The comms sector is witnessing a step change in the importance of digital technologies to customers at a time when opportunities for channel firms to scale have perhaps never been greater.
But maximising the potential of a transforming market means first understanding the critical catalysts and challenges ahead – and against this backdrop Comms Vision 2022's (Gleneagles Hotel, 2-4 November) opening super session provided a snapshot of the most important market trends together with a high level assessment of the channel's priorities ahead of the 2025 PSTN switch off and in the context of evolving markets, such as full fibre and 5G, as well as exploring competitive necessities.
The discussion highlighted a clear correlation between the potential for growth and the comms channel's hardy nature which habitually comes to the fore when times get tough, and is a driver for digital transformation and high optimism.
"Look back to the last recession and we see that technology companies are resilient and good at helping customers find their way out of challenging times," said Dale Parkinson, Fixed Wholesale Sales Director, Virgin Media O2 Business.
According to Gavin Jones, Head of Channel, BT Wholesale, there are two primary factors that 'create a great opportunity'. "The build out of fibre networks and 2025," he stated, citing Ofcom statistics that indicate the number of premises available for FTTP has risen from seven million to 11 million in the last year.
"We have a compelling event in 2025 when the PSTN network, which is 35 years old, is being shut down," he added. "We haven't yet seen the technology drive that FTTP and all-IP will give us. There is much to be excited about."
David Barber, Strategy Director, Zen, noted that there is concern around a pending recession, but nevertheless the channel is entrenched in opportunity. "Ultimately the technology and solutions we provide are the foundations of businesses in the future," he said.
For the industry, people are the most powerful lever for growth and every channel business should manage staff for the greatest impact, observed Matthew Worboys, Business Development Director, Gamma. "One acton point is to double down on investments in people," he stated. "If you have a hungry sales force then you will succeed as we have the perfect storm of customers looking to change their technology."
Worboys believes there are two clear opportunities in front of us - the 2025 PSTN switch off and the rise of hybrid working environments. But opportunities are not limited to these areas. There are many uses for the technology provided by channel businesses and key to their success is the plumbing, according to Andrew Wilson, Sales Director, Wholesale Channel, CityFibre.
"Technology is a weapon," he commented. "We all know that the best way of gaining efficiency in this market and climate is the use of technology, but we need a state of the art full fibre infrastructure to underpin that tech and support economic growth. Right now we're lagging behind as an economy and the faster we build the more opportunity we create for the channel and customers."
To drive a greater proportion of revenue in all markets Parkinson advises resellers to look at three areas. "I'd first look at my suppliers and want them feeding into me as partner, which means being commercially flexible, commercially innovative, and giving me a set of propositions that will cut through to customers," he stated.
"I'd also try and protect any budget I had for automation, whether it's integrating into supply chain systems or providing customers and partners with additional tools. Thirdly, double down on what we are good at doing for customers and why they bought from us in the first place. These are no regret decisions."
No doubt consultancy is a powerful driver for growth, but the need for detailed conversations with customers is also catalysing demand for more complex solutions. "To meet what companies are trying to achieve and how end customers are seeking to differentiate you need platforms," pointed out Neil Wilson, Product Strategy Director, TalkTalk Wholesale Services.
"You've got the rise of SD WAN which is complicated and there isn't an abundance of engineers and architects to construct those environments and maintain them. There is a real opportunity to do that on behalf of customers.
"It's also important to take as many steps as possible away from transactional relationships into a trusted advisor and consultancy type position where you are adding more value and helping to grow their business, innovate faster and reach new markets."
Success will also primarily be driven by tangible and easily understood outcomes, noted Adam Cathcart, Managing Director, Onecom Partners. "There is a requirement to move away from a focus on the technology and look at the benefits it delivers," he stated. "If we can present the value of what technology delivers and see a reward of 10 per cent or 15 per cent increase in efficiency, this will create more opportunities for the channel."
Growth is a top priority for most businesses and ambitious channel players are also keeping a close eye on the rise of full fibre deployments. Andrew Wilson, Sales Director, Wholesale Channel, CityFibre, noted that as build programmes mature a more competitive environment will emerge and have an impact on businesses, a trend that must not be ignored. "If you don't react quickly enough in this market someone else will eat your lunch," he warned.
"The opportunity, size and scale is not quite there to make the big impact today, but the rate that altnets are building will see the opportunity create itself, and it's coming a lot quicker than people think."
To remove any doubts about the future role of full fibre deployments Jones shared insights into the rate of adoption witnessed by BT Wholesale. "The investment to date in terms of fibre roll out has been predicated in more residential areas," he said. "Many of the partners we work with address the SME, the SoHo and larger businesses. So the coverage and footprint isn't there.
