As communications service providers (CSPs) transform their business to become digital service providers (DSPs) there’s a growing recognition that the technological, cultural and operational changes involved must extend from the core of the network out beyond the CSP’s own business to partner organisations that provide applications and content. The sheer breadth and depth of the transformation, which has to touch every facet of the business, means it won’t happen overnight but CSPs have started their transformation journeys and many have their strategies in place.

Recent research has revealed that 63% of service providers now identify themselves as DSPs although only one-third say they have completed a business-wide DSP strategy. That same 33% of respondents are the only CSPs to claim they are generating revenue based on that strategy. Revenue generation is the vital indicator here and remains CSPs’ core motivation for engaging with the disruption of this total business transformation. The good news is that new revenue opportunities exist beyond the traditional business of selling capacity on telecoms networks. By transforming to effectively partner with third parties, CSPs can change their future prospects positively.

Yet time is ticking away. If CSPs do not accelerate their transformations to DSPs, potential partners will not be prepared to wait and will find alternate partners in the web world to enable them to serve their customers better. For this reason, CSPs need to focus on the speed and agility of their DSP transformations. They need the capability to adjust quickly and efficiently to evolving market and customer demands and replicating their traditional silo-based business structure won’t provide the flexibility they need to do so. Instead, operating in cloud environments enables quick changes to be enacted and rapid time-to-market for new offerings to be achieved.

The flexibility and agility enabled by cloud means service providers can sell and distribute products assembled from an ever-changing range of devices, applications and content provided by a continuously growing number of partners and suppliers. This fragmented, complex and growing value chain relies on delivering users high-quality experiences that are consistent across every network and application. User profiles, secure content and preferences should be seamless across all devices to deliver a true omni-channel experience.

The heritage of service providers in terms of delivering complicated services at great volume to huge numbers of subscribers provides them with a foundation of experience for this new and wider market place. However, evolution of IT support systems is a fundamental building block because, without modernised operations support systems (OSS) and business support systems (BSS), it will not be possible for a CSP to develop into a DSP. Upgraded IT systems for the digital era must allow customers to initiate content interactions with service providers utilising a broad range of digital apps and devices and they must also enable collaboration with partners across all channels, product lines and customer segments.

Enabling users with this functionality will enable service providers to focus on profitability by making digital services easy to buy, use and pay for. This will deliver DSPs with the crucial monetisation capability they need for the delivery of new services and apps.

However, the transformation to becoming DSPs presents many challenges for CSPs. Although the focus is on retiring aging infrastructure and operational systems to support new business models, CSPs still need to extract the maximum value from their older network investments. Many of these are still fit for purpose and have years of useful service left to give so CSPs will continue to operate these technologies in a hybrid mode, alongside newer replacements.

In addition, the newness of this environment presents significant challenges. There are both a lack of regulation and a lack of standards for DSPs, although CSPs continue to be subjected to telecoms industry regulations in most nations. This lack of standardisation is compounded by a shortage of qualified partners to help grow and build the ecosystem. CSPs are learning to place greater focus on the needs of the customer but mature partners are required to help them in these efforts.

Strong partnerships form a fundamental basis for DSPs and the digital services economy. Full-service retail DSPs need a diverse set of global partners to help provide apps, IT infrastructure and support. However, CSPs themselves are not good at supporting partners and a recent survey by Netcracker highlighted that fewer than half of CSPs have provided application programme interface (API) guidelines or open APIs for partners. In addition, the survey uncovered that fewer than 40% of CSPs have provided an ecosystem to facilitate partner relationships, while 15% have provided no support at all to partners, although almost 80% cite partners as key to their DSP strategy.

Successful DSPs will create new service models based on partnerships with third party vendors such as over-the-top (OTT) content providers so establishing partner ecosystems, enabling open APIs and participating in standards and regulatory efforts will be important. On the flip side, CSPs are increasingly focusing on (and will need to rely on) partnerships to enable them to respond to client demands for more in-depth support. Only then will CSPs complete their transition into the digital era and take up a strong role as DSPs in a rich and vibrant new market place.