 Hello, this is Gerd Leonhardt, Futurist and CEO of the Futures Agency. We're having a conversation today with two colleagues about digital transformation. The first topic will be the digital transformation of the telecom communications business. We have Simon Torrance over here, he will introduce himself shortly and then we have Rohit Talvar, Futurist from London. Why don't we start with Simon, just briefly tell us what you do and then we'll jump to the topic. Yes, so thanks Gerd. I spend most of my time looking at how the telecoms industry needs to evolve and adapt and in the past I created a research programme called Telco 2.0 which is all about looking at the next iteration of the telco business model and the role of telcos in the wider digital economy. In fact this has become sort of the war cry of the telecom companies where they all want to be 2.0 now. They do, they're all about, I'd say they're all about 0.9 at the moment but they have the ambition of getting to 2.0 one day. Well we'll have to help them with that. Rohit, tell us briefly what you do. Hi, I'm Rohit Talvar, I run a company called Fast Futur in London and we help clients in telecoms, media and technology to understand the forces, the trends, the technologies that could shape the next five to twenty years. We focus in particular on more of the new concepts to take to the market, the new business models you need to be driving and how do you actually drive that transformation inside your organisation to embrace what's coming next and evolve quickly from one model to the next at the speed at which markets are changing. Great, so I'm going to learn how Futurist and CEO of Futurist Agency are two members, we have several other members but we focus on these kind of conversations about discovering what somebody's future, the company's future could be and how we get to your preferred future. The three of us have done quite a few telecom things together including the ITU Doha World Summit on the feature in December last year in Doha. So the first question I have that I want to discuss is you mentioned telecom 2.0 and this in fact is kind of an old meme, right, ten years old. But now we're reading just I read a couple days ago about MTN now bundling streaming into the network and of course did you sell doing the same and everybody else, are we finally actually getting there, are we getting done or are we still early? Well still, I suppose I tend to what 2.0 means, I mean I tend to see it as the next iteration of their core business model and of course the telco is their main business model has been to sell you and I connectivity in making phone calls or accessing the web and occasionally they add some TV into that as well and that's been very extremely successful for particularly the mobile industry for the last 20 years, partly I think because it's a scarce resource they're selling, they get a license for spectrum, there's only two or three of them in a market or maybe four and everybody wants to be connected, so everybody wants to have a mobile phone, everybody gets a mobile phone and the only way you can go to do it to get connected is to a mobile operator and they can set a price and they've been extremely good at monetizing that scarce resource which is the unique spectrum that the government has sold. But now everybody does that, more or less right, so you were there with us in Doha and you do some telecom stuff and you do many other things, what was your observation of the issues? So I think what we see is that telecom companies around the world are struggling with four things, one is what is it we do in the future? Simon's just articulated a lot of those services but what is it that we're providing to our end users in terms of the range of platforms, services? The second is what technologies do we need to master to make that happen because the technology is evolving so quickly. The third is what do we actually look like? What's our shape? Are we just a brand buying everything from a whole range of other players or are we trying to master all the underlying capabilities ourselves? And then the fourth is what's our business model? How do we actually do this in a way that we can make money and not just become some giant debt machine? And what we see is that every operator we talk to around the world is struggling with these issues. They used to know exactly what the story was, now they're in a world where it's a rapidly changing reality, what we thought was the right model last year is already out of date, this year are all that have been demonstrated to be unviable in a two or three year time frame. I find in this context this conversation that I'm having a lot with operators because there's been so many over the years is that they intellectually understand the challenge and the possibilities. They're looking at themselves and saying, you know, God, you know, we are so strictly measured by the stock market. We're very risk adverse. We invest a lot in LTE and 5G and whatever, right? But this kind of giant leap of becoming the next generation of who they are reinventing themselves like Tesla has reinvented cars or like Amazon has been inventing reading, you know, that seems like a very, very unnatural thing. This is the main thing that I'm observing. And so I always feel like, you know, our work has been about prodding them to maybe scaring them in many ways to take that leap, you know, how do you think that's going to happen? Well, I think sorry, you're right. I mean, they are infrastructure businesses by background. They're run by finance people and