"Yet, 62 per cent of my weekly orders are for fibre based connectivity – in Q4 last year that was 50 per cent and in Q3 37 per cent - so the statistics indicate exponential growth."
Wilson also says that the size of the opportunity is not obvious at the moment but nonetheless it's strengthening behind the scenes. But what is clear for all to see is the wider impact of full fibre infrastructure in that it is seven-and-half times more efficient to run. "Running full fibre significantly improves carbon footprints," he said. "And looking globally at fibre roll outs, churn is far less. Once you are on fibre infrastructure you stay."
Even better, Barber believes that full fibre investment will create solutions we haven't even thought about. "It will drive innovation - however it is under-disruptive and for true innovation we need to see the investment in full fibre networks distribute more around B2B coverage, the not-reached areas and those stuck with a variant product. There is a long way to go with full fibre but it will drive the biggest change."
Wilson expects discussions around full fibre to mirror those experienced by Barber in relation to broader digital transformation. "The conversations partners have been trying to have with disengaged customers previously are now being driven by customers," he said. "And the conversations we have with partners now are around how we equip them to deliver against digital infrastructure and the move away from analogue. It's great to see that response."
Whether the run up to all-IP and the PSTN closure will turn out to be a growth multiplier is open to question given the lack of awareness among many businesses, observed Worboys. "There was strong government messaging around the analogue TV switch off and we haven't seen the same when it comes to the PSTN shut down," he stated. "There is more to do around that.
"There is an incredible number of PSTN lines still to switch, and one of the biggest challenges is managing number porting with the migration of the data – the provisioning time can be excessive. So making sure there is a process that is simple to consume is important."
Cathcart expressed a note of pessimism about the chances of getting over the line in 2025. "We have seen changes and mixed messages coming out so we spend a lot of time working with partners to make sure they know what the impact is, almost at a granular level," he said. "For example, what customers to target. My hunch is that we will get to a stop-sell in 2023 but I can see 2025 being pushed out as I'm not sure the technology is fully available to deliver it."
However, there is more clarity around the upsides of co-opetition which could help unlock opportunities quicker among resellers with differing specialities, believes Cathcart. "We'll start to see more engagement between resellers bringing different skills sets," he said. "Especially as products and technology evolves. People will work more collaboratively but with that comes risks - you need to make sure that there are clear rules of engagement and that it's monitored regularly because business models and approaches to selling, for example, can change."
One area of possible collaboration is around security which is fast rising up the comms channel's agenda. Most notably, the increase in home working has coincided with a big hike in cyber attacks, and the comms industry has traditionally been one layer below where the cyber attacks take place, but that's changing, particularly with the hybrid workforce. This raises a cardinal question: Is the industry doing enough to protect customers? "As we see the proliferation of working from home, and washing machines having Wi-Fi, security will become more and more important," stated Jones. "If I had one wish it would be to launch a brilliant security product to the channel. Security is top of mind and super-important."
According to TalkTalk's Wilson, another transformational change the channel could deliver is 'proper' end-to-end automation of services. "Ultimately, customer experience is what end customers buy," he commented. "It's what resellers and people in the channel sell on. You have to differentiate and we as an industry need to focus on how to deliver a competitive advantage."
Key to gaining a competitive advantage in the future will be transformational 5G services. Jones noted that we are still at an early stage with 5G but EE expects to cover 50 per cent of the UK population by 2023 with ubiquitous coverage by 2028. The primary uses cases will centre around ultra low latency communications and mass machine type communications (IoT). "These will be seminal and we will see them rise," said Jones.
A big industry question often asked when 5G enters the conversation is whether it will become a replacement technology for fixed lines. Parkinson was clear in his response. "We don't see fixed and mobile as a choice," he stated. "They are complementary technologies. If you think about fully dense fibre right up to the edge of the network and having applications and services running for healthcare and consumers in a smart city, that's when you bring the power of fibre and 5G together and make it real for businesses. Both technologies enhance one another and all of the work we are doing on 5G and fibre is about delivering real outcomes that people can understand and engage with, and can stimulate demand."
The Comms Vision super session began by asking whether the channel can survive and thrive in turbulent times, and whether resellers can adapt to turn a challenging economic situation to their advantage. As far as Worboys is concerned, the answer is an emphatic 'yes'. "The channel is often seen as the place to be," he said. "You have businesses that are particularly well run, mostly cash positive, so their ability to pivot and change is probably second to none."