How to stay ahead of the curve and maximize AR revenue

Posted by Holly Maunders on 09 November 2018

This Squared Online white paper explores how to improve current processes and deliver a disruptive edge to the Telecommunications industry. 

A huge congratulations to March 2018 Squares Omar Kabbara, Ana Horta and Gambar Oruj, for creating this superb this piece of work. Discover various insights into how AR can innovate the sector by reading on...

Trends

Reflecting on the future trends of telecommunications, it is interesting to highlight that a lot has changed in the field. In just 1999, WiFi was made available for home use and digital cellular 3G was only made available in 2001. Although it seems relatively recent, so much has changed in our daily lives on how we communicate that we are now questioning: What’s the next trend for telecoms?

Augmented reality (AR) is considered one of the main upcoming trends, among others such as the Internet of Things (IoT) and 5G. Augmented reality is the use of digital technology, in the real world, to enhance the user experience by creating an interaction with a real life scenario and digital image.

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It is widely believed that augmented reality is a recent innovation. As a matter of fact, AR made its real debut 50-years ago when, in 1968, computer scientist Ivan Sutherland developed the first ever AR and VR head-mounted display (HMD) system, called “The Sword of Damocles”. It used computer-generated graphics to show users simple wireframe drawings. The term “augmented reality” was used for the first time in 1990 by Boeing researcher Tom Caudell when he and his colleague, David Mizell, proposed that workers configuring airplane wiring wear HMDs that would project airplane schematics onto reusable boards.

These days AR technology is compatible with mobile phones and is already being used in retail and some gaming apps. To date, Pokemon Go is the most famous AR app. According to the Prnewswire, the AR market is already valued at USD 11.14 billion (2018) and is forecasted to reach USD 60.55 billion by 2023.

Why is Augmented Reality relevant to TELECOM?

Telecom industry revenue has been on a downfall trend. According to The Economist, one of the main reasons is that the Average Revenue per user (ARPU) has fallen by 2.3% in mobile and 11.5% in fixed line in 2018. However, on a positive note, the mobile data traffic is expected to grow to 49 exabytes per month by 2021. This will largely be driven by growth in Generation C (also known as YouTube generation), offering an opportunity for telecoms to focus on innovative mobile solutions in order to improve their revenue streams.

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Industry Innovations

Telecommunication companies have evolved immensely in the last Decade, with the introduction of Voice over IP (VOPI), 4G mobile networks and WiFi networks that enabled mass access for mobile phones among other devices. It is quite extraordinary to contemplate how much those changes have impacted our day-to-day lives. Looking ahead, the innovations continue at full speed.

a) 5G – Next Generation Networks

The new 5G generation, with its' faster data transfer speeds, will have a profound impact on customers’ perception of information. This is exactly what is necessary for the development of Augmented Reality. AT&T and Telia, along with Ericsson and Intel, have recently presented some live demos to showcase their 5G functionality. They have also shown customers how the new 5G mobile technology opens up new possibilities in AR and real-time video streaming solutions. In both experiments, an Augmented Reality Demo gave participants the opportunity to see-through physical objects - similar to x-ray vision or the superhero power of seeing what is hidden behind the wall.

b) Field Alpha

Telecom companies recently started using AR providers to improve the quality of their services. Field Alpha is Softweb Solutions’ AR-based field service application that uses ODG R-7HL. The Osterhout Design Group (ODG) claims to have developed the perfect AR smart glasses for industries like Telecom. With Field Alpha, the technicians can leverage benefits such as determine the scope of work, estimated repair or maintenance time.