engineers, and they create life critical networks that work guaranteed. That's what they good at all most of the time they work. And as I said, they've been making so much money from that model, it's been very successful in the past, but that is now that's reached the sort of plateau. So as you say, they need to come up with something different. And they do instinctively know, as you say, that they have a whole load of great assets and capabilities within that network, within the fact that everybody has a phone and the amount of data that we're generating about our personal data, information about ourselves, generating the whole time as we move around the world. They do recognize that. And as you say, in principle, they recognize they could leverage that and create new sources of value and therefore new sources of revenue by opening up that capability to other people who want to use it. But when you speak to when you speak to them time after time that all the senior managers who are trying to create these new types of business models, what they'll say is it's the it's the culture that stops us from doing it's the mindset. How do we get them to transform? I mean, do we go in with like a giant like a future shock in this and scare them to submission? Or, you know, how will they actually change? I think future shock doesn't work anymore now because they've had that for the last few years. They're almost paralyzed by if you're a leader in an organization, you're almost paralyzed by the number of people coming and telling you that you're facing disruption, that you need to change everything. And as Simon says, it's this issue of culture. And the organization itself, you have 5,000, 10,000, 100,000 star, who you've spent 20 years perfecting into thinking in a certain way, behaving in a certain way. And now we're saying, no, you've got to be entrepreneurial, you've got to be dynamic, what we did last year, we're not necessarily doing this year. And you've got to think very differently. And that's a very big shift. And unfortunately, whilst the technologies move very, very fast, people don't. Well, this one we have to accept that it's going to take a while. And that's where organizations need to be going through the change programs to get them their management and the rest of their organization waking up to what's changing, and start to get this mindset change going inside the organization. And we just have to accept that you can't accelerate that. Yeah, I think a part of it is working on what's your purpose. I mean, part of the problem is that they tell the telcos particularly very successful organizations making lots of money, and they have shareholders who are expecting a certain rate of return and in the volatile markets these days, telcos are pretty stable, they're not exciting growth businesses. And so there's a there's a dame that there's an opportunity, I guess, is to reinvent why you exist, what's your purpose in life. And we talked about these these sort of life critical networks that they they run if you're doing, you know, if if people are doing robotic surgery these days, which is already a service, the network's got to work for that. So so I had a meeting with some senior management team actually only this this week, and they're very successful company, they they, in terms of the quad play, as we call it that TV and so on. And they were looking for the next wave of growth. And what we started to explore with them is that, could you not be as as the rest of the economy in your the country that you operate is becoming digital, there is the digital economy being created, could you not be the innovation platform for that digital economy, that the platform that allows other people to innovate to serve consumers in that digital world. So rather than you try to come up with services yourself, trying to come with OTT services or new entertainments, let other people do it on your platform. And what what grabbed their attention was when you start to talk about the internet businesses, which the most successful ones are all platforms, they create capabilities that other people innovate on top of. The challenge there is if you are if you are already a pipeline or network, it's very hard to mutate to a platform and vice versa. So let's wrap up this session because we're going to talk about digital transformation in general like we just started to in a separate session. Let's wrap up with three predictions of what's going to happen with telecom in the next five years. I'll take a start. And so three short things about what their destination is. My view is I've said for years, you know, we're heading into what I call the telemedia economy, which converges the telecom and media. So content and network converging in advertising is part of that as part of media is right. So that's going to be a very, very clear cut thing. The Internet of Things Connecting Everything, a whole new business model. Part of that is the whole discussion about big data and paying for privacy, all these extra services. And of course, automation, virtualization, cloud computing, those are giant businesses that they're all going to get into. Key question there will be about ultimately about they are going to become very much a platform rather than a network. And the network will be underneath the platform rather than will be the central part of what it is. I think you just done at least 30 of the three predictions that we might cover. I think that so building on what you've said, I think there's a few things. One is we're going to see a big spreading out in