I recently had the opportunity to talk with some Communications Service Providers (CSPs) about the opportunities that high speed networks offer them. All of them agree that high speed networks will drive cloud computing and mobility. Indeed, they will drive huge transformation in all industries.

As I mentioned in earlier posts, these changes in technology will invert the relationship between business and technology. Technology is now driving business rather than business driving technology. Only a few years ago, business sought technology products and services that could increase the efficiency and effectiveness of their processes. For example, DVD rental firms sought technology that could assist them in sourcing DVDs, managing their accounts and so forth. They certainly did not expect organizations such as Apple, Amazon and Google to enter their industry and transform it completely, in a few years. In the entertainment industry, technology has almost completely transformed the industry in a way that would have been unimaginable to most people only a few years ago.

So how is this affecting CSPs? Well, CSPs are playing a key role in industry transformations. It is they that provide the infrastructure to enable cloud computing and mobility. CSPs need to understand how industries are being transformed by technology and work with businesses to enable them to benefit from these changes. This may involve acquiring new skills or it may involve partnering with organizations that offer business transformation skills. It will also involve a transformation in CSP business models.

In mature economies, CSPs are facing profound challenges. Their traditional revenue streams associated with voice services are declining. The prevalence of smartphones and other intelligent mobile devices are, of course, offering opportunities. But, service providers around the globe struggle to monetize mobile data. CSPs are placing increased focus on reducing costs dramatically in order to remain profitable. This is not sustainable. The key challenge faced by CSPs is that the opportunities offered to them by high speed networks and the move to cloud computing, require them to focus, to a greater extent, on customer experience and personalization. For most CSPs in mature markets, this is a huge challenge. They typically work with highly heterogeneous IT environments with a lot of legacy infrastructure. Their historical investments were concentrated on providing the same service to a mass market.

Today’s requirement to focus on personalization and customer experience requires a transformation in the business models of most of today’s CSPs. CSPs typically offer plans with limited flexibility. Plans need to be dynamic and contextual. In other words, they need to be highly personalized and change according to a customer’s circumstances. For example, most people turn off the data roaming feature on their smartphones when they travel to another country. Often, they have previously paid the penalty for failing to turn off the data roaming feature. It is not uncommon for smartphone users to suffer severe bill shock when they receive a bill for over $1,000 after their first trip to another country with their smartphone. Most CSPs do not personalize data roaming plans or seek to offer a positive customer experience when the customer is traveling. If the cost of data roaming was reduced and CSPs were able to use information about their customers’ whereabouts, they could offer a plan specifically for their individual customers when they travel. In most cases, this would increase ARPU for the CSP.

In countries where businesses and consumers have started to use high speed networks, we can get an idea of the kinds of new opportunities that will arise. CSP success in these markets is increasingly dependent on having a focus on applications rather than technology. For example, CSPs might focus on offering a gaming experience, an immersive learning experience, a connected home experience , a video streaming experience or/and a telemedicine experience. Emphasis on speeds alone does not mean a lot to most people. Applications, customer experience, and supporting industry transformations will clearly be where new opportunities lie for CSPs. However, capitalizing on these new opportunities requires a complete business model transformation for most CSPs.