Open Innovation Upside Potential for Telecom Services
A creative Open Innovation strategy promotes a mindset for collaboration that is counter to the ‘closed silo’ approach of most legacy organizations. That said, the benefits of increased openness are apparent. Open technology ecosystems have driven ongoing cooperation in the Global Networked Economy.
Open source software (OSS), and to a lesser degree open source hardware, serves as the foundation of IT infrastructure worldwide. It enables many eCommerce platforms and innovative over the top (OTT) service providers to bring new offerings to market quickly.
OSS is gradually driving the innovation agenda for communications service providers (CSPs), and by extension, it is now challenging the dominance of proprietary solutions in the telecommunications sector.
Telco Open Innovation Market Development
OSS holds the potential to play a key role in telco cloud deployments, a market that will potentially grow to $29 billion by 2025, according to the latest worldwide market study by ABI Research.
According to the ABI assessment, telecom service providers that want to compete with OTT service providers and hyperscale companies may have to implement the same technologies and agile business processes to innovate more rapidly.
OSS and cloud computing technologies enable operational nimbleness, but it’s unclear if telecom service providers can seize the digital growth potential. Telecom companies are typically constrained by standard bodies that have long cycle times to next-generation technologies. On the other hand, open source is characterized by an agile approach.
“Though CSPs are at different timeslots in their digitalization journey, they should collectively propel the open source agenda forward. A close collaboration between standard bodies and open source communities is a step in that direction,” said Don Alusha, senior analyst at ABI Research.
Furthermore, a key consideration for OSS success is the means of monetization. There are two main models that vendors can potentially use to commercialize OSS. Namely, there is a customer support model. And, the alternative where the core of the product is open source software. However, some vendors add proprietary features and capabilities on top of the open code.
Red Hat pioneered the customer support model, and it remains the leading IT vendor commercializing OSS using that option. Other companies such as Cloudera and Hortonworks have successfully embraced underlying OSS to offer enterprise-grade modules under a commercial license.
In telecoms, the adoption of OSS is already underway among CSPs and it could be in the mainstream by 2025. For example, CSPs like Orange and Bell Canada have created internal open source groups in a bid to become more well versed in interacting with community-developed software.
To that end, CSPs no longer hold reservations in adopting OSS but are now considering ways to include it in their network operations and commercial undertakings. In fact, the industry at large stands to benefit from OSS innovation with the introduction of IT and cloud solutions.
But, unlike the general-purpose IT infrastructure domain, telecom infrastructure is characterized by stringent performance, reliability and security requirements that require telco-specific arrangements.
Outlook for Open Source ApplicationS in Telecoms
Commercial models notwithstanding, telco system vendors can potentially leverage OSS to realize performance and scalability as they transition their products to more cloud-native equivalents.
At present, OSS serves as an enablement technology for these vendors, rather than a catalyst to build a new business case for OSS. But eventual diffusion of 5G may drive vendors to invest significantly in open source projects to develop carrier-grade products and services in the next five years.
“When that takes place, telecom vendors will need to channel time and investment to establish a presence in open source communities,” Alusha concludes.
Originally published at https://blog.geoactivegroup.com.