Boosting telco revenues through DPI-driven monetization strategies

Sebastian Müller portrait

by Sebastian Müller
published on: 19.12.2023

A mediocre 9% of total shareholder return (TSR), spanning from 2019 to 20221, underscores a pressing reality for telcos: they must diversify their revenue streams. The existing threat from hyperscalers armed with end‑to‑end ICT solutions and OTT service providers operating on razor-thin margins demands that telcos rethink their operations. They need to expand their service portfolios by leveraging their existing infrastructure and customer base. Deep packet inspection (DPI) can facilitate this much‑needed transformation to enable new revenue streams and enhance existing ones.

Deep packet inspection for telecoms

Deep packet inspection, in short DPI, is a technology that inspects and analyzes data packets as they pass through the network. It identifies and classifies applications, protocols and services to provide granular visibility into user behavior, traffic types, application usage and network performance.

R&S®PACE 2 and R&S®vPACE by ipoque are OEM DPI engines that are widely used in telco networks. Networking and cybersecurity vendors embed the DPI technology by ipoque in routers, firewalls, policy control engines and caching systems to provide real-time network intelligence. This intelligence is then used for real‑time access control, security policy enforcement, traffic management, network optimization, analytics and content filtering. In this article, we take a deep dive into how DPI‑driven traffic visibility helps telcos craft new revenue streams and enhance their long‑term business sustainability.

B2B2X and IoT: telco’s next revenue fountains

Telcos are already making major forays into B2B2X by using next-gen BSS platforms that enable a ‘one-stop shop’, bringing together end-to-end solutions via an expanded partner ecosystem.

For example, municipalities leverage B2B2X marketplaces to access 5G network slices, IoT sensors, cameras, drones, data analytics tools and unified management platforms to initiate, expedite and optimize their smart city initiatives.

However, managing multiple cross‑industry solutions presents unique challenges, as each is characterized by different levels of criticality, resource requirements and billing models. While 5G offers this flexibility through network slicing and customizable QoS, effective QoS profiling demands real-time application visibility. This enables each component service to be monitored end-to-end. It also enables bottlenecks and issues with component services to be identified in real time, with relevant vendors notified instantly. DPI-driven insights can also be used to study emerging opportunities, allowing telcos to optimize and expand their B2B2X offerings.

Telcos to techcos

Many telcos have already ventured into the SaaS space, offering cloud and edge computing services for their business customers. Leading carriers such as AT&T2 already offer comprehensive cloud computing and connectivity solutions, and Verizon’s3 telecommunication services integrate with Verizon Cloud storage to target SMBs specifically. Granular DPI data on application performance can be used to measure the performance of business-critical applications. This enables the allocation of sufficient bandwidth and computing resources. By fulfilling their SLAs and guaranteeing a superior user experience, telcos can command higher margins, while solidifying their presence in the enterprise ICT space. Furthermore, application‑level and user‑level insights can be used to tailor superior ICT bundles and forge profitable partnerships with application providers.

In the context of edge computing, telcos already have the established infrastructure and customer base and can strategically deploy the edge stack to monetize the growing demand for edge computing. Next-generation DPI capabilities enable telcos to gather valuable insights about bandwidth and CPU utilization across various locations, assisting in the strategic selection of deployment locations for edge nodes.

SASE, SSE and other security services

Deep packet inspection can monitor network traffic in real time, identifying patterns and behaviors such as abnormal traffic spikes that indicate potential security threats. Based on this information, telcos can offer add‑on security services such as intrusion detection and prevention (IDP), DDoS protection, content filtering, parental controls and personalized security consultation. The user, application and contextual awareness provided by DPI technology also enables ZTNA policies, so that continuous authentication and authorization can be executed across every active session.

Several telcos, such as Macquarie4 and CITIC5, have ventured into the secure access service edge (SASE) market with integrated, all-in-one networking and security solutions. They offer complete coverage across branches, headquarters, a remote workforce and distributed assets, including IoT fleets. A DPI engine is a crucial part of the SASE framework as it provides real‑time networking and security data and insights for proactive threat mitigation and self‑healing connectivity. With a project market worth USD 5.9 billion by 20286, SASE presents a viable long‑term revenue stream for telcos as more and more enterprises turn to cloud-based and software‑defined access controls to safeguard their data and applications.

