Kyivstar forges ahead with new model of business to harness opportunities of the digital revolution.
The world is changing, fast. Indeed, in modern digital technology, speed is always of the essence.
Fast digital networks are now the basis of technological development: The rapid transfer of data enables services such as video conferencing, cloud computing, voice recognition and instant translation, as well as new services as yet unforeseen. The mobile device in your hand is a powerful computing tool in itself, but its capabilities are increased manyfold the instant it is connected to a fast, reliable digital communications network.
The custodians of these networks, telecoms companies like Ukraine’s leading mobile operator Kyivstar, have therefore always been at the cutting edge of technological development.
The modern wonder of the Internet, a lightning-fast communications network spanning the entire globe, has supercharged the capabilities of mobile telephones, but it has also presented telecoms companies with problems. Just as traditional fixed-line telephony was superseded by wireless cellular telephone networks, so is the capability of linking telephones to the Internet forcing telecoms companies to reevaluate their models.
A mobile phone can now use the cellular network as a bridge to the Internet, and with speedy data transfers, Internet-based phone services have become available, offering cheap, international calls for the price of a local connection.
“Traditional” telecoms operators, fixed and mobile, risk being bypassed unless they embrace the digital revolution. Developing a high-speed cellular network demands considerable investment, and the users of the new smartphones are starting to demand much faster and more reliable connections. Moreover, with the proliferation of open-access Wi-Fi, it has become possible to use a mobile phone without even accessing a cellular network at all, cutting telecoms companies out of the communications loop entirely.
The solution, as Ukraine’s Kyivstar is demonstrating, is to radically transform the telecoms company business model.
What are they doing to be positioned as a strong, faithful and sustainable partner for the state and business? What are the main pillars that build that positioning? Read on.
New Model
In a market economy, companies compete to survive. Uncompetitive businesses die, or are absorbed by more competitive ones. What makes a company uncompetitive? Most usually a superior rival offers a better service for less money, and the less competitive company is starved of business until it can no longer operate.
Smartphones, in only about a decade, have made regular mobile phones practically obsolete. Finnish company Nokia, which dominated the mobile phone market for around two decades, was unable to compete with the leaders of the smartphone technology charge – Apple and Samsung – and had to pivot away from phone making to concentrate on the Internet and mobile telephony infrastructure segment, selling its mobile phone business to the more agile Microsoft Corporation.
Telecom companies have long had to ride this wave of fast-changing technology as well, and Kyivstar is a prime example of how to evolve and succeed. The old-style business model of telecom providers is fast becoming obsolete, and is being replaced with a new one – the digital services provider. It is so much true for both – end consumers and business customers.
The provision of voice services alone is no longer a viable business model. As a new generation grows up with instant messaging and video calls, demand for the simple telephone call is tapering off. Telecoms companies must look for new revenue sources.
Illya Polshakov, Director of New Business Development, Kyivstar
“Kyivstar is gradually evolving from a traditional mobile operator to a provider of integrated converged solutions. Knowing the business task of the clients, we offer them the full range of services and products “from the single hands” – from traditional telecom services to Big Data products, cloud solutions and Open Telecom business model. Open Telecom concept demonstrates that company tends to open its capabilities and solutions in accordance with the demands of the market – companies and partners”.
In partnership with IT heavyweights like Microsoft, it is developing a sweeping new range of digital services that leverage the awesome potentials of today’s superfast communications networks.
Business users are now demanding Big Data and cloud computing services; end consumers want superfast Internet connections and mobile payment services, as a good alternative to cashless payments. In another decade, they’ll both be demanding new services as yet either poorly-presented, or not developed at all.
Network development is essential
At the forefront of this technological revolution, Kyivstar is now effectively a player in the economic development of the country through developing the communications networks on which the future prosperity of the country will depend.
Leonid Polupan, Enterprise Sales Director, CEE Multi-Country, Microsoft
“Telco providers start playing an even more crucial role in the modern world and in our “new normal”. They go beyond their current monetization models, focusing not only on connectivity but other areas, like solutions for analytics of massive volumes of data generated by IoT connected devices, IoT security, APIs for deployments of IoT applications, automation solutions for IoT ecosystem orchestration, etc. They are creating new services and solutions for both consumers and business customers from every industry.
For Manufacturing, for example, important solutions would be around Real Time Automation, like RT quality control and automation, RT inspection, RT productivity and safety improvement. And when we’re talking about Smart Services, we see a huge demand for such services in many industries and this trend is just growing. You can see it from Smart Cities usage scenarios like Traffic Management, Automated Control and Monitoring of Infrastructure to the different scenarios in areas like Public Health or Social Services.
Also, I would like to note that the Gaming Industry is continuously evolