Is the future bright for telcos taking on the tech giants?
Connectivity really is now king. In the new, post-pandemic world, the need for constant, reliable, and fast telecoms infrastructure is imperative to the way many traditional businesses operate. Yet the companies who provide that connectivity are legacy players, with vast infrastructure portfolios that span cities, nations or even across continents.
Few are bigger than French incumbent Orange. Once known as France Télécom, the Paris-based multinational has 266 million customers worldwide and employs 89,000 people in France, and 59,000 elsewhere. It is Europe’s fourth largest telco, with operations in 26 countries, not to mention the 220 countries where its enterprise unit, Orange Business Services, operates in.
Yet, as with the rest of the telecoms market, Orange is facing an identity crisis. Even though demand for the type of service it provides – connectivity – has never been higher, revenues for most major telecoms companies have been flat for years.
While telcos have invested in boosting infrastructure, spending huge amounts on spectrum to support 4G and 5G mobile deployments, other companies – from social media giants to video conferencing firms – have built products that leverage telecoms tools without having to pay for them.
At this year’s Mobile World Congress, the telecoms industry began to push back, with several of the world’s biggest operators openly discussing the need to transition from just being providers of infrastructure into offering better services, solutions and driving technological change.
During the event in Barcelona, TechInformed sat down with Orange SVP Innovation for B2B & Wholesale Jehanne Savi, who acknowledged the challenge facing incumbent operators.
“We have to avoid the commoditisation of connectivity and the as-a-service model could lead to this,” she explains. “But it also opens an opportunity for what we call enriched connectivity or augmented connectivity, by adding services to our offering. This is things like security, on-demand management of networks, access to any cloud services.”
Reaching for the cloud
She says that Orange’s multi-cloud strategy allows its enterprise partners to combine several public or private cloud offers to build a technically and financially optimised IT infrastructure while maintaining control of its main public cloud providers.
According to figures from Orange Business Services, more than 85% of companies that use the cloud have already adopted multi-cloud.
“60% of data in 2025 will be produced by companies,” she adds, citing a study from IDC. “The revenue stream that we may catch from this data is through enterprises, as opposed to the mass market. 70% of this data is supposed to be used in real time, which provides a big opportunity for us. Thanks to new networking technology such as 5G, edge computing, and our real telco expertise with this technology – we can catch that data.
“We are credible because we can combine all of these bricks that underpin new services, but we also have service in our DNA.”
That DNA spans over 30 years since the creation of France Telecom, with more than two decades spent under the infamous Orange logo. Orange will, Savi adds, continue to serve as an operator. But the company is going through a major change, with long-term chief executive and chairman Stephane Richard stepping down when his third term in charge comes to an end this year.
The announcement came after Richard, who took charge in 2010, was sentenced by the Paris appeal court to a one-year suspended jail sentence for complicity in a misuse of public funds case, dating back to 2008 when he was chief of staff of then Finance Minister Christine Lagarde.
The issue of transformation at Orange goes beyond just management, however. Savi explains: “We want to play a role as an operator, of course, but also as an integrator. And so, these are really two pillars of the strategy on the b2b side.
“The game is changing with a few players entering the telecoms field, especially integrators who are offering telecoms services. There are also vendors who want to go further in the B2B market, not just through traditional channels like us, but also directly.”
Then, of course, there are the hyperscalers such as Amazon Web Services, Microsoft Azure, Google, Alibaba and IBM, all who bring their own solutions to the market, which see them act often as both a competitor, a partner and a customer for telecoms firms.
“In this context, we are in ‘coopetition’ – we need to cooperate with guys we are also competing with. To do this, we need to find complementary services. And we’ve been doing this, most recently with Google around edge computing.”
Orange recently announced a strategic partnership with Google Cloud to accelerate the transformation of Orange’s IT infrastructure and the development of future cloud services, in particular edge computing.
The partnership will see the two tech giants closely collaborate. Google will provide its know-how in cutting-edge cloud technologies, data analytics and AI tools, as well as its digital transformation methodology and dedicated resources.
Orange, meanwhile, will bring its expertise in information and communication technology services and its multi-national network infrastructure.
“This is one of the best examples where we complement each other,” Savi explains. “We have certain strengths that could complement them, and we can also imagine new business models from working together.”
“Any layer will be available as a service, so the big value will come from being able to integrate everything. This includes network functions, applications, and add-on services for connectivity such as security or IoT management.”
“The services and sectorial applications can be made specifically for different verticals. Orange has chosen to focus on the smart industry, but we have a strength and credibility in that we have a legacy in connectivity, but with interoperability built in. That is a key value-add.”
This experience of working across different systems, across different countries, and with a variety of services sat on top of their network is central to Orange’s approach to supporting businesses on their transformation journey.
“Partners can benefit from our global worldwide reach,” she adds. “But also, our end-to-end promise, managing devices, managing compatibility, and to aggregate IT needs.”
One key element to Orange’s approach will be 5G and, more specifically, network slicing. The ability to take part of Orange’s 5G spectrum and offer a slice of it to an enterprise to use as a dedicated private 5G network opens several possibilities for companies transforming their operations.
“With 5G and slicing you will buy the quality on demand from us. So, we could bundle that to be end-to-end with where the device is, choosing the slices and managing this quality on the security.”
Another key area of focus for Orange, and specifically for OBS, is SD-WAN. Software-Defined Wide Area Networks allow enterprises to run a wide area network without leasing any of the infrastructure, replacing traditional MPLS models through either hybrid networking, or pure SDN.
On this, Orange partners with numerous companies, including Cisco and Fortinet.
“OBS is betting big on SD-WAN,” Savi explains. “The percentage of companies opting for SD-WAN should triple in the coming years. This is also a big opportunity for us.”
According to Dell’Oro Group, worldwide sales of SD-WAN technologies are forecast to grow at a compound annual growth rate (CAGR) of 24 percent over the next five years, and the market is expected to surpass $4 billion in 2025, despite some delays in deployments due to Covid-19.
When it comes to flexible networking, and the ability to ramp up connectivity, or switch it down on-demand, there is “such a demand from the enterprise side that it becomes a no brainer” says Savi.
“It’s now at this new stage which is to offer cool management of the services so that the enterprise could be autonomous. We are thinking about APIs to offer this co-management capability to enterprises,” she adds.
A telecoms company talking about APIs and managed services. It really is a new world!
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