IT leaders and their departments are becoming more business-focused – and not a moment too soon – realising the need to move faster and be more agile, in order to meet both strategic business goals and changing customer needs.

‘Fail fast and move on’, as the mantra goes, with the big picture being the emergence of startups and innovative thinkers who see the potential to disrupt markets with apps and sharing-economy services, but without the millstone of legacy systems – or, sometimes, any need to turn a profit before they’re snapped up by bigger platforms.

Once-core IT functions – such as the proverbial ‘keeping the lights on’ – are now outsourced commodity services, with the real value-add for the IT function being enabling the business to move at startup speed, while removing the barriers for employees to work when, where, and how they please.

Within the organisation, a flexible, agile, DevOps focus is emerging. Outside of it, cloud platforms, commercial 5G networks and services, artificial intelligence, machine learning, and other Industry 4.0 technologies, are rising and coalescing around the Internet of Things (IoT).

So far so good. But often overlooked in these megatrends is the role of communications service providers (CSPs); but it shouldn’t be, as we all become more mobile and reliant on them.

“CSPs’ ability to provide connectivity while leveraging multiple data sets gives them “a unique competitive edge to play with” in the 5G and IoT spaces, but it’s “not a foregone conclusion that they will win”. That’s the view of networking and communications provider, Ericsson, which has published a new report, Realising IoT Strategies, in the same week as Vodafone shared its own report on the IoT landscape.

According to Ericsson, digitalisation is “bringing both new friends and foes to CSPs, so they need to ensure they have the right strategic approach and pursue the opportunities that play to their considerable strengths.”

So what are those opportunities and strengths? CSPs may want to develop a cross-industry strategy such as data monetisation, says the report, while others may wish to devise a strategy targeting a vertical, such as transport and logistics, where the IoT has obvious impacts (as explored in a separate report on the Vodafone research).

However, the current momentum of digitalisation is causing the boundaries between many industries to become less defined, warns Ericsson, perhaps suggesting that a platform approach with different industry connectors may be the way ahead.

“Amidst all this change, CSPs are advancing their 5G and IoT strategies to provide greater value “both within and beyond connectivity”, explains the report. To compete, they must deploy their existing assets to defend and evolve their core businesses – such as “providing enhanced digital experiences, rolling out high-performance networks, and improving operational efficiency” – while exploring the opportunities for new growth that are enabled by 5G and the IoT.”

Ericsson says its own strategy is to help CSPs navigate through these uncertainties, by engaging strategically with their CXOs to help them define strategic intents in 5G and the IoT, how to best capture value, and whether they should focus on their existing core business or take on a larger role in the value chain.

Accordingly, Ericsson has developed a strategic 5G and IoT framework that has eight key dimensions: Strategic intent; consumer focus; enterprise focus; value chain position; go-to-market/ecosystem strategy; commercial model; portfolio and network strategy; and operating model. CSPs can use this framework to explore where their own 5G and IoT pursuits should be focused, starting with their positioning and differentiation in the market.

Taking a holistic approach across all eight dimensions is vitally important, says Ericsson, because only then can CSPs develop a unified view of their 5G and IoT priorities.

Based on its work with these companies to date, Ericsson reports that CSPs find five of the eight dimensions to be the most challenging:

• Strategic intent: CSPs tend to be too technology-focused and lack long-term strategic thinking about their 5G and IoT investments, says Ericsson. Even when they have that intent, they can be too ambitious about their execution ability. This means that their 5G and IoT strategies are often misaligned, putting their ability to capture 5G’s and the IoT’s potential at risk.
• Enterprise focus: What Ericsson calls CSPs’ “opportunistic approach” to targeting enterprises means their focus is diluted across many sectors. As a result, they face difficulty in providing meaningful 5G and IoT value to those segments. This problem is exacerbated by their miscalculation of the industry-specific expertise needed when targeting enterprises.
• Value chain position: Many leading CSPs want to assume larger roles higher up the IoT technology stack, but they often underestimate the capabilities required to reach a dominant position beyond connectivity and network provisioning. More, they may be taking competition from IT firms in the IoT stack too lightly, says Ericsson.
• Go-to-market/ecosystem strategy: CSPs are currently attempting to develop capabilities in-house and build solid partnerships for execution. They are also looking to compensate for their lack of experience and exposure to industry partners as they go to market.
• Operating model: CSPs commonly operate in silos, with isolated enterprise and network departments, causing disjointed strategic and operational approaches on 5G and the IoT. More, their IoT responsibilities tend to be scattered across the organisation.

