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Digital connectivity marketplaces to enrich 5G and IoT value propositions

One of the key growth opportunities for the telecom industry is to provide network capabilities that support the digital transformation underway in most businesses and industries. Already today, we have a powerful technology foundation in place, and this will become even stronger with 5G. Now is the ideal time to evolve the business side of the equation toward platform business models, which will enable the telecom industry to prosper in multisided business ecosystems as well.

Ericsson Technology Review logo

May 30, 2018

Authors: Malgorzata Svensson, Lars Angelin, Christian Olrog, Patrik Regårdh, Bo Ribbing

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  • Consumer: a user associated with a company that purchases services/products exposed by the platform/marketplace. A consumer can be an individual and/or an organization.
  • Producer: a supplier of services/products to a platform/marketplace. A producer can be an individual and/or an organization.
  • Platform provider: an organization that manages the platform/marketplace.
  • Platform/marketplace: the entity that exposes the services of the platform. The exposed services are a composition of platform services and services supplied by producers.
  • Digital connectivity marketplace: the marketplace that offers various connectivity services and connectivity service enablers to enterprises. The enterprises may require IoT capabilities.
  • Cloud services: a set of services including storage and computation.
  • Digitalization: the use of digital technologies to change a business model and provide new revenue and valueproducing opportunities. It is the process of moving to a digital business.

aaS – as a Service
B2B – business-to-business
B2C – business-to-consumer
BSS – business support systems
DCP – Device Connection Platform
E2E – end-to-end
IoT – Internet of Things
OSS – operations support systems
SLA – Service Level Agreement


Digitalization is undoubtedly one of the most significant forces for change of our time, characterized by a wide variety of smart devices and applications that touch all possible areas of life. Now, new technologies such as the Internet of Things (IoT), artificial intelligence, wearables and robotics are driving an accelerating digital transformation in which core processes across virtually all businesses and industries are becoming more distributed, connected and real-time optimized.

Businesses need networks that can provide them with the foundation to operate the new transforming business models. Digital transformation requires network capabilities to support a broad spectrum of different user scenarios. Coverage, speed, latency and security are some of the key parameters, along with new network functions for effective processing of data and distribution of applications and functions far out in the network. 5G brings the ability to realize a wide variety of connectivity and network services to meet the performance requirements of tomorrow’s digital industries.

With networks capable of supporting an unlimited set of services and use cases, it has become increasingly clear that traditional mass-market services will soon be a thing of the past. Looking forward, networks must be viewed as a horizontal foundation or platform on which businesses can consume networks just as other ICT capabilities are consumed. The business model of the future will look more like current aaS models for other parts of the ICT sector. The current telecom business model must evolve significantly to work in this new market reality to place telecom companies in a better position to capitalize on new business opportunities.

The case for business model transformation

For many years, the telecom industry has successfully been operating in what is best described as a vertical business model. In this model, telecom operators have delivered end-to-end (E2E) standardized services to consumers under long-term contracts and competed within national boundaries. The collaboration between communication service providers has generally been limited to interoperability and roaming for the purpose of global service reach and to drive technology and market scale. It is reasonable to expect the traditional modus of collaboration to continue to serve the industry in the years ahead, but it is also clear that this framework is not fit to explore the full value of network infrastructure. Rich configuration variances and more complex services will in many cases push demand beyond the capability of a single provider, as well as beyond the scope of what is possible to realize with traditional interoperability and federation models.

In light of this, it is necessary to evolve toward a new collaboration framework – one that offers service providers an environment where they can dynamically aggregate capabilities from multiple sources into the tailored solution they require to enable their unique digitalization journey.

Such a model must excel in serving the unique and varying needs of consumers as effectively as possible and include value contribution from innovation partners. It must also meet a new set of requirements to effectively create and capture value. Some of the most critical aspects are:

  • simplicity for service providers to define and configure their own connectivity and network solution regardless of underlying infrastructure and player boundaries.
  • openness for service providers to easily integrate and dynamically adjust their solution, including the needed management, into their digital business processes.
  • well-structured exposure of enhanced connectivity and network capabilities such as distributed cloud, edge analytics, and so on, for rapid use-case innovation and value creation.
  • easy exchange of digital assets such as safe and secure trade of data across different players.
  • attractive complement for operators to explore currently unaddressable business/markets beyond the vertical business they traditionally run today.
  • creation of an environment where innovation thrives to the benefit of all business model participants.

