CSPs are reluctant to fully embrace openness
Survey results, January 2022
CSPs agree that openness is critical, but security fears and a lack of strategic vision are holding them back from fully embracing open principles and business models. That resistance to change may carry a heavy cost.
As the English saying goes: You can lead a horse to water, but you can’t make it drink. Our latest Pulse survey shows that you can get CSPs to agree that openness is key to their future success, but you can’t make them do very much about it.
What is "openness" in the telecoms world?
Before we dive into the results, though, let’s recap on what we mean by openness in the telecoms industry. For us, it means adopting a business strategy that exploits four dimensions of openness to create new value for customers.
CSPs can generate new value for themselves, their partners and their customers by adopting an open approach to 5G innovation and monetization. In fact, it’s increasingly clear that open models are the future of telecoms, and those who move early will reap the rewards.
4 things CSPs told us about their attitudes to openness
So are CSPs fired up and ready for this new, open future? According to our survey, not really. We asked 100 decision-makers about their attitudes and approaches to openness, and the results make decidedly lukewarm reading.
Here are our top four takeaways:
#1: Less than 10% strongly agree that openness is critical
The vast majority (88%) of respondents only “somewhat” agree with the notion that openness is critical to the future of the industry, with just a tiny 8% saying they’re fully on board with the idea.
At first glance, it seems to be a case of talking the talk, but not (yet) walking the walk. Over two-thirds (68%) say that adopting openness principles is good for strategic positioning (see point #4 below), and 79% believe their company is already open.
But when it comes to putting openness principles into action – especially action in support of a clear business objective – the numbers drop significantly. Only 4% say they’ve fully adopted the kind of open ecosystem model that’s proven to support rapid, customer-centric innovation, for example.
For Ben Bawtree-Johnson, CEO of US-based SiFi Networks, which privately funds, builds and operates open-access fiber networks, the reluctance to embrace openness is mainly due to an entrenched industry mindset. “The prevailing model of telecoms is based on a century-old model where one company owns and operates the network,” he says. “Many CSPs likely only know this type of network and are unaware of the benefits of an open approach.”
If that’s the case, it’s a mindset that really needs to change, as today’s customers need more sophisticated solutions than CSPs alone are capable of providing. Emerging industrial use cases for 5G, for example, need many specialist providers to come together to build solutions for applications like autonomous manufacturing and remote inspection and repair. The CSP may not always own the direct customer relationship in these fluid ecosystems, but rejecting them altogether means missing out on high-value monetization opportunities.
#2: The biggest advances are around open APIs
One area where CSPs are making solid strides is in opening up access to network functions and data via open APIs. Almost two-thirds (64%) said open APIs are important for the future of their business, with 21% saying they are already fully incorporated into the business.
That’s encouraging, because open APIs allow CSPs and third-parties to easily trial, build and deliver innovative services on top of the network, without the need for cumbersome point-to-point integrations or weighty partnership agreements. It’s the way the tech industry as whole increasingly operates, and it’s great to see CSPs on board with that shift.
However, George Glass, CTO of TM Forum, says that for many CSPs, implementing open APIs is easier said than done. “Our observation is that operators want to include APIs into their solutions, but they have to be planned into release/delivery cycles,” he says. Reed Peterson, Senior Vice President for Telecoms Strategy and Engagement at Datastax, agrees that open APIs are hard to implement, as “matching frameworks and languages and the different ways developers build apps [is] notoriously difficult”. CSPs will also need to put more support and documentation around their APIs if they want to “cultivate an ecosystem and grow with developers’ needs as they arise,” he says.
From our own conversations with CSPs, the sense we get is that currently, open APIs are being used to solve specific technical challenges – either internally, or perhaps for individual customers – rather than as part of a strategic move towards open, ecosystem-based innovation. That could explain the discrepancy between 21% having fully incorporated open APIs, but only 4% having fully incorporated an open ecosystem model.
#3: Security challenges are the main barrier to opening up
So other than technology constraints, what else is making CSPs so reluctant to move with the times? Our survey suggests that the biggest barrier is security challenges, cited by 69% of respondents.
Don’t get us wrong. It’s entirely appropriate that security should be a major focus for CSPs: the threat surface is ever-expanding, DDoS attacks are on the rise, and threats are always evolving.
But all this is – or should be – business as usual for CSPs. And indeed many have already adopted a security-first mindset – using principles like security by design, zero trust, and defense in depth to bake security into every aspect of their operations.
This built-in approach to security ought to give CSPs the confidence to adopt new models without fear. After all, being open doesn’t mean being less secure – if the right principles are in place. In many cases, it means the opposite. Open-source software, for example, benefits from having many eyes on it all the time, and a community that moves fast to fix anything that might present a risk.
Citing security challenges, then, feels more like a way of rationalizing a cultural resistance to change than a genuine reason to stay closed. “The cynic in me says this is the same excuse given by organizations for not adopting cloud, or using open source,” says TM Forum’s Glass. On the upside, that may mean security fears are short-lived, just as anxiety about public cloud vanished as it became clear that the hyperscalers had vastly more security resources than the average hosting company or enterprise data center.
Some of the other responses may hint at what’s really behind the hesitancy. More than half of our respondents (53%) cited “business model challenges”, reinforcing the sense that CSPs are reluctant to give up their role as 1:1 providers to become players in a broader ecosystem. And 36% were worried about charging and billing, which may reflect the inability of legacy BSS to support new value-added services.
#4: Revenue generation from open business models still seems a way off
Finally, some of the most intriguing answers came in response to a question about the most important drivers for embracing openness. The top response was “strategic positioning”, cited by 68% of respondents.
Yet despite this acknowledgment that openness is in some way “strategic”, driving new revenue streams – one of the biggest strategic opportunities that openness makes available to CSPs – was cited by only 50% of respondents. Instead, “technology innovation” grabbed the second spot. For Reed Peterson at DataStax, that’s because CSPs are still in the early stages of adopting principles like open source. “Strategy, innovation and positioning come before revenue,” he says. “You build your position, then, as the OSS enables new and faster development, you’ll be able to create products and services that customers will pay for.”
The implication is that many CSPs aren’t yet ready to use openness to develop new, value-added services that meet modern customer needs. That’s perhaps borne out by the fact that currently, only 5% “strongly agree” that openness is critical to their ability to grow revenue and develop new business models.
Overall, the message seems to be: “we recognize openness is important, but we’re not yet ready to build our business on it.” As startups, hyperscalers and a minority of progressive CSPs pile into the opportunities created by 5G and next-generation broadband, that stance could prove to be short-sighted. Without a commitment to openness, strategically, technically and culturally, CSPs may find themselves eclipsed by rivals with a clear focus on reaping the benefits that openness can bring.