AR utilized industries

Despite AR still being in its early days, there are many interesting uses being implemented in retail, healthcare and education sectors, among others. We would like to highlight the examples from military and automotive industries:

Tactical Augmented Reality (TAR):

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The US Army is giving soldiers the TAR eyepiece, which is connected wirelessly to a tablet that soldiers wear on their waists, in order to improve their situational awareness using AR technology. TAR assists soldiers with precise location of their position as well as the locations of others. Additionally, if a solider is aiming at a target, it provides the image of the target along with the distance and other vital data.

b) Acura live-streamed an AR race:

Acura experimented with the world's first Live Augmented Reality experience. This consisted of a new AR drving course with a unique set of visuals and obstacles which was visible to a driver and to a Facebook Live audience. Cameras mounted to the drivers’ helmets brought viewers directly to the action. Each driver used custom-built race helmets with AR technology embedded in an extra-wide visor, allowing for an unprecedented full-color, HD, 180-degree viewing experience.

Industry Gaps

There are still some challenges to be overcome by the Telecommunications industry order to have the Augmented Reality implemented:

Computational power: AR applications require complex algorithms to work but current devices – such as smartphones and kiosks – are not built to support these types of data-intensive applications.

Real-time data transport and bandwidth: Contextualizing the user environment will require large volumes of real-time data transactions and highspeed broadband internet connection.

Security: In areas which could increase customer engagement, it will require the layering of corporate sensitive data on the AR applications, and many of them running on the cloud. Hence, security will become a critical component that will determine the extent of adoption by corporate enterprises.

Strategy for Change & Recommendations

Telecoms are traditionally among the largest companies on the planet. Many Telecom giants are partially or fully owned by governments, and the sheer size (AT&T has 254,000 employees) and bureaucracy at some of these companies, makes decision making and reaction-time to market trends a major challenge.

The industrys track record in adapting to emerging trends have caused most Telecom operators to miss opportunities to benefit from immense assets, and to position themselves strongly in the Digital Era.

At the moment, Telecoms are operating in a narrow part of the value chain, mainly as infrastructure and connectivity providers. The meteoric growth of Over the Top (OTT) companies such as Google, Amazon and Alibaba, by using Telecom connectivity services, has raised the red flags. Telecom giants realise that the industry has to evolve and transform itself to become a platform enabler, and as an applications and content provider, to remain relevant in the new emerging ecosystem.

How can Telecoms utilize AR to transform their Industry?

1. Build up the technical infrastructure and network needed for Augmented Reality

a) Acceleration of the 5G roll out which in itself gives a good starting point for AR apps and unique content to work effectively.

b) Invest in further advanced network infrastructure (edge computing, SDN, NFV) to enable the anticipated massive data processing, transmitting and storage required by AR apps and devices when the technology goes mainstream.

2. Diversify into new revenue streams of application & content creation for AR

a) Bundle AR into existing Telecom services such as home packages (telephone, TV, internet). Pioneering Telecomms can develop AR tailored to their home-use customer base. An example of this could be using a digital receiver equipped with a hologram projector where viewers can watch live performances of their favorite artists. Another way of incorporating AR could be via a telephone handset in the kitchen which has a hologram projector, enabling users to watch a live hologram of Gordon Ramsay demonstrating how to prepare set recipes. These applications can be extended to the corporate world with Next Age conference call devices equipped with hologram projectors enabling companies to have more engaging and effective meetings and business reviews. These services can be introduced on a pay-per-view basis, or with premium subscription packages that add sizeable high margin revenues to Telecoms

b) Provide a platform that App developers and entrepreneurs can utilise to develop original and exciting AR content. This will give Telecoms the opportunity to partner up with some of these startups and to secure a flow of relevant content. Orange in the UK has already started this initiative with other major companies looking to follow suit. Another way of being a platform enabler and content provider is by acquiring or taking up equity in existing media and content creators. A great example of this is AT&T’s recent purchase of Time Warner group, giving it instant access to massive entertainment content and production capabilities.

3. Utilize AR to maximize operational efficiency & reduce costs

a) Introducing AR technology to network maintenance and operations. With the benefit of AR (such as field Alpha) technicians can see live mock-ups of the equipment they are attempting to fix, right down to the software version installed on the device. The device is geo-tagged which saves a lot of time and potential revenue loss for the company. AR can also be utilised in CRM programs, improving the customer experience.

