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Navigating the perfect storm: Observability as a key enabler for the Telco Sector
- The telco sector is pressured by commoditisation, infrastructure needs, demanding regulations and evolving customer expectations.
- Observability is a key enabler in overcoming the challenges.
- Observability will help telcos emerge stronger, more trustworthy and more nimble in the current climate.
The global business landscape is being reshaped by a surge of converging challenges. From geopolitical instability to rapid technological disruption, organisations across all sectors are facing unprecedented pressures. The telecommunications sector is navigating a convergence of powerful forces: technological disruption, economic headwinds and evolving customer expectations. This “perfect storm” demands a new approach and observability acts as the key enabler for transition to a future, where visibility and trust are paramount.
In this article we describe how observability serves as a key enabler for successfully implementing strategies to navigate this complex landscape.
A convergence of pressures
The telecom industry is experiencing slow growth, and global industry revenues will rise at a compound annual growth rate (CAGR) of only 2.9% through 2028, below the projected rate of inflation, at which point total revenues will edge up to US$1.3 trillion.1 Our Global Telecom Outlook 2024-2028 highlights that with products and services being commoditised, there is an ongoing need for infrastructure investment, regulatory reforms, and adoption of AI in the industry.
Globally, the sector experienced high levels of BMR pressure at the turn of the millennium; and more recently pressure has increased again, with levels nearing historic highs creating a “perfect storm” of pressures.
While commoditisation is eroding core revenue, a need for infrastructure investment and service excellence is straining resources. Simultaneously, increasing regulatory demands around reliability, privacy and AI ethics are adding complexity.
Caption: The pressure to reinvent the Business Model in the Telecom Sector is near a 20-year high driven by the impacts of COVID-19 and increasing regulatory pressure.
Privacy and governance: Evolving privacy regulations around the world are creating complexity in how telco service providers collect, store and utilise data. Balancing data-driven innovation with stringent privacy requirements is going to be crucial, and answering the call for effectiveness and accountability of business systems and data practices.
Trustworthiness and ethics of using AI: The use of AI in business decision making, network management, customer experience, and service delivery brings heightened scrutiny regarding its ethical implications. Concerns about algorithmic bias, the lack of transparency in AI driven outcomes, and the potential for misuse or inaccuracy of AI are growing.
“Clinical” approach to maintaining essential services: Regulatory bodies are expecting telecom providers to maintain essential services with “clinical” precision, ensuring near-zero downtime, high reliability, and preventing frauds and scams. There is pressure to invest in resilient infrastructure and robust disaster recovery mechanisms.
ARPU is declining: The industry is currently in a situation where almost all the cash it generates is absorbed by capital expenditures, dividends and servicing debt, leaving very little for investment in innovation or enhanced customer experience. In addition is the impact due to over-the-top (OTT) services and increasing competition in the digital ecosystem.
Perspectives from the Global Telecom Outlook 2024-2028
The telecom industry can find new pockets of revenues and value creation amid challenging headwinds.
The road ahead
However, this storm also carries opportunities. Telcos are uniquely positioned to lead the way and explore the potential of AI to enhance B2C services, push for B2B growth through verticalisation, enable the expansion of 5G services even in private, promote the growth of cellular IOT, among other pathways to navigate out of the current environment. The need today is to create business differentiators, radically transform the adoption of technology and ensure value creation in a way that is responsible and trustworthy.
Observability: A strategic imperative
To not only weather this storm but thrive, telecommunication service providers need a new level of insight and agility. In the face of these pressures and opportunities, observability emerges not just as a technical capability, but as a strategic imperative for telecommunication service providers. In a sector undergoing rapid transformation, observability provides the essential insights and agility needed to navigate complexity, drive innovation, enable transparency and ensure sustainable growth. It helps by:
Guiding AI-driven service evolution: The effective deployment of AI hinges on the ability to monitor, validate and optimise AI performance. Observability empowers to move beyond “black box” AI deployments. By providing granular visibility into AI model performance, data drift and decision-making processes, it enables them to proactively identify and mitigate biases, ensure regulatory compliance and optimise AI-powered customer experiences. This translates to increased trust, reduced risk and enhanced service quality.
Orchestrating B2B growth strategies: As telcos prioritise B2B growth through verticalisation and horizontal plays, observability enables management of service level agreements in complex B2B solutions, monitors network performance, and optimises the performance and personalisation for the customer.
Unlocking the potential of 5G monetisation: With 5G set to dominate mobile subscriptions, telcos need observability to optimise network performance, and manage the complexity of 5G deployments to ensure a high quality of experience for customers. And this is not just about monitoring; it is about monetising it to effectively optimise network slices with operational insights, and proactively manage network performance.
Powering the expansion of IOT: The growth of cellular IOT presents both opportunities and challenges. Observability provides the visibility needed to manage IOT deployments at scale, monitor device connectivity and data flows in real-time, detect anomalies that may indicate threats and ensure the reliability of networks. It enables the transition to managing IOT ecosystems from being a provider of connectivity.
Laying the foundation for the AI grid: As the telecom sector plays a crucial role in building the AI grid, observability becomes essential for managing the underlying infrastructure. It forms the backbone of real-time insights needed to ensure performance, reliability and scalability of this critical infrastructure required to orchestrate the complex interplay of connectivity, compute and energy.
Final thoughts
Beyond enabling these, observability becomes the steel thread that binds the risk and control profile to deliver strong business outcomes. It provides the granular visibility needed to ensure continuous compliance with evolving regulations, maintain the trustworthiness of systems and optimise operations to reduce the cost of change and improve efficiency.
Observability is the key to not only navigating the “perfect storm” but emerging stronger, more trustworthy, and more nimble in the current climate.
If you would like to find out more about Observability, please contact Matt Cudworth, Louise King or Arya Choudhury.
Contact the authors
Matt Cudworth
Lead Partner, Digital Engineering, PwC Australia
Louise King
Partner, TMT Industry Leader and Many Hats Program Lead, PwC Australia
Arya Choudhury
Director, Advisory, Digital Engineering, PwC Australia
References
- https://www.pwc.com/gx/en/industries/tmt/telecom-outlook-perspectives.html
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