Money in the data

With the COVID-19 outbreak, several government authorities used telecommunication data from telcos like Vodafone to trace contact history and ensure compliance with the containment measures7. Post pandemic, telcos can still offer consumer analytics services. For instance, Deutsche Telekom8 has a data intelligence hub for providing open data and paid data sources along with analytics capabilities. A recent study estimates that telcos offering well-developed data products and services can potentially generate up to USD 376 million worth of revenue9. In this regard, DPI technology can provide deep insights through anonymized information relating to source and destination IP, session information, data usage, application protocols, service types and QoS parameters. This data is valuable for businesses seeking insights into consumer behavior and contextual awareness for enabling AI‑based decision‑making.

Pay more, get more

DPI can deliver real-time QoS metrics and application classification for critical traffic prioritization, even for traffic that is encrypted, obfuscated and anonymized. Hence, DPI can play a central role in driving service differentiation, enabling operators to earn premiums on slices that are built to deliver superior connectivity. For instance, they can offer standalone gaming and AR/VR packages for consumers who are willing to pay premium price tags for ultra‑reliable, low‑latency, and high‑performance connectivity.

Expand that content menu

DPI‑enabled application‑level and user‑level insights also allows telcos to advertise localized data plans, upselling premium content services to consumers who are most likely to buy them. They can identify popular content within a locality and cache it for speed and cost optimization. Telcos can form partnerships with popular content and app providers to enable zero‑rating services to win more subscribers while creating new revenue streams. In 2021, KT, South Korea’s second-largest mobile operator, partnered with Disney+ ahead of its launch in the country10. Similarly, Vodacom and Telkom South Africa partnered with Netflix in a bid to attract potential Netflix consumers11. In such scenarios, DPI-enabled application identification can be leveraged to accurately execute zero‑rating or discounted pricing for selected content.

Unlocking hidden revenues with next-gen DPI

As revenue pressures continue to taunt telcos, ipoque next-gen DPI technology brings the insights needed to shake up stagnant revenues and form new monetization avenues. What is more, our DPI engines R&S®PACE 2 and R&S®vPACE come with high‑speed processing capabilities and exceptional throughput for any traffic volume. Their seamless scalability and easy integration into any part of the network make them an ideal fit to meet the intelligence needs of modern‑day telcos striving in the brutally competitive, yet highly lucrative industry.

To learn more about the next-gen DPI technology of ipoque, check out our solution guide.


Sources

[1] What Five Trends Mean for Telcos: https://www.bcg.com/publications/2022/telco-trends
[2] AT&T Managed Cloud Connect: https://www.business.att.com/products/att-managed-cloud-connect.html
[3] Verizon Cloud: https://www.verizon.com/business/products/plans/verizon-cloud/
[4] Introducing Macquarie Telecom SASE: https://macquarietelecom.com/sase/
[5] Secure Access Service Edge (SASE): https://www.citictel-cpc.com/en-eu/product-services/trueconnect-sase
[6] SASE Market: https://www.marketsandmarkets.com/Market-Reports/secure-access-service-edge-market-220384224.html
[7] Data sharing and collaborations with Telco data during the COVID-19 pandemic: A Vodafone case study: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8649407/
[8] Data Intelligence Hub: https://dih.telekom.com/en
[9] Telco data monetization: what's it worth?: https://stlpartners.com/wp-content/documents/Extracts
[10] KT Signs Mobile Partnership Contract with Disney+: https://www.businesskorea.co.kr/news/articleView.html
[11] Netflix turns to telecoms tie-ups in challenging African markets: https://www.reuters.com/article/us-africa

Sebastian Müller portrait

Sebastian Müller

Contact me on LinkedIn

Sebastian is a passionate DPI thought leader guiding a cross-functional team to build the networks of the future with leading traffic analytics capabilities. He has over ten years of dedicated experience in the telecom and cybersecurity domain, providing him with deep understanding of market requirements and customer needs. When he’s not at work, you can either find him on his road bike or hiking in the mountains.

Email: Seb.Mueller@rohde-schwarz.com
ipoque blog - discover the latest news and trends in IP network analytics

Sign up for the ipoque newsletter

Stay informed about the latest advances and trends in
deep packet inspection and network traffic visibility