meet consumer demands and build a loyal customer base.

Turkcell, a Turkish mobile phone operator, say they have been changing from ‘being an infrastructure player to being a real digital operator.’ Their decision to begin a transformation journey began when they analysed their customer consumption pattern.

Their average customer spends 3.5x more time on the internet, music, and television viewing than making phone calls. To capitalise on these customers who comprise of about 70% of their total customers, Turkcell launched a digital arm – Lifecell – similar to the social networks, WhatsApp and Facebook. They even developed their own search engine – Yaani. Today, 20% of their customers are on their own e-commerce platform. By not being afraid of data growth, Turkcell has diversified their source of revenue. LifeCell’s core suite of nine digital apps has been downloaded over 80 million times, serving more than half of Turkcell’s customers. This transformation has allowed Turkcell increase revenues by over 50% in the last two years. [3]

Some of the ways telcos can maximise their chances of success in the age of digital transformation are through data analytics, machine learning, and better software. Data analytics, for example, can be used to collect information about network usage patterns to create solutions to future problems like network overloading. Combining this with machine learning, telcos can begin to predict when their network is likely to be overloaded and adjust their capacity in a precautionary manner to offer the best service. Better software will also increase network performance and improve efficiency, even by using existing hardware, allowing companies to save costs and improve profitability in the long-run.

Deutsche Telekom has launched a Pan-net unit that is designed to transform its national operations outside of Germany. Their services to be transformed “started with easiest, such as messaging and voice over Wifi”, and on the business-to-business side, it started with secure cloud services before moving on to cloud-based customer premises equipment. They now have 160 million unique users. [4]

DT in the Telco space is pushing even hardware makers to embrace the change. Finnish mobile hardware seller Nokia has partnered with Infosys to help enterprises digitalize business and operational processes for communications, media, and entertainment companies. This strategy helps Nokia of expanding its customer base outside of the traditional telco sphere, as this will help them diversify into the smart education market, leveraging wireless broadband, cloud and IoT technologies to create digital education solutions. [5]

A business transformation centered around enhancing the customer experience always wins. The telecommunications industry is no exception. Data explosion, soon to be introduced 5G, cloud computing, Augmented Reality, Artificial Intelligence, are all redefining customer engagement and usage of telco networks.



[2, 4]




The impact of 5G technology on Telecommunications industry

The evolution of cellular mobile networks – from 2G when text messaging and mobile data were first offered at the kbps scale, to 3G where faster transmission of data including the ability to video call was available, to 4G which offered even higher data transmission rates at the mbps scale – has resulted in a tremendous growth of the telecommunications industry. With this growth, we have seen greater traffic in cellular mobile networks which, between 2012 and 2016, increased at a compound annual growth rate of 78% [1]. While managing high mobile traffic remains challenging for telecoms companies, the industry is now meeting demands for high data transmission rates with its incoming 5G technology.

5G – the fifth generation of the cellular mobile networks – is expected to release in 2019 and 2020. Built upon the success of 2G and 3G, 5G is expected to bring about a revolution in not just the telecommunications industry, but also advance technologies incorporating IoT (Internet of Things). Moving from the lab to our wireless networks next year, 5G is expected to create strides in the development of smart cities, autonomous vehicles and provide remote healthcare. 5G will enable disruptive technologies to enter the market, including the development of augmented and virtual reality projects.  

Spectacular speed

While 4G can reach speeds up to 100 mbps, it is expected that 5G will enable speeds up to 10,000 mbps, changing the scale at which telecommunications currently operates at. With more power and improved efficiency, 5G may be the pathway towards connecting the world with greater ease, allowing for HD and ultra HD video streaming at faster rates. In addition to improving broadband speed in an era of ever-increasing mobile traffic, 5G will improve user experience while augmenting current LTE (long-term evolution) networks and perhaps even completely replace them in the future.

5G may be a solution to some of the challenges the telecommunications industry currently faces, including the growth in data consumption, resulting from an increase in the use of mobile phones and other devices utilising mobile data. With 5G, mobile operators are aiming to reduce the cost of data delivery which aims to improve the overall efficiency of providing data to customers. 5G will also focus on connecting machines through IoT, however, this is an area which will need further development from the current 5G standard that is being released next year.

The expectation

The onset of the 3G mobile network brought about GPS (Global Positioning System), allowing businesses such as Uber and Deliveroo to offer services that quickly became game-changers in their respective markets. 5G is expected to offer even greater speeds of up to gigabyte per second rates which will enhance the overall user experience. While 5G promises to be nothing less than a universal access network, it is still uncertain how far will it live up to this promise and how quickly it may be adopted by network providers worldwide. While wireless internet has had a great impact on the growth of mobile data users, pointing to the need for higher speeds and efficiency, the real challenge for the adoption of 5G by cellular networks will be in the management of data traffic, for which the telecommunications industry is now preparing for a 1000-fold increase in by 2020 [1].

[1] S. Chen and J. Zhao, “The requirements, challenges, and technologies for 5G of terrestrial mobile telecommunication,” IEEE Communications Magazine, vol. 52, no. 5, pp. 36–43, 2014.