To effectively meet these and other requirements, it is obvious that the establishment of such a business model is beyond the ability of a single player or company. Instead, it makes more sense to look at a business that is designed like a platform where a multitude of players, producers and consumers can coexist and gain mutual business outcomes. In this scenario, the platform is both a marketplace that supports the business of its stakeholders in the most effective way and also an infrastructure that facilitates and simplifies these multisided relationships with a range of key functionalities.

Multisided connectivity platforms

Multisided platforms bring together two or more distinct but interdependent groups of consumers and suppliers. Such platforms are of value to one group (consumers, for example) only if the other group (suppliers, in this case) is also present. A platform creates value by facilitating interactions and matchmaking between different groups. A multisided platform grows in value to the extent that it attracts more users and it matchmakes one consumer’s needs with services and products offered by multiple suppliers; a phenomenon known as the network effect.

The telecom industry already offers a vast variety of connectivity services, and 5G technologies will accelerate the development of new ones [1] characterized by the different capabilities that the various industries require. The connectivity services of 5G will be realized by means of network slicing. We believe that tailored connectivity services with diverse characteristics will be necessary for enterprises within the industries to digitalize their operational and business processes [2].

Digitalization of enterprises’ business and operation requires not only connectivity services but also various cloud-based services like computation and storage, where companies’ operations and business applications can be hosted, deployed and operated, or where enterprises can benefit from the cloud services’ capabilities offered in the software as service business model.

The full potential of 5G connectivity and cloud services can be reached when they are exposed on fully digital multisided connectivity platforms (marketplaces), as shown in Figure 1. In this way, the services – and consequently the industries – will benefit from the presence of a vast range of other services such as information and application enablement services, as well as business and operation support capabilities. The connectivity marketplace will complement the federation model for connectivity and bridge the gap where the existing federation model is not enough.

The digital connectivity marketplace will enable new business models by providing capabilities for the exchange of information and connectivity enabling services to ecosystems of consumers and suppliers.

Figure 1: Digital connectivity marketplace: multisided platform
Figure 1: Digital connectivity marketplace: multisided platform

Our vision of the future digital connectivity marketplace is that it will offer interaction between producers and consumers by exposing the connectivity and cloud services on one side, and collecting the requirements from consumers and matchmaking them against the capabilities of the services on the other. The platform will facilitate the interactions by providing business and operation support services to both producers and consumers.

The services exposed in the marketplace could be supplied by multiple producers owning the networks and infrastructures required to produce these services. The consumers representing various industries will require connectivity and cloud services to digitalize their business and operational processes [2].

Consumer services offered by producers

As discussed above, the future multisided connectivity marketplace will offer capabilities to expose connectivity and cloud services that may be provided by multiple producers. In the context of 5G the following types of connectivity services may be exposed: massive machine type communication (also known as massive IoT), mission-critical machine type communication (also known as mission-critical IoT) and extreme mobile broadband services. There will be a need to complement the connectivity services provided by others to be able to offer the desired value proposition and satisfy industry demands.

Security will remain one of the top priorities as societies continue to connect everything from autonomous trucks to elevators and ventilation systems. Isolation techniques such as automatic network slicing are likely to play a key role in reducing security risks, together with machine-learning-based ingress firewalls, possibly embedded as virtual network functions in operators’ networks.

Making the platform attractive and efficient to operate

At Ericsson, we foresee the digital marketplace as the foundation of an ecosystem of many consumers and providers from a multitude of industries. This implies that industries will require capabilities to express their requirements in languages and contexts that are specific to their business and operational environments, as opposed to needing telco and cloud-domain knowledge to be able to choose or define the requirements on the connectivity and cloud services.

The multisided character of a platform – and its matchmaking abilities – will make it well suited to provide these capabilities. The platform will match industry-specific requirements with service capabilities.

Figure 2: Graph model: how industry requirements can be linked with connectivity services
Figure 2: Graph model: how industry requirements can be linked with connectivity services

The matchmaking function uses the relatively old research area of graph theory, boosted by its explosion in usage and implementation in social networks in recent years. The model in Figure 2 shows an example of how consumer requirements, modeled as graph edges, are linked with services, then technologies and consequently subscriptions. By defining each service as a vertex in a graph where edges constitute a consumer/producer relationship, it is possible to model complex value chains or relationships between services.

