Industry Thought Leadership

How Telecom Operators can Thrive in the Age of Drones

July, 2017
Jad Hajj
Partner

Ramzi Khoury
Manager David AbiDiwan
Associate

Strategy& (formerly Booz & Company), part of the PwC network

Telecom operators can position themselves to take advantage of the growing drones market in the GCC. Drones are becoming increasingly popular as they can help companies in diverse sectors transform their operations and make better decisions, such as through gathering and analyzing data or by conducting deliveries. As a result, the drones market is expanding at a rapid pace in the GCC, and could be worth US$1.5 billion by 2022.

The challenge for most companies across the industry spectrum is that they are in no position to conduct their own drone operations without massive investment or acquiring many new capabilities. That sets the stage for a separate player, telecom operators, to provide drone solutions for interested companies. Telecom operators are obvious candidates to play this role and reap the resulting benefits because of their capabilities in connectivity, cloud computing, big data and analytics. Venturing into this market presents a unique chance for operators to diversify their sources of revenue, offering an opportunity that many are seeking for growth.

To take advantage of this opening, telecom operators first need to work out how to excel across four components of the drone value chain – procurement, operations, processing and analytics, and storage and delivery.

Procurement involves equipping the drone device with the information systems, sensors and additional features that allow it to capture massive amounts of data and carry out critical tasks. In-house development, however, is costly and demands advanced capabilities. Operators would be well advised to choose from the wide selection of commercial drones offered by established global players.

On the other hand, drone operations – carrying out necessary tasks, such as collecting images and video footage, or transporting goods to the end client – should be conducted internally. As drone flights are very frequent, and as the task of recruiting or training pilots is relatively straightforward, it is more efficient for operators to build and acquire their own capabilities.

Over time, operators can certainly build capabilities in data processing and analytics, primarily in aerial imagery analytics. In the first phase, operators can create partnerships with leading data processing and analytics service providers. Once more expertise is acquired through these partnerships, operators should be able to conduct this work themselves, a vital step in terms of their own market value.

Operators use extensive cloud platform capabilities and can use these to store, manage, and deliver data to clients. Again, they could make use of partnerships, this time with service providers, to deliver and visualize data through a highly sophisticated platform for data presentation.

There are several potential business models available. These vary in terms of the type of drone solutions provided, and in the capabilities required. They include comprehensive drone commercial services, on-demand live video data acquisition, or a fully autonomous system operated on site for the client.

Another, quite separate, opportunity presents itself to operators. They could assist in establishing a drone traffic control center, facilitating all its technology components from end to end. This would involve supplying and managing data storage, connectivity, cybersecurity, professional services and applications, including a drone traffic management system and real-time reporting and analytics.

Operators then need a tailored strategy, comprising several aspects, to succeed in the drones market.

The regulatory environment is largely restrictive, with the region’s authorities prioritizing security and public safety. Operators must actively engage with regulators to ensure their commercial needs are met, and that they are allowed to conduct drone operations throughout the relevant country.

They then need to analyze the drones market in its entirety to gauge where the business potential lies. Based on this market analysis and an assessment of their own capabilities, operators can select industries to target, discovering their challenges and identifying those drone services that can best tackle them.

Requirements for hardware, software and for the workforce should be set out at an early stage. The decision on whether to develop capabilities in-house, or whether they should be outsourced, depends on the level of necessary investment and specialist expertise required.

Technical expertise can certainly be quickly bolstered by recruiting experienced specialists. Meanwhile, regular training will strengthen the capabilities of existing employees in areas ranging from sales and business development, to conducting drone flights, to data processing and analytics.

Finally, a target operating model should be selected. A new business unit to offer drone services could be set up, for example, with a standalone entity possibly being established as the business grows. By taking these considered steps, telecom operators can put themselves in the best possible position to win in the burgeoning and strategically important drones market.

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