5 challenges confronting enterprise drones

Forecasts for the drone market have been very aggressive.

One research firm predicts sales of drones will exceed $12 billion by 2021. Another says the market for drone-based business services is worth more than $127 billion. And the Association for Unmanned Vehicle Systems International (AUVSI) predicts that by 2025 the U.S. drone industry will create more than 100,000 jobs and add $82 billion to the economy.

While I’m optimistic about the long-term prospects for unmanned aerial vehicles (UAVs), my research has identified five major factors inhibiting the adoption of drone-based solutions by enterprises:

#1: Today’s drones have limited flight endurance and payload capacity

Today’s drones can only fly for 15 to 30 minutes before they need to swap out or recharge batteries. And while there are drones that can carry payloads up to twenty pounds, five pounds or less is more common. To complicate matters further, there’s an inverse relationship between payload weight and flight endurance: increase the payload and you get less flight time.

What this means is that even in compelling applications, such as inspecting bridges and gas flares, there are frequent interruptions. And drones can’t even be considered for bigger jobs.

Help is on the way, however. WiBotic, a Seattle-based startup, has developed a system for autonomously charging drones and robots. When a specially-equipped drone touches down on similarly-equipped landing pad, it is charged wirelessly. Using this technology and a small fleet of drones, the interruptions can be minimized.

Drones are an attractive solution when there is work to be done in dangerous or dirty environments. It would be nice if they could not only complete inspections but assist installations and perform repairs. Olaeris and Top Flight Technologies have developed larger drones that can perform bigger jobs — in some cases by employing hybrid power systems (batteries plus combustion engine).

#2: Competing solutions refuse to die

Large corporations do not change the way they handle mission-critical tasks without studying, testing, and planning. While drones may be the superior solution, the old way of doing things has stood the test of time.

In many applications, drones look particularly promising, but there are several alternative solutions. Drones enable precision agriculture, but tractor-based sensors and satellite imaging systems can perform similar functions. If a drone detects that a field needs more fertilizer or pesticide, a small plane may still be required to do the spraying. Plus, many types of crops are commodities, and farmers are under pressure to spend as little on advanced technology as possible.

#3: Drones fly locally, but the power is concentrated in Washington, DC

The Federal Aviation Administration has done a great job ensuring safe air travel. It makes perfect sense for the FAA to retain the authority to keep drones at a safe distance from manned aircraft. However, when Congress passed the FAA Modernization and Reform Act of 2012, it put the FAA in charge of shepherding the emerging drone industry. That’s not a good fit.

The FAA primarily manages large aircraft that fly long distances and cruise at high altitudes. Commercial drones are small and mainly fly short distances at low altitudes. More importantly, the FAA succeeds by minimizing and even eliminating risk. The drone industry can only succeed if we are willing to accept a little more risk.

While manned aircraft demand nationwide rules, the nascent drone industry requires flexibility. It doesn’t make sense to apply one set of rules to drones whether they are in Manhattan or rural Wyoming. Congress should pass legislation that gives state and local governments — in consultation with local users, businesses and citizens — the authority to decide when and where the benefits of drone use outweigh the risks.

#4: The industry is trying to develop the perfect traffic management system

The drone industry is putting too much time and effort in a futuristic project: developing a comprehensive solution for managing skies filled with drones. It’s not clear when drones will become a common sight in our urban skies. If it takes 20 years, there’s a good chance that whatever traffic management system is developed today will have become obsolete.

Instead of integrating drones with the national airspace system, it makes more sense to keep unmanned and manned air traffic separate. This is the core of Amazon’s proposed airspace model for drones. There simply isn’t enough drone traffic today to justify a highly complex and integrated system.

Alternatively, what’s needed today are simple technical solutions and tools for ensuring that drones don’t pose hazards to manned aircraft. Planes cruising at 30,000 feet don’t need to know the exact positions and headings of drones flying at 300 feet, but drone operators must be aware of restricted airspace (such as near airports), temporary flight restrictions (for a special event), and any helicopters or small planes operating in the vicinity. Companies such as AirMap are addressing this need.

