Breakthrough from the Telco Tyranny

How Telcos are poorly placed to provide managed services for next generation Enterprise WAN solutions and how a Cloud-first WAN solution combined with a service-first delivery model is needed to provide much needed co-managed secure WAN services to enterprises.

I recently moved to new place and ordered an Internet connection from AT&T. AT&T shipped me a VDSL modem with WiFi, and even though I had a modem that they supported, they insisted that they must ship their own (and charge me every month for it!). Once service was turned ON, it was clear that I had to turn ON parental control for my young kids (With kids unlimited access to the internet is a bigger nightmare than unlimited access to candies!!). But to my bewilderment, AT&T does not support parental control on the WiFi modem that they sent me. The more frustrating part is that I knew the technology vendor who developed the WiFi modem, and it has supported parental controls on the same platform for few years. But AT&T still has not adopted it!

It is for such reasons the telcos remain the least innovative and most hated by consumers. In a 2018 American Customer Satisfaction Index report, out of 5 most hated industries, three were –  Cable Providers, Internet Service Providers and Wireless Phone Service Providers – all dominated by incumbent telcos!

There has been no dearth of innovation from technology vendors supplying the telcos, but chances are that their innovations have never seen the light of the day because the telco never pushed them to the end customers. As it is, end users are bad consumers of the features when left to individually discover, enable, and use them. And on top of that, if you have gatekeepers like telcos, who decide which features even get enabled, you have innovation coming out at a snail’s space.

Telco’s Inherent Deficiencies

The telco experience is not unique to consumers. It is same for SMBs and enterprises as well. The problem is amplified when offering enterprise WAN solutions. Telcos are besieged with poor customer experiences, inflexible solutions, and remain behind the curve in meeting the pandemic-driven fast paced changes in enterprise WAN requirements. Telcos have structural shortcomings in developing secure WAN solutions or delivering them in the post-pandemic world.

1. Stitched Up WAN solution: Telcos have stitched up solutions with technology and tools from multiple vendors. Customer onboarding and ongoing support workflows are loosely layered upon the solution as an afterthought instead of integrated into the solution. This does not provide a coherent customer experience throughout the services lifecycle from pre-sales to deployment to ongoing support and introduces risks at every stage. Customer touch points largely determine the customer experience, and telcos are poorly equipped due to stitched-up solutions and unprepared staff.
2. Lack of Expertise: WAN technology has progressed from leased lines (DIA), to MPLS, to SD-WAN, and now to SASE. Telcos were best placed to provide DIA and MPLS solutions, in which the critical piece was to provide solid network connectivity. And technology vendors had a limited role in MPLS, in the form of providing the hardware. So, when those solutions were delivered and managed by telcos, it made sense. But for next-gen WAN solutions – SD-WAN and SASE – robust network connectivity is a pre-requisite but not sufficient. As the SD-WAN acronym connotes, it is ‘software defined’ and software is developed by technology vendors, while telcos lack expertise in this area. WAN solutions are becoming more complex and feature-rich and telcos, which are typically volume players selling connectivity, lack the organizational sophistication to absorb this complexity. Many enterprises complain even during sales cycles, that it is difficult to communicate with telco sales teams as they lack the knowledge and understanding of enterprise WAN needs.  In next-gen WAN solutions, differentiation as well as the overall customer experience delivered by solutions is provided by the technology vendor, and telcos don’t have much of a contribution to this.
3. Lack of Flexibility: Telcos lack the agility and flexibility to deploy new features and respond to customer requirements and change requests. This is again due to stitched-up solutions and layered support workflows. Even when technology vendors innovate, telcos are slow to adapt. A part of the problem is, when technology vendors build new features, no doubt, they put the user at the center of the solution, but delivery and post-delivery support are often ignored, which makes it difficult for telcos to roll these out in a customer environment. The small proof is my parental control feature experience with AT&T’s Internet service. The path of innovation to user adoption, when controlled by telco, is fraught with obstacles.
4. Business Model with Perverse Incentive: Telco business models are built on a longer ROI period. Technology vendors have the incentive to innovate to keep themselves relevant, but telcos in fact have the exact opposite incentive – keep the service revenue coming with least new investment for as long as possible. For telcos, the MPLS cycle is still in mid-flight, it is a high revenue service, and they have the core-competency to deliver it. No wonder, a recent TeleGeography report states that, while SD-WAN services are gaining traction, enterprise spend is still dominated by MPLS and local access services. In fact, MPLS spend in 2020 was approximately $32.6 billion, almost 43% of the total WAN market compared to the SD-WAN connectivity spend of $1.6 billion or only 2.15% of the market.

Aryaka ‘Service-First’ Approach

At Aryaka, we are acutely aware of the challenges that enterprises are facing with telcos. With our unique position in the market as both a technology vendor and as well as a managed service provider, we are not only innovating in the technology space but also across the managed services delivery model. We follow a ‘service-first’ approach to solution development and delivery. Every new feature is developed with clear customer adaption target goal. As both a technology developer and managed service provider, our biggest advantage is a service delivery team at the table from Day-0 of feature conception, so feature delivery and post deployment support are not afterthought. Some of the advantages and outcomes of a service-first delivery model are:

1. Deployment and support tools are developed along with the feature. New features are not only designed with the user at the center but also delivery and support in mind. That ensures the feature sees the light of the day and gets widely activated or used in the customer’s network. Many times, new feature development to roll-out across all customers happens in weeks!
2. Aryaka has business model opposite of the telco – deliver more innovation to delight existing customers and attract new customers. The business model enables Aryaka to respond to enterprise customers and their fast-changing requirements in networking and security.
3. A second TeleGeography survey shows that 40% enterprises prefer a co-managed service model, which requires agile delivery and support. Aryaka has natively built co-management capabilities into its solution with appropriate co-management tools for customers and associated support workflows.

As much as Aryaka’s Cloud-First solution architecture is responsible for innovation at breakneck speed, our ‘Service-First’ solution delivery is responsible for bringing it to our customers in the fastest and best possible way. It certainly delights them, and no wonder we are voted as best in all regions in Gartner’s ‘Voice of the Customers’ for two straight years.

Breakthrough template

When you look back, another industry that the telco had tight grip on was mobile services. It is very clear, that Apple’s genius was not only with the revolutionary innovation of the iPhone but also in removing the destiny of phones from the clutches of the wireless service providers and reaching out to consumers directly. Prior to the iPhone, the service providers dictated which phones get certified on their networks and what features get enabled. Apple turned the table and the service providers had to evolve their network to support innovation coming from the iPhone and application ecosystem. If not for the changes happened with Apple’s iPhone, we would be still sending MMS (remember Multimedia Messaging Service!) over 3G networks on a phone with keys! The iPhone revolution has helped even the wireless service providers and according to latest American Customer Satisfaction report wireless phone service industry is no more in the top 5 hated industries.

Action in motion

This movie is paying out in other domains as well – Tesla cutting down the dealer network, or numerous SaaS companies delivering services directly to end users rather than waiting for some middlemen to test, certify and push it into the market. It is time, enterprises will do the same for their WAN service, unshackling themselves from the telcos so that their WAN solution responds well to dynamic networking and security needs in a post-pandemic world and allows them to take on whatever challenges that arise!