Executive Summary: ISG Provider Lens™ Telecom, Media & Entertainment Services - North America 2023
“More for less” is the operating mantra for the telecom, media and entertainment industry
Over the last couple of years, North American telecom, media and entertainment enterprises have navigated through inflation, continued competition, regulatory hindrances, layoffs and disruption of business models. With the widespread rollout of 5G and fiber-to-the-x (FTTx), growth in data traffic continues unabated. Enterprises are balancing variety, accessibility and quality of content with freemium models. Technological advancements have however reduced data carriage costs, accommodating users in a regulated industry where spectrum and customer attention are always scarce.
As enterprises compete and cooperate for the same price-conscious subscriber, the need for one platform, one bundle and one subscription has become paramount with product simplicity and consistent service
quality. With 5G monetization still underway, most connectivity spend by enterprises is being repurposed and remodeled to embrace the shift from product-based to platform-based business models, which are collaborative, interactive and responsive. Connectivity has emerged as a foundational enabler of digital initiatives and a catalyst for CX, from mobility to secured cloud platforms to industrial IoT and smart homes.
This connectivity glue enables the digital world with distributed cloud and edge platforms.
Under current operational, business and macro-economic conditions, more for less has been the operating mantra of the industry. As the telecom, media and entertainment (TME) industry transforms itself by adopting alwayson service delivery and operating models, including outcome-based, customer-centric models, cloud adoption within the industry is expected to increase for core and non-core functions. The use of AI-assisted and cloudgoverned assets, more so at the edge, will rise to manage, optimize, secure and monetize disparate IT and business assets in the forthcoming years. Further, cloud aggregation and infrastructure disaggregation will become table stakes for TME enterprises. The rise in the development and migration of cloud-native
applications in core business and functional areas will necessitate the use of microservices, containers, open source and DevSecOps. In a hybrid or multicloud setup, tight coupling between business, network and IT teams becomes critical as enterprises transition from a traditional company to a tech-company.
The need for collaborative R&D, upskilling and cross-border talent movement remains pertinent. With joint standards development, cloud-led alliances and interoperable assets, investments in cybersecurity and new-age technologies such as extended reality, antiad-blocking, Wi-Fi 6 and 6 GHz spectrum co-existence with cellular bands, automated journalism, and wearable and AI-driven video creation will become the new norms.
In all cases, the data quality with continuous content curation and collaborative data sharing holistic governance will dictate the adoption of new age technologies such as blockchain, non-fungible tokens (NFTs), secured Web 3.0 marketplaces, and uniform environment, social and governance (ESG)-led initiatives. The
existing regional differences in data privacy and security regulations among the U.S. and various countries will likely lead to federated AI and data frameworks.
An integrated data platform that leverages AI- and ML-based end user and network data is crucial. This platform, or the digital twin of the network, has several benefits TME enterprises:
• Orchestrates and assures made-to-measure plans using federated data and dynamic query tools
• Enables auto-discovery among active network elements from various vendors for single-pane-of-glass observability
• Enables self-serve capabilities as enterprises evolve from an engagement-first to a delightfirst approachz
Implications for service providers
Implications for service providers, this would indicate that emphasis on agile architecture and operations strategy, design and execution of technology services is paramount. Providers will need to leverage hybrid, multicloud, multivendor, multi-technology and multiconnected assets using full-stack development and support capabilities. In a tough operating climate for TME companies, where customer requirements change rapidly, providers are expected to implement automation for process optimization, free up monetary resources and speed time to market by using real-time, edge-based analytics as more processes are
deployed at the edge. A unified system of record to enable single-pane-of-glass observability with layered security is equally imperative for CXOs, with a preference for partner-based models that drive efficiencies, provide flexibility and are user- or customer-centric. This will propel the use of generative AI (GenAI) across
customer, product engineering, enterprise servicing and partner management.
Collaborative risk management techniques in an ecosystem will likely enforce the use of standardized tools where ethical AI and ML modeling is preferred, lightly governed or regulated (or even crowdsourced) to
enable innovation. They will also be used where apps are released based on security posture mandated by clients. As trust-based systems pave the way for a superior customer experience (CX), a healthy mix of insourced, acquired (from clients or global captive centers), re-shored capabilities and outsourced functions are needed to balance the reuse of assets and build differentiated intellectual property (IP) and skills. Citizens Broadband Radio Service (CBRS) in the U.S. is the best example of leveraging shared spectrum by operators such as Federated Wireless with neutral host push. Still, there are others, such as the Ofcom-sponsored model in the UK, for telecom providers (telcos) to lease unutilized spectrum in local areas to interested third
parties. The use of open innovation models and bolt-on complementary acquisitions will also likely be encouraged by U.S. and Canadian TME enterprises.
ISG notes the following trends and imperatives for service providers catering to the telecom vertical evaluated in the study:• Platform investments with cloud-native and edge AI investments hold ground: Providers must be quick in integrating cloudconnected ecosystems for cross-industry transformation and monetization. IBM,
for example, has used AI and automation to build service wrappers on top of core business functions by leveraging ecosystem partners. Data-intensive and AI-driven industry use cases such as business support
enable value creation for the telco-to-techco transformation projects.
• Data-led GenAI movement dictates AI and automation trends: Most providers are quick to release use cases backed by previous AI investments. They are now riding the Gen AI wave with accelerators used for various use cases such as software development, user support for billing/loyalty, weather forecasting, customer sentiment analysis for call centers, faster visual inspection for tech services firms boosting ecosystem services and others.
• Network and service transition morph into observability and experience centricity: With 5G mmWave and fixed wireless access (FWA) expansion in the U.S. and Canada, virtualization and edge computing are driving hyperautomation using hyperscaler platforms. ISG sees the rise of selfmonitoring, self-configuration, self-healing, self-optimization and self-evolution of telco network infrastructure. These techniques simplify network architecture, employ autonomous domains and automate intelligent business and network operations with SD-WAN, SASE and private networks, enabling closed-loop control and insights for digital businesses.
• Cybersecurity takes center stage: As per ISG’s network transformation survey (n=199 global enterprises) in 2023, 75 percent of enterprises mentioned network security as the number one priority until 2024, followed by cost optimization and modernization. As a customer-centric industry, protecting consumer data backed by the laws of the land, securing communications channels, preventing service disruptions and adapting to new threats are much needed by telcos. Trusted digital entities with blockchainenabled micro-transactional flexibility are needed to tackle fraud across the network (5G) and endpoints as well as cloud, identity and perimeter. As service providers target DevSecOps for operations, the focus needs to be equally developed on architecture agility based on threat modeling, baking in security user stories, morphing chaos engineering in pre- and post-production systems.
ISG notes the following trends and imperatives for the service providers catering to the media and entertainment vertical in the study:
• Decline in linear ad revenue accelerates investment in digital and non-linear platforms: There has been a significant increase in the scope for shared services for media operations and addressing longstanding integration challenges of technical debt layered by multiple acquisitions and industry consolidation. Growth in integrated and omnichannel ads and improved monetization techniques lead to hyperpersonalization as free adsupported streaming TV (FAST) subscription models continue to drive subscriber growth with broadcast interactive capabilities. In a competitive ecosystem where tech companies take a large share of impressions and viewers, it challenges broadcasters to be strategic and balanced with pricing and human touch to retain viewers and subscribers.
• Move to cloud dominates with edge assets: The use of data platforms is democratizing access to insights fueled by cloud migration. Content Delivery Network (CDN) use cases that include edge, security, video and other API sets will continue to enable remote, mobile or cloud production. Remote integration capabilities on the cloud will enable real-time polls, chats and Q&A sessions during live broadcasts, enhancing fan and user engagement.
• Continuation of GenAI and automation-focused approach: As the focus on metaverse and Web 3.0, content platforms and spatial computing rises, the GenAI movement supports a creator-based platform economy, which further improves the automation of non-strategic and repetitive tasks. However, for artificial general intelligence to permeate within the media and entertainment vertical, data collection wherever and whenever required with user consent), non-biased algorithmic developments and cognitive architectures need to be fused with self-supervised learning, common-sense reasoning and multi-modal learning (where video contributes equally with text and images).
• Cross-play functionality is becoming more common in multiplayer games and eSports: Providers must focus on non-traditional domains such as eSports along with podcasts, radio and other audio content assets. Cloud gaming services are gaining traction, allowing clients to stream games to various devices. Hence, platform compatibility and SDK engineering are necessary capabilities to drive cross-platform adoption and monetization.
The contours of the telecom, media and entertainment industry finally depend on how disruptive technologies can enhance the CX to provide continual feedback to the network and service operations teams. As the need for observability rises with more network resources being deployed at the edge, operational complexities are expected to increase with bundled offerings blending security, collaboration and intelligent connectivity. Hence, a healthy mix of insourcing and outsourcing ITS and BPS functions is critical to balance costs, customer centricity, strategic vision, IT-OT convergence and core operations.
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