“In short, it could be said that CSPs face the same transition challenges as many of their enterprise customers. And across all eight dimensions of Ericsson’s framework there are distinct gaps between CSPs’ current and intended positions. “These deltas must be bridged to reach strategic intents,” the report warns.”

And that’s not all. Most CSPs adopt an opportunistic approach to new revenue streams, but their desire is to follow a more well-defined strategy. Their opportunistic approach also means they tend to have a broad industry focus today while aiming to target a selected few in the future.

Given that many CSPs are part of larger conglomerates, a natural starting point for them would be to focus on the industries in which their groups are already operating. This would present some obvious advantages: easier access to the enterprise and the ability to scale and demonstrate initial use cases faster while improving the competitiveness of the parent company.

Most CSPs are also connectivity-centric, but have clear ambitions to capture the full value of 5G and move up the IoT stack to take on more profitable roles beyond connectivity, concludes Ericsson.

• In related news this week, Ericsson warned that growing media alarm about Chinese technology giant Huawei – whose activities in the UK have long been monitored by the security services – risks delaying the rollout of 5G networks and services in Europe.

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At the company’s recent annual general meeting, less than three per cent of shareholders supported the move, which sought to restrict sales of real-time facial recognition technology to law enforcement agencies.

In both the US and UK, concerns have been raised by civil liberties campaigners, and by politicians on both sides of the house, at the speed of adoption of real-time facial recognition systems, and their potential use in citizen surveillance and racial profiling.

According to a BBC report, Democrat congressman Jimmy Gomez said, “Shareholders did not not end up passing a ban on Rekognition, and you know what? That just means it’s more important that Congress acts.” Republican congressman Jim Jordan added: “It is virtually unregulated, but I think that frankly that needs to change.”

Last year, the American Civil Liberties Union (ACLU) criticised Amazon over sales to two police forces of the Rekognition system, which can be fitted to officers’ body cameras. The technology enables live citizen surveillance, said the union, and risks discriminating against ethnic minorities because of poor training data, leading to people being misidentified and/or profiled by the police.

ACLU lawyer Matt Cagle said that real-time facial recognition “provides government with unprecedented power to track people going about their daily lives. That’s incompatible with a healthy democracy.”

At this year’s AGM, Amazon said that it knew of such concerns but was not aware of any abuse of the system by police. In its belief, it is up to legislators, not individual companies, to curb the technology’s use.

Nevertheless, a second proposal called on the company to commission an independent study into the privacy risks, and whether Rekognition’s adoption could lead to the disproportionate surveillance of ethnic minorities, immigrants, and political activists. The proposal garnered greater support – 27.5 per cent of shareholders – but was still rejected.

The debate about facial recognition is certainly hotting up in government. In May, San Francisco became the first American city to ban police and security services from using the technology. The move also prohibits the use of data gathered by facial recognition systems in the city.

City supervisor Aaron Peskin said, “We have an outsize responsibility to regulate the excesses of technology precisely because they are headquartered here.”

The feelings are shared on this side of the Atlantic. In the UK last year, Parliament’s Science and Technology Committee quoted findings from privacy group Big Brother Watch that the Metropolitan Police had achieved less than two per cent accuracy rates with its automated facial recognition system. In a trial programme, just two people were correctly identified and 102 were incorrectly ‘matched’. The force made no arrests using the technology.

The Committee recommended that such systems should “not generally be deployed, beyond the current pilots” until questions about their effectiveness and potential for bias could be answered.

Politicians and privacy watchdogs are not alone in warning of the potential abuse of these systems. Last year, Microsoft urged the US government to regulate facial recognition.

In a blog post, company president Brad Smith wrote, “Facial recognition technology raises issues that go to the heart of fundamental human rights protections, like privacy and freedom of expression.” He called for “a government initiative to regulate the proper use of facial recognition technology, informed first by a bipartisan and expert commission”.

• Last year, California introduced data privacy regulations that could form the basis for de facto GDPR-style rules in the US. The California Consumer Privacy Act came into force in 2020 but was opposed by Google, Facebook, and other advertising-driven technology companies.
• According to Bloomberg and CNBC reports, the US government is considering adding Chinese technology company Megvii, maker of the Face++ facial recognition system, to a trade blacklist.

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