terms of those that get it, that get how the world's changing and those who are still stuck in this very old fashioned, which is part of government type thinking. Those who get it will start to change the way they think, the way they manage and the way they look for opportunity and partner in the marketplace to bring it to market. The second is I think one of the things that we're going to see hitting all of these guys is the kind of rapid wave of increasingly intelligent software, not fully artificially intelligent, but more and more almost lights out operation of everything they do, dynamic reconfiguration of the network, dynamic pricing models and just an increasingly intelligent network, which will need less and less people. The third thing I think we're going to see is a lot of new entrants, because the actual, the underlying pipes, the networks now are a very small piece of what's going to come next. So we might see a few players providing the pipe work, but an awful lot of people filling the role that the traditional telecoms companies played in terms of being that platform provider between the marketplace solution providers and the end consumer. Good point. Yeah, I think I think in any way some of the things that have, I suppose held them back culturally in terms of five nines culture, everything having to be completely robust before they launch it. Actually, as the world becomes more digital, more connected, and we talk about the internet of everything, not just the internet of things, the internet of everything, that requires increasingly network intelligence and it requires security to make it work. As I said, you know, things like robotic surgery, if that doesn't, if the network goes down, that's a disaster. So I think in many ways, if they can, they're going to play an even stronger role in the digital economy. And there's a lovely description of digital economy, which is all economic activity mediated by software, but enabled by telecoms networks. And I think they have that role, that very strong role to play to enable that. I think if they just look a little bit over the parapet about where the digital economy is moving, what their assets and capabilities they could expose into that, then I think they've got a very bright future. But it just needs a slight change in mindset, and a little bit more, and a little bit of thinking about what's our role in the world. I think in general, I mean, correct me if I'm wrong on this, but my observation has been that this is mostly happening in developing countries and in regions that are hungry for their futures. In Europe, we have a problem of regulation, everything's regulated. In America, it's one big country where they satisfy with themselves, so to speak. But if you're looking at operators like MTN and others, you know, who have huge diversity of countries, and they can do all kinds of interesting things because they have to reinvent their future. So this will come out of Africa, will come out of South America, the Caribbean, it will come out of India, it will come out of Indonesia, in my view, not from Europe. I don't know, I think it will, I think just on different levels. So in those emerging markets, that's whether you get the service innovation and then things like the mobile money transfer and M-Pays and so on, because you're solving really important things. But I think back here or in the West or in mature markets, then because the rest of the economy in which they operate is going digital, they are they're acquiring cloud services and secure networks and the telecoms are good at providing that. So I think they'll just be, they'll be innovating, but in a different way, I think. So Robert, bear cards for Europe or good cards for Europe, would you? Let's call the UK also part of Europe. Yeah, but for this practical purpose, UK Europe, are we in a good position there? I don't think it's a case of saying we're in a good or bad position. I think you must have to get down to the country level and the same with the developing economies. What we see is those where you've got progressive government, progressive regulators, who are open to new roles for the players in the economy. You're going to see some quite dramatic stuff happening. So you'll see your telecoms players being a platform for education in some country. Same in the so-called mature economies, where the regulators get it, where governments recognize that shift has to happen quickly, you'll see the market reconfigure, you'll see small companies, we're seeing them in other sectors where you've got 20 employees and they're being valued at 20 billion because of the market impact they can have. So we're going to, I think we'll see a lot of innovation, maybe the ideas coming more from the West, but actually being adopted in all sorts of places around the world as test cases. And the other thing I think we're going to see is a lot of new kind of financing mechanisms, which we haven't really got the time to talk about. But what we're seeing is a kind of radical shift in the way of finance innovation. And I think that is going to make it a lot easier for people to bring game changing ideas to market. Okay, we have to wrap. We're going to go back to a few more sessions about digital transformation. We have with us Simon Torrance, telecom 2.0 expert and internationally known for his knowledge about telecom. We have Robert Talva futurist from Fast Futures, myself, Gerd Leonhardt from the Futures Agency. We're all working together there if you want more information. It's thefuturesagency.com. Thanks for tuning in.