Given a set of requirements modeled as vertexes with consumption needs as “dangling edges,” we can find an efficient subset of the graph which fulfills these needs, if at all possible. By also modeling non-functional aspects such as location, latency and throughput, we get a generically applicable mechanism. This gives rise to tremendous possibilities where a multitude of loosely connected players together enable an efficient E2E service, as a dynamically constructed value chain, capable of reaching far beyond what is currently possible. There are many implementation options, including capabilities for life-cycle management to ensure that consumers and producers, joined by market forces and the platform, provide a suitable mix of stability and innovation.

Data lakes and analytics are used to execute matchmaking, as shown in Figure 3. Analytics services will make the future platform data driven, as they will be exposed for use by either consumers or producers to help them evolve their services. At the same time, the consumers or producers provide the platform with extended insight into how producers’ services are used, potentially helping improve the recommendations supporting service discovery and matchmaking.

A common solution for providing identification is yet another important component of the platform to truly support scale and innovative combinations. Federation of identities is a key service when considering new service combinations. Authorization for a connection between two things will likely take both software fingerprinting and behavioral analysis into account if this functionality is available in a “thing management” system in a trusted relationship.

Security solutions will enable the safe and secure trade of data between different players and the exchange of digital assets [3]. Trust facilities will enable secure transactions between consumers and producers. Analytics insight in the shape of fraud management, combined with a novel form of analytics insight predicting likelihood of successful service activation, will be the key for the platform provider to be able to manage risk when bridging the trust divide.

Service exposure will secure openness for consumers to easily integrate and dynamically adjust their solutions and services, including the needed management, into their digital business processes.

Figure 3: Digital connectivity platform
Figure 3: Digital connectivity platform

Business support platform

The business support platform comprises many things for both producers and consumers: their entire life cycle, interactions and management while in a business relationship with the platform; the entire service life cycle of the onboarded producer and consumer services sets; and self-services for the aforementioned.

One of the most critical capabilities is contracting, due to the fact that the mix of services, SLAs and pricing schemes is complex and contracts are frequently negotiated and renegotiated. The business support platform simplifies business by using only bilateral contracts between parties – that is, a business-to-business (B2B) contract between any two of the three: the producer, the consume and the marketplace provider. B2C contracts are applicable if the consumer is a private individual and not an enterprise. While business value chains are often referred to as B2B2x, the contracting arrangement supporting them is a set of linked B2B and B2C contracts.

In addition, the marketplace allows for a party to act as a consumer to purchase services, orchestrate them into a new service, and offer the orchestrated service on the platform as a producer. A party in a producer role can also act as a consumer for its resource needs. This results in a series of B2C and B2B contracts, which is the essence of a vibrant ecosystem built on the platform. The contracting and contract management processes are fully automated.

Operations support platform

The consumer and producer services that enable the network capabilities such as distributed cloud and edge analytics will be exposed using service exposure, thereby enabling innovation and value creation.

The dependencies between services are automatically inferred through service-level assurance, and the combined analytics of the different services provides insight into performance at several levels. This may allow fine-tuning of SLAs based on heuristics and help fuel innovation by managing and providing transparency with regard to risk. A network or service outage must be dealt with swiftly, as they may be used in consuming enterprises’ mission-critical production. Automatic healing, based on orchestration and policies, is one way to to mitigate outage situations.

The service configuration and activation will make it possible for enterprises to define and configure their connectivity services settings simply and independently of underlying infrastructure and player boundaries.

Device Connection Platform

One of the first realizations of a multisided platform is Ericsson’s Device Connection Platform (DCP). This is a platform where mobile network connectivity services are exposed to be consumed by applications. Its fundamental purpose is to make connectivity available for enterprises to include in their offerings and provide the means to manage this connectivity. Two examples of typical enterprises in this context would be an original equipment manufacturer of some sort (such as an automotive company or a camera manufacturer) or a service provider of a service where a device is an integral part of the offering (such as a utility company using automatic meter reading or a point-of-sales terminal provider).