Challenges and Risks

Network & data security: The exponential growth in data volume and interconnectivity between users presents a whole new set of challenges in terms of data sharing protocols and security. Telecoms need to be proactive in this area, and develop a Global standard, to ensure the seamless operation of the technology.

Content Rating & Censoring: There is a need to develop a unified rating standard for content (similar to the gaming / film industries) and parental advisory warnings to censor the content and prevent exposure of unsuitable content to minors.

Health Risks: Prolonged exposure to Augmented Reality could pose serious physical and mental health concerns. The full extent and implications of these concerns are not yet known because the technology is still in its infancy. In June 2018, World Health Organization (WHO) acknowledged “Gaming Disorder” as a mental health condition. 

In addition to personal health risks, there is a concern for the macro impact on society and the social interaction and behavior of individuals. A Boston Consulting Group study revealed that I in 3 people would give up seeing their friends for a year instead of their smartphone. The availability of original, entertaining and engaging content in AR Apps and services will only increase the usage of mobile phones.

Legal Concerns: With the wide application of AR technology in various industries, there will be some legal implications arising from personal injuries or even death of individuals while using AR applications or devices (one example is cars enabled with AR technology). There needs to be clear legislation on personal and civil liability in such accidents, and disclaimers need to be signed upfront by users of Telecom-enabled-AR to limit the exposure of Telecom companies to lawsuits and compensation claims.

Main Benefits of Augmented Reality to Telecoms

Revenue Increase: The Telecoms who adapt and invest in AR will be able to provide the services at a better level. This will lead to a bigger market share and increase their opportunity to improve Average Revenue per user (ARPU)

Customer loyalty: Ensuring AR is available not only as a service that is offered to the customers but also incorporated into the customer service, will allow the company to communicate and engage with the customers in more personalised and efficient ways.

Stock Value Appreciation: Among factors which influence a company’s share prices are demand and supply. In becoming an early adopter of AR technology, this would give companies a competitive advantage from other Telecoms. As well as the interest in new technology, it may also increase the interest in the industry and attract more investors.

Staying relevant: How would you feel if you went to a Telecom site and they did not have iPhones or WiFi available? That is exactly what will happen with the AR. It is estimated that within 5 years this will be fully incorporated into our daily lives. Therefore, early adopters will benefit most.

Conclusion

Moore's Law states that computer processing speed is doubling every 18 months. This means that technological changes and the ensuing implications and transformation of our daily lives is occurring at an exponential rate - whether we choose to accept it, partake in it or ignore it! It is a reality which is only going to get bigger and more impactful.

Telecoms have enjoyed a near monopoly in their industry for decades before the digital revolution took place and the rise of smaller OTT companies (WhatsApp for example). The industry is already witnessing diminishing returns and average revenue per user, and it is forecasted to continue to drop if Telecoms do not acknowledge the need to transform their business.

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Telecoms have immense enviable assets that are extremely relevant in the new Digital Age. Telecomms own valuable data of millions of users with uninterrupted access to their customer base through mobile connectivity and home, so they are in prime position to capitalize by introducing new digital services such as Augmented Reality. There are lots of challenges but the potential rewards are enormous. Telecoms should start working on the regulatory, technological, commercial aspects in order to make Augmented Reality a major revenue stream in the medium and long term. By doing so, they become more relevant and valuable to stakeholders and wider society as a whole.

"No matter how big the dinosaur, the asteroid is already on the way5. This saying sums up the current reality for the Telecom industry. The window of opportunity is still open but it is going to close pretty fast, with incumbents and start-ups praying for the new looming prizes that 5G networks present. Telecoms need to start the transformation today in order to surviveand thrive tomorrow. 

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Find out more about Squared Online: you can give us a ring on +44 (0) 20 7173 5938, or download the brochure to read about the course and the Squared experience.

References

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Topics: Squared Network, Digital trends, Digital marketing, Business case studies, Whitepaper, insurtech, insurance