#5: Concerns among the public about privacy, security, and safety

The public is understandably concerned about issues surrounding the use of drones. No one wants drones peeking into their windows. People may approve of law enforcement using drones to track down fleeing suspects, but they worry about government agencies using drones to spy on innocent citizens. And these days, everyone fears terrorists using drones to scout out targets or even deliver explosives.

Nor does it help when we hear about commercial airline pilots spotting drones nearby during takeoff or landing, drones interfering with helicopters engaged in firefighting operations, or neighbors feuding over drones. There should be severe penalties for drone users who endanger manned aircraft. There are also technical solutions, such as geofencing, that can be used to prevent drones from flying where they should not fly.

Naturally, the biggest concern is safety. The public will not accept drone delivery if there is a substantial risk of drones falling from the sky. The only way to develop drones that are highly reliable, and that can make soft landings in the rare event of an equipment failure, is to allow them to be used in places where citizens and their local government agree, so that manufacturers and operators can gain much-needed experience.

This post is based on commentary by Ira Brodsky that first appeared at Computerworld. Brodsky is a Senior Analyst with Datacomm Research and is the author of five books about technology. Brodsky focuses on mobile solutions for payments, retail automation, and health care.

How the FAA hinders innovation

The civilian drone market was predicted to take off like a rocket. But the market has stalled. The Federal Aviation Administration (FAA) is keeping drone technology bottled up in the U.S. while it continues to move forward in Asia and Europe.

The opportunities for drones are real. Oil companies, electric power utilities, and mobile operators are already using drones to inspect vital infrastructure. Companies including Amazon, Domino’s, and Walmart are serious about putting drones into wider use. Everyone agrees that the industry must prove that drones are safe before they are allowed to deliver small packages to homes. But there is reason to believe that it can be done: Every day in the U.S. there are more than 23,000 commercial airline flights carrying well over 1 million passengers.

For now, the drone market is in a holding pattern. Several drone makers laid off workers over the last 12 months. The FAA recently reported that drone registrations are averaging about 8,300 per week. However, the forecast cited by the FAA in its 2017 annual report would require average weekly sales of more than 23,000 drones.

Many drone companies have tied their fate to a glacial FAA process that could be leading them down a blind alley. While many in the tech press (which moved sharply to the left during the Obama years) blame the layoffs on the growing dominance of Chinese drone maker DJI, Wall Street Journal columnist Gordon Crovitz points out that it was excessive FAA regulation that allowed a Chinese company to run away with the market (“While Amazon Waits, Drones Fly“).

The demise of Flytenow offers further evidence that the FAA is an obstacle to innovation. Flytenow operated a flight-sharing website for private pilots, enabling them to offer rides to the public to help defray expenses. The FAA contended that when pilots offer rides online they become common carriers, forcing Flytenow to shut down.

Finding a way Forward

The biggest challenge confronting the drone industry today isn’t safety — it’s politics. Apparently, we have become so accustomed to federal agencies riding herd over businesses that no one batted an eye when Congress passed the FAA Modernization and Reform Act of 2012, which appointed the FAA to oversee the emerging drone industry. That action was a mistake for two reasons.

First, the FAA primarily manages large manned aircraft that fly long distances and cruise at high altitudes (typically around 30,000 feet). Commercial drones are small and mainly fly short distances at low altitudes (below 500 feet). While the FAA should retain the authority to keep drones at a safe distance from manned aircraft, the FAA has neither the motivation nor the skills to shepherd an emerging tech industry.

Second, the FAA’s mission is to ensure safe air travel. Given that most passenger flights are interstate or even international, it makes sense for the FAA to apply one set of rules to the entire country. In contrast, one-size-fits-all rules do not make sense for drones used in environments as diverse as rural Wyoming and New York City. State and local governments — in consultation with local citizens, users, and businesses — should determine when and where the benefits of drone use outweigh the risks.

Despite the apparent good intentions of Chief Administrator Michael Huerta, who publicly called for his agency to be more flexible and “stop moving at the speed of government,” it took the FAA more than four years to create the first rules for small unmanned aircraft. Up until mid-2016, using drones for business purposes in the U.S. was actually illegal, though the FAA began issuing waivers on a case-by-case basis in 2014. The new Part 107 Rules were supposed to open the floodgates to commercial use of drones. In practice, the rules merely codified the uses that were already being granted waivers. The rules reduced the FAA examiners’ workload, but did almost nothing to spur business use.

A quick look at the restrictions contained in the Part 107 Rules reveals why. Drones may not be operated beyond line of sight of the operator, at night, or over people not directly involved in the drone’s operation. That means that drones still can’t be used to examine crop fields on a large farm, patrol a private facility at night looking for intruders, or transport small items between facilities several blocks apart without first obtaining special permission from the FAA. Nor are the restrictions likely to be relaxed anytime soon.

None of this is to suggest that the FAA should have no role in the drone industry. The FAA should remain in charge of keeping drones away from restricted areas such as airports. Otherwise, the FAA could serve as a resource to the states rather than as a national gatekeeper, developing airworthiness guidelines, providing operator training, and helping to field-test new solutions.

Lately there has been much talk in the tech industry about flying cars and small electric aircraft with vertical take-off and landing (VTOL) capability. Proponents say these new forms of air transportation could help alleviate automobile traffic congestion in and around major cities. That’s precisely the kind of thing that gets inventors and entrepreneurs excited. However, if we are going to allow commercial air taxi service for people by 2025 as proposed by Uber, then shouldn’t we figure out much sooner how to permit drone delivery of small packages?

Ira Brodsky is a St. Louis-based consultant and the author of five books about technology. This article first appeared at American Thinker on May 20, 2017. Follow him on Twitter: @IraBrodsky


Why Wigig will be a wireless game-changer

The new high-speed short-range wireless standard promises a bandwidth bonanza for users

WiGig is a relatively new wireless technology that lives in a part of the radio spectrum (60GHz) where bandwidth is extraordinarily plentiful. The FCC has allocated 14GHz of spectrum — from 57GHz to 71GHz — for unlicensed use. That’s more new spectrum for consumers than all of the spectrum previously allocated for consumers.

WiGig is first and foremost a shot in the arm for Wi-Fi. WiGig began as an independent development effort, but is now managed by the Wi-Fi Alliance. Last year, the Wi-Fi Alliance began certifying products based on the WiGig standard (802.11ad). WiGig will relieve congestion in the Wi-Fi bands at 2.4GHz and 5GHz by giving Wi-Fi users an alternative band with 20 times as much spectrum. WiGig also offers extra-wide channels (more than 2GHz wide) for bandwidth-intensive applications such as super-fast file transfers, screen-sharing and virtual reality.

Engineers have long known that the higher you go in the radio spectrum the more bandwidth there is. Why didn’t we take advantage of this fact sooner?

Challenges and Benefits

Until recently, the electronics required at 60GHz were bulky, sophisticated and expensive. The military used millimeter waves — frequencies above 30GHz — for years because it saw that remote part of the radio spectrum as inherently private and secure. However, it’s now possible to build small, inexpensive millimeter wave products using standard semiconductor materials and processes.

WiGig still faces some challenges. Radio signals at 60GHz are like flashlight beams: The signals can’t penetrate walls or other solid objects. Tiny, sophisticated antennas are required to point the signals in the right direction. The WiGig antenna (a little smaller than a postage stamp) should be installed on the surface of a mobile device in a location unlikely to be blocked by the user’s fingers or hand.

WiGig can’t do everything that today’s Wi-Fi products can do — but it can also do things that today’s Wi-Fi products can’t do. Wi-Fi products operating in the 2.4GHz and 5GHz bands can communicate over longer distances and through walls. WiGig products will normally be confined to applications within a room or large open area.

However, only WiGig can deliver the high speeds and low latency required by applications such as streaming a video from a smartphone to a nearby HDTV, using a cordless VR headset, and quickly transferring content from a server to a mobile device. Plus, WiGig will enable hotspots in crowded environments, such as airports, to serve more users simultaneously.

Today’s Applications

The short-range applications for WiGig are compelling. Today, screen-sharing is possible at Wi-Fi speeds using data compression. Unfortunately, compression typically entails a reduction in picture quality due to lost data and increased latency. WiGig eliminates the need for data compression.

Virtual reality headsets are another example. Headsets with cords limit the user’s mobility. VR headsets with WiGig offer a better user experience — particularly for applications requiring quick, unimpeded movement such as gaming.

Companies specializing in WiGig semiconductor solutions include Blu Wireless, Intel, Nitero, Peraso, Qualcomm and Tensorcom. Dell is a notable early supporter among device makers, and is including WiGig in select laptops and wireless docking stations. Other companies supporting WiGig include router makers Acelink, Netgear and TPlink. New tri-band wireless routers support 802.11n at 2.4GHz, 802.11ac at 5GHz and 802.11ad at 60GHz.

Tomorrow’s Applications

WiGig could be instrumental in the development of all-wireless environments. Office workers often use laptops, tablets, or 2-in-1 devices that they can take home or on the road.

When at their desks, they want to use the larger display, local area network and various peripherals at their disposal. WiGig is the first wireless standard that can handle all of their communication needs. However, USB-C can also handle all of their communication needs and charge their mobile device at the same time.

According to Dell, an all-wireless solution in the office requires both WiGig and wireless charging. Dell’s new Latitude 7285 (a 2-in-1 device that can be used as either a laptop or a tablet) and the Dell Wireless Dock support wireless operation. Add a charging pad supporting WiTricity’s magnetic resonance standard, and you have an all-wireless solution.

Conference rooms are an even more compelling use case. Users may want to connect to projectors, the office LAN and each other. WiGig would eliminate the need for cables and different types of connectors. Users are typically in conference rooms for shorter periods, so wireless charging would be optional. Only WiGig has the bandwidth to handle all of the communication tasks simultaneously.

In the future, mobile devices may not have any connectors. All short-range communication could be handled by WiGig, with Wi-Fi and Bluetooth included to support legacy devices (which will likely be around for a long time).

Charging will also be wireless, though the location of the device being charged will be less critical. While today’s wireless charging typically requires exact placement of the mobile device on a charging pad, solutions are under development that could allow charging devices anywhere on a table or even anywhere in a modest-size room.

There is one more compelling reason to use WiGig: privacy. WiGig is attractive for mission-critical applications (such as on the factory floor) because it offers exceptional bandwidth using signals that can’t easily escape the building.

As WiGig matures, it could even find use in smart homes. For instance, WiGig could be used within the home to remotely control smart locks.

Future Potential

The success of WiGig will depend on several factors. As with any new communication standard, there will need to be a critical mass of products supporting WiGig, particularly infrastructure devices such as routers, HDTVs and desktop PCs. Practical antennas must be developed for handheld devices such as smartphones.

Improvements in performance will allow WiGig to be used over greater distances and where there isn’t continuous line-of-sight access. WiGig can support speeds of 2Gbps to 3Gbps per second at 30 feet today, with even higher speeds and longer distances possible in the future.

The history of Wi-Fi offers a good reason to be optimistic about WiGig. The first wireless LAN products were introduced in the early 1990s. They were slow, bulky and expensive. Back then, you could buy proprietary wireless LAN products that ran about 100Kbps and cost about $1,000 per device. Fortunately, there were some mission-critical vertical applications that absolutely had to have wireless. Over the following years, the industry developed wireless LAN products that were faster, smaller and less expensive. The first Wi-Fi standard (802.11b) was published in 1999.

All in all, it took about 10 years for the wireless LAN market to finally take off. Given how much bandwidth WiGig offers, there is plenty of incentive to improve WiGig’s performance and reduce its cost. As Wi-Fi proved (and continues to prove), persistence pays off.

There is one more reason to be optimistic about WiGig: It appears clear now that millimeter wave technology will play a big role in 5G mobile networks. Therefore, it’s not unrealistic to expect billions of smartphones (and other devices) featuring WiGig. That means hordes of engineers working on ways to boost WiGig’s performance — and penny-conscious handset makers doing everything they can to squeeze out costs.

WiGig won’t happen overnight. But one day you just might wake up and find WiGig is everywhere.

This post is based on commentary by Ira Brodsky that first appeared at Computerworld. Brodsky is a Senior Analyst with Datacomm Research and is the author of five books about technology. Brodsky focuses on mobile solutions for payments, retail automation, and health care.


Survival strategies for a hyper-regulated economy

Software automation and mobile communication can ease the pain of regulatory compliance.

Federal regulations increase the cost of doing business, and can be a disincentive for anyone thinking about starting a business.

Fortunately, there are technology solutions that can take some of the sting out of regulatory compliance and even turn it to advantage. Many regulations involve collecting information and informing consumers — tasks that can be largely automated using software and mobile devices. The data gathered can often be used to fine-tune operations and better serve customers.

During his campaign, President-elect Donald Trump promised to eliminate the most daunting rules and scale back regulations. Specifically, Trump called for a government-wide review and, more recently, suggested that two existing regulations be eliminated for each new regulation enacted.

Good luck with reducing regulations. Any such attempt is likely to encounter fierce opposition from the federal bureaucracy and special interests. The new administration would be wiser to focus on overturning the most prohibitive regulations, and let technology ease compliance with comparatively innocuous regulations.

An era of steady regulatory expansion

Nearly all U.S. regulations were created after 1900 — most in just the last half-century. The Code of Federal Regulations has grown from 22,877 pages in 1960 to 178,277 pages in 2015. Growth has been relatively steady regardless of whether there was a Democrat or a Republican in the White House. Market-leading companies are rarely opposed to regulations: They are more interested in shaping than eliminating them, because regulations can be a bulwark against new competitors.

Even when both political parties agree to deregulate an industry, the result is often more pages of rules — not fewer. For instance, the Telecommunications Act of 1996 was conceived to open the communications business to competition. However, new carriers had to be guaranteed the right to interconnect with incumbent carriers’ networks at reasonable prices. That required a slew of new technical and business rules.

Generic business and industry-specific regulations

Many federal regulations cut across multiple industries. They include tax withholding, Occupational Safety and Health Administration (OSHA), Affordable Care Act (ACA), nondiscrimination and consumer credit rules. These regulations are typically handled by HR departments, though many only apply to businesses above a certain size.

Other federal regulations are industry-specific. Financial institutions are subject to know your customer (KYC) rules designed to thwart money laundering, terrorist financing and identity theft. KYC rules require confirming the customer’s identity, checking the customer against lists of persons being watched and comparing actual behavior to expected behavior.

According to a study commissioned by Pegasystems, a developer of strategic business applications, care must be taken by financial institutions when onboarding new customers and upselling existing customers. KYC compliance can be baked into client life-cycle management software to smooth the information gathering process and use the data to improve business performance.

Regulations have become so extensive, complex and subject to change that companies often find it difficult to keep up. Some consultants expect financial institutions to turn to artificial intelligence for help in the future. Natural language processing can be used to scan new regulations, identify rules relevant to specific business areas and determine precisely how the rules apply.

There are also regulations specific to the life sciences industry. Medical products (drugs and devices) must pass rigorous clinical trials before they can be marketed. Clinical trials are expensive and time-consuming, and it’s a problem when patients drop out. In the future, expect companies that provide clinical trial management software to offer mobile apps for communicating with participants.

Safety regulations often require on-site inspections. Traditionally, inspections were conducted using paper and clipboard. That required transcribing the handwritten data — an extra step that was frequently a source of errors. With mobile devices, many fields can be filled in using drop-down menus, and images can be attached or linked to each report. On-site inspections are required in industries such as construction, oil and gas, and manufacturing. Mobile apps may support bar codes, RFID and NFC for identifying assets, and GPS, Bluetooth beacons and Wi-Fi positioning for recording their current locations.

Easing compliance: Opportunities for startups

Safety compliance can be automated by integrating smart devices and apps with the work environment. For instance, the Food Safety Modernization Act (FSMA) — passed in 2011 and put into effect in 2016 — requires retail outlets that produce ground beef to record the source of meat for each package and label it accordingly. This makes it easy to trace contaminated beef back to its source so it can be immediately taken off the market and all affected shipments can be recalled.

However, compliance is a challenge for butcher shops and meat departments within supermarkets, because they are less-than-ideal places for working with paper. Meat is stored in refrigerated rooms. Workers wearing gloves spend most of the day handling fresh meat and keeping work surfaces clean.

St. Louis-based startup SaniTrace has developed a solution for logging and labeling the origin of each package of ground beef, as well as logging the daily sanitization of meat-grinding equipment. The solution consists of a tablet computer, label printer, bar-code scanner and the SaniTrace software. The label placed on a package of ground beef confirms that the source has been recorded and gives the consumer the option of receiving a text message in the event that the package becomes part of a recall. The consumer simply texts the product ID to the phone number on the label. Being notified directly is much faster and surer than hearing about a recall through the news media.

Though complying with the new regulations is extra work for meat departments, the use of a touchscreen computer makes it relatively quick and easy, and promises to get contaminated meat off the market faster while giving consumers a little extra protection.

Even most critics of the current federal code accept the need for basic regulations to ensure safety, prevent fraud and fight terrorism. Safety and security can be baked into software for managing critical business processes, and mobile devices can be used both for gathering data in the field and communicating directly with consumers.

This post is based on commentary by Ira Brodsky that first appeared at Computerworld. Brodsky is a Senior Analyst with Datacomm Research and is the author of five books about technology. Brodsky focuses on mobile solutions for payments, retail automation, and health care.


Mobile operators won’t find safety in content deals

Mobile operators need to look at reinventing their operations instead of content deals if they want to guarantee future success.

AT&T wants to acquire Time Warner and Verizon Communications wants to buy Yahoo because they believe delivering news, sports and movies to the small screen is the best way for mobile operators to ensure their long-term success. Mobile communication service has become a commodity and operators have known for a long time they need to do more than just provide “dumb pipes” if they want to continue prospering.

On the surface, everything appears to being going well for the U.S.’ four largest mobile operators. Both AT&T Mobility and Verizon Wireless have more than 100 million subscribers each, while T-Mobile US and Sprint have more than 50 million customers each. However, the mobile industry is in constant flux. Within the next five years, mobile operators are expected to begin deploying fifth generation wireless technology. And mobile operators know from experience that innovative companies can disrupt their businesses. When Apple burst into the mobile phone business with the iPhone in 2007, it broke up the handset makers’ exclusive club, and put operators in the unaccustomed position of having to negotiate for sales rights.

Threats to mobile operators’ businesses are very real. Cellular telephone was originally developed for automobiles, but today mobile phones are mainly used indoors. Competitors offering low-cost service relying primarily on Wi-Fi hot spots and only secondarily on cell towers are springing up everywhere. These include small independent companies such as Republic Wireless, Google’s Project Fi, cable TV operators and city governments offering “municipal Wi-Fi” service.

Another threat comes from so-called “over-the-top” providers. These companies have found ways to use mobile operators’ networks to deliver the same services for less – or even for free. For instance, Messenger allows Facebook users to make international phone calls from within Facebook, avoiding international phone charges. Other OTT companies have cut into operators’ messaging revenue.

A subtler threat comes from new smartphone-based services. Uber’s ride-sharing service is a prime example. The service lets you choose the type of vehicle you’ll be riding in, tells you the estimated charge, shows the approaching driver’s progress on a map and handles the payment automatically using your stored method. Currently valued at around $60 billion, Uber is generating significant revenue in cities all over the world while the mobile operators that provide the underlying communication service receive only pennies.

What should mobile operators do? There is only one way for technology companies to ensure their long-term success: they must continue to innovate. is a good example. The company that created the “Earth’s biggest bookstore” did not stop there. It developed e-book readers that now threaten to make printed books obsolete. Amazon Founder Jeff Bezos understood that it’s best to cannibalize your products before someone else does.

The biggest obstacle to innovation for mobile operators is found in their mobile information technology systems. These are the systems that store the customer account data, define the service plans and handle the billing functions. The problem with these mobile IT systems is that most were developed in the early 1990s – when mobile phones were used exclusively for voice calls. As mobile phones and networks evolved, operators created new services by patching their mobile IT systems rather than replacing them.

Ironically, while other businesses are leveraging smartphones to enhance the customer experience, mobile operators continue to rely on call centers and storefronts. As mobile IT provider ItsOn puts it, operators must “fundamentally change how mobile services are delivered and consumed.” The customer experience for activating new devices, purchasing usage, subscribing to content and setting family controls should be like requesting rides on Uber. Customers should be able to do these things right on their devices via a simple and intuitive app.

Mobile operators need modern mobile IT systems enabling them to quickly design and launch new services, to present customers with timely information and offers, and to interface with third parties. These capabilities will make operators more agile competitors, allow them to shape and enhance the customer experience and permit them to work more closely with business partners.

Sure, mobile operators can beef up their offerings by acquiring exclusive content. But what they really need is a culture that encourages creativity and the tools to deliver innovative new services.

This post is based on commentary by Ira Brodsky that first appeared at RCR Wireless. Brodsky is a Senior Analyst with Datacomm Research and is the author of five books about technology. Brodsky focuses on mobile solutions for payments, retail automation, and health care.

Why mobile operators need a digital makeover

Mobile operators are still using business support systems architected in the early 1990s. They need to become digital service providers delivering digital user experiences.

The global mobile phone business is booming. Up until recently, operators had their hands full rolling out 4G services and upgrading users to the latest smartphones. Going forward, operators will face growing threats from Wi-Fi, over-the-top (OTT) services and innovative solutions not yet on their radar screens. Pressure to seize partnership opportunities will increase.

To meet these challenges, mobile operators must acquire new skills: the ability to quickly design and launch new services, to gather information and act on it in real time, and to create more compelling user experiences.

The problem for most mobile operators is that they are still using a business support system architecture developed in the early 1990s. Back then, voice generated almost all of their revenue, there were few smartphones, and opportunities to partner with content suppliers and app developers were practically nonexistent.

Today’s environment is dramatically different. Operators now provide a multitude of voice, text, data and video services. Most users have smartphones and many have additional smart devices. Operators are partnering with (or even acquiring) content providers, app developers and manufacturers.

To prosper in this new environment, mobile operators need to modernize their business support systems.

Digital technology is accelerating the pace of innovation in one industry after another. For instance, Uber is using digital technology and mobile connectivity to upend the taxicab industry — an industry that long seemed impervious to change. Uber’s mobile app model of engagement has fundamentally changed the ride-for-hire experience. It’s faster, more convenient and totally self-service.

While companies such as Uber are leveraging mobile networks to create significant new revenue streams, mobile operators have been lucky to see a modest uptick in billable traffic — if that.

Doing business digitally

Mobile operators have said for years that they want their networks to be more than just dumb pipes — they want to create and sell added-value services. To accomplish this, they must become digital service providers (DSPs) and create digital customer experiences.

What is a digital customer experience? Today’s customers — particularly millennials and Gen Z — desire real-time information, contextually relevant offers and personally engaging interactions. In a sharp break with the past, they want to purchase services on-demand. And they expect to do everything right from their smartphones — preferably through a simple and intuitive app.

A digital service provider possesses the business support tools to quickly design and launch new services, to engage users in ways that drive sales (using analytics and predictive marketing), and to generate new revenue streams through collaboration with business partners.

How can a mobile operator become a digital service provider? There are three options.

1. The complete overhaul

The first option is to completely overhaul the carrier’s business support system. This approach is offered by companies such as Amdocs, Ericsson and Huawei.

Amdocs pioneered billing systems for wireline and wireless carriers. Today, the company describes itself as a provider of “customer experience software solutions and services for the world’s largest communications, entertainment and media service providers.” Digital transformation has become a major focus for Amdocs, and it has exciting ideas about how DSPs will provide enterprise customers with powerful new marketing tools.

Ericsson is a leading provider of networking technology, particularly infrastructure for mobile phone networks. Ericsson is working with operators to change the way they conduct business and interact with their customers, and to that end it has acquired numerous telecom consulting and system integration firms. Ericsson recently announced a five-year contract worth $1 billion to “digitalize and globalize” VimpelCom’s business support systems.

Huawei is another major supplier of infrastructure for mobile phone networks. The company has developed a digital business support system (business enabling system, BES) as part of its next-generation “Telco OS.” Huawei has conducted commercial trials including a large pilot program with one of the world’s biggest mobile operators, China Unicom.

2. Spot upgrades

The main drawback to completely overhauling the mobile operator’s business support system is that it can take years and cost tens or even hundreds of millions of dollars.

The second option is to instead perform focused upgrades.

Dublin, Ireland-based Openet provides policy management software solutions for wireless operators. The firm has conducted studies of multiyear projects and has identified some major risks. Openet believes that it’s wiser for mobile operators to think in terms of a phased digital transformation. The company has helped operators implement features such as tiered data pricing, content and data bundles, and usage notifications and upsell offers.

3. The parallel stack

The third option is to deploy a separate communication stack to work alongside the existing business support system. This approach lays the foundation for all of the capabilities of a DSP (service agility, digital customer experiences and partnering tools) in a relatively short time. It’s an attractive solution given the urgency of responding to competitors’ moves and seizing partnership opportunities. Operators are expected to derive a growing share of their revenue from business partners in the years ahead.

ItsOn describes its mission as “to fundamentally change how mobile services are delivered and consumed.” The firm’s cloud-client architecture delivers an end-to-end solution enabling operators to quickly create new services and offers, and letting users buy the exact services they want right from their smartphones. ItsOn’s digital solution has been fully integrated by operators including Sprint, Telefónica Mexico, STC and MTN Group.

Matrixx Software emphasizes that today’s mobile operators need real-time policy management and charging systems. The firm’s communication software stack can be deployed as a virtualized system interfacing with the operator’s existing business support system. Matrixx is working with operators including Swisscom and Telstra.

Digital transformation should be a top priority for every mobile operator. According to a survey conducted by Pegasystems, a provider of strategic business applications, telecom carriers tend to underestimate the threat posed by disruptive new entrants. In today’s hypercompetitive digital environment, mobile operators must become as innovative and agile as startups.

This post is based on commentary by Ira Brodsky that first appeared at Computerworld. Brodsky is a Senior Analyst with Datacomm Research and is the author of five books about technology. Brodsky focuses on mobile solutions for payments, retail automation, and health care.