As mobile networks are always of a geographically-limited nature, normally by country or license area, there is a need to harmonize the way the enterprise’s connectivity is used across several networks. Ideally, the enterprise needs to have the same connectivity experience wherever it launches and runs its service. The only practical way to achieve this is to standardize on a centralized platform, which brings together the connectivity of all providers and exposes it in a uniform way. This makes the experience truly harmonized, in terms of functionality as well as service levels and operational procedures. Furthermore, it also minimizes the cost of integration between the enterprise systems and the access networks, saving money both initially and continuously, as well as shortening time to market for the enterprise’s service.

Conclusion

The ongoing digitalization of businesses and industries is one of the key growth opportunities for the telecom industry. Telecom infrastructure, encompassing both current networks and soon-to-be- launched 5G, is rapidly evolving into a very powerful resource that can bring significant value to the digital transformation of most industries. Looking ahead, some of the telecom industry’s key value levers are: quality differentiated connectivity; distributed computing and storage; analytics of data flows; and security solutions. With the technology already in place, the main challenge is to fully understand the needs of a new breed of consumers, and use that information to organize the business, develop new relationships and establish efficient operations.

At Ericsson, we believe that the best way to overcome this challenge is to establish a platform model where capabilities from many providers can be effectively packaged and exposed in attractive ways to buyers from different industries. This approach creates a new and much-needed role for the telecom industry as the provider of the marketplace and brings opportunities for multisided business relations and transactions to prosper.

On one side of the platform are the businesses and industries that are consuming services from the underlying infrastructure, and on the other side are providers of both network assets and enabling functions. The platform organizes the relationships for optimal fit and usefulness for the players involved. In so doing, the platform provides a number of useful functions with one of the key values being the scale of business and the networking effect that it has to offer. Instead of competing for the same consumers with the same offer, operators that restructure according to a logic that enables full participation in an ecosystems platform will find themselves well positioned to fully capitalize on new market opportunities.

Authors

Malgorzata Svensson

Malgorzata Svensson

is an expert in operations support systems (OSS). She joined Ericsson in 1996 and has worked in various areas within research and development. For the past 10 years, her work has focused on architecture evolution. Svensson has broad experience in business process, function and information modeling, information and cloud technologies, analytics, DevOps processes and tool chains. She holds an M.Sc. in technology from the Silesian University of Technology in Gliwice, Poland.

Patrik Regårdh

Patrik Regårdh

is head of strategy for Solution Area OSS, where his work focuses on market development, industry dynamics and driving strategies and initiatives for Ericsson’s digital business. He joined the company in 1994 and his previous positions have ranged from strategy and business development to account management. Currently based at the global headquarters in Stockholm, he has also worked extensively in Brazil, Thailand and Germany. Regårdh holds an M.Sc. from KTH Royal Institute of Technology in Stockholm, Sweden.

Christian Olroga

Christian Olroga

is an expert in cloud service delivery architecture. He joined Ericsson in 1999 and has been a technical leader and architect in many different areas, ranging from embedded client development and wireless enterprise connectivity with a security focus to cloud and operations support systems/business support systems (OSS/BSS). Olrog currently sits in the Technology & Industry group at Business Area Digital Services at Ericsson. He holds an M.Sc. in general physics from KTH Royal Institute of Technology.

Lars Angelin

Lars Angelin

is an expert in BSS at Business Area Digital Services. He has more than 30 years of experience in the areas of concept development, architecture and strategies within the telco and education industries. He joined Ericsson in 1996 as a research engineer, and in 2003 he moved to a position as concept developer in the machine-to-machine and OSS/BSS areas. Since 2006, Angelin has been focusing on BSS – specifically business support, enterprise architectures and the software architectures to implement the systems. He holds an M.Sc. in engineering physics and a Tech. Licentiate in tele-traffic theory from the Faculty of Engineering at Lund University in Sweden, and an honorary Ph.D. from Blekinge Institute of Technology, Sweden.

Bo Ribbing

Bo Ribbing

is head of Product Management for Connectivity Management. He joined Ericsson in 1991 and has worked in the networks business since 1995. During this time, he has gained broad international experience, particularly from Latin America and Asia Pacific, and has held several management positions. Ribbing holds an M.Sc. in applied physics from Linköping University in Sweden.

Acknowledgements

The authors would like to thank Frans de Rooij for his contribution to this article.


References

  1. Ericsson white paper, January 2017,5G systems – enabling the transformation of industry and society
  2. Ericsson white paper, October 2017, Telecom IT for the digital economy
  3. Ericsson Technology Review, November 2017, End-to-end security management for the IoT

 


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