Digital Transformation Initiative Telecommunications Industry

The Digital Transformation Initiative The Digital Transformation Initiative (DTI) is a project launched by the World Economic Forum in 2015 as part of the System Initiative on Shaping the Future of Digital Economy and Society. It is an ongoing initiative that serves as the focal point at the Forum for new opportunities and themes arising from latest developments in the digitalization of business and society. It supports the Forum's broader activity around the theme of the Fourth Industrial Revolution.

Industry digital transformation context Enabling the Fourth Industrial Revolution The ever-wider availability of technologies such as mobile, artificial intelligence, cloud, analytics and platforms is dramatically altering the way we live, work and interact – in what has been termed the Fourth Industrial Revolution.1 The telecommunications (telecom) industry is playing a critical role in enabling this digital revolution unfolding around us. The telecom ecosystem has provided the fundamental building blocks – access, interconnectivity and applications – that are enabling this digital revolution to take place. A large share of potential value stemming from digitization across global industries over the next decade is dependent on the telecom industry delivering essential infrastructure, applications and productivity improvements in many areas. – Retail. Broadband penetration will be essential to the growth of e-commerce, which could directly result in almost $100 billion in value migration from offline to online retailers over the coming decade. – Automotive. Customized networks that make telematics and usage-based insurance a reality could save more than 120,000 lives by reducing traffic accidents. – Electricity. Telecom industry infrastructure will enable connected devices on the grid and in consumer homes to drive a potential $170 billion in cumulative costsavings for consumers over the coming decade. Missing out on a digital windfall? The industry faces a rapidly changing economic and competitive landscape driven by internal and external digital disruptions. So far, the role that telecom operators have played in accelerating digital business and service models has not translated into new value for the operators themselves. Operators' share of the industry profit pool has declined from 58% in 2010 to 47% in 2015, and is forecast to drop to 45% in 2018. Pressure on traditional revenues means that it is increasingly important for operators to look at new digital business models to make sure that they share in the value from digital transformation.

Future horizons The digital transformation of telecommunications represents a $2 trillion opportunity for industry and society The next decade of digitization will look markedly different from the past and companies across the industry will need to be well-prepared to take advantage of the sweeping transformation taking place in consumer lives, enterprises and the broader economy. Our research has identified four broad digital themes, each including tangible digital initiatives that firms can implement, which we expect will have the biggest impact on telecom companies. Networks of the Future. Virtualization and an abstraction of the physical hardware layer promise to fundamentally change the basis of future service differentiation by creating self-optimizing and secure zerotouch networks. Beyond the Pipe. The increased digital transformation of consumers' lives and businesses presents the telecom industry with important opportunities to extend revenue streams beyond connectivity, through integrated internet of things (IoT) solutions, consumer and enterprise digital services, and reimagined models of digital communication leveraging advances in natural human interfaces and augmented reality/virtual reality. Redefining Customer Engagement. To win the race for customer loyalty and mindshare, telecom industry players will need to increasingly deploy features and tools that deliver delightful digital experiences. This is especially important as customers now expect the high-quality digital experiences they receive in one industry to be matched by companies in other sectors. Bridging the Gap on Innovation. The need for rapid innovation, greater convergence and new services means that telcos must fill capability gaps using new innovation models and revamped talent strategies for a digital workforce.

At the end of the day, the digital divide will be between those who take advantage of technology and those who do not. We are playing a big role in transforming to a new world where everyone has the same access to technology and what will differentiate us is the ability to use that technology for something useful and good. Ulf Ewaldsson, Senior Vice-President, Chief Strategy