Cyber security incidents highlight revenue opportunities for carriers


In today’s reality, cyber crime and cyber security is no longer confined to Hollywood material. It has real world impact, which if uncontained, can escalate on an unprecedented scale in a matter of hours. The potential threats today are different than a mere five years ago, given the rise of internet-connected devices beyond the mobile phones and tablets, known as the Internet of Things or IoT. According to Machina Research, total IoT connections will grow from 6 billion in 2015 to 27 billion in 2025, a CAGR of 16%. The U.S. and China will host about a fifth of those connections each, by 2025.

The rise of the IoT devices has cause for concern. In October last year, hackers brought down critical Internet infrastructure and took control of swarms of unprotected IoT devices, by flooding them with excessive traffic, also known as DDoS, or Distributed Denial of Service attacks.

In these threats, lie opportunities for the telecom companies, to reestablish their position as the safe keepers of global networks. Telecom companies must view increasingly sophisticated attacks and vulnerabilities as opportunities to not only improve their own network and thus their brand, but also as a revenue generator to existing and new clients.

Competing with existing products

While there already are competing cybersecurity products available, there are a number of factors that buoy our optimism. Carriers can tap existing customers as clients and offer them complementary cyber security products. Carriers can also integrate security solutions when acquiring new customers by either creating their own products or partnering with specialist firms to boost product ranges.

Carriers have the ability to offer a distinct approach when it comes to cyber security for customers. Since they already own the network, they have the advantage of incorporating new cyber security products in as a matter of convenience to customers, cyber security whilst enhancing integration, to accommodate demand for the security product. It means that the carrier is in a unique position to provide secured bandwidth at its core.

Carriers also have another unique advantage. Since they have customer data, they can segment customers and tailor products according to the cyber security needs. Multinational corporations will no doubt demand for the most robust security there is, but this may not be what the mom-and-pop shops want, nor what the average household requires. For customers with low to medium cyber security requirements, their needs can be addressed through standardized products – this can be a very profitable business, given the high scalability and the cross-selling potential. Larger clients require tailored solutions; to address them, a strong B2B sales organization and consulting skills are mandatory. This can be further segmented, given the different requirements of different industries, and heavy customization will help the carrier build a deeper relationship with customers.

A potential for cooperation and information sharing?

The significant revenue opportunities for carriers would naturally give rise to a competitive playing field. Carriers are bound to then treat information and expertise as competitive assets. However, there is potential for the telecommunications industry to take a leaf from other industries – especially financial services – to come together and build a superstructure, where critical information and expertise are shared among all industry players to improve defenses against the global body of hackers and cyber terrorists. The industry is fighting a challenging battle against hackers who are very well-coordinated.

This begs for a formal platform, where carriers and regulators can come together in a “co-opetition” mode, to move the industry in the right direction to defend against future cyber intrusions. Since there is a need to protect intellectual capital and competitive advantages, the framework for any intelligence sharing must address these concerns and protect the intellectual capital from unauthorized access.

Damien Dujacquier and Mohit Gidwani Senior Partner and Principal respectively, at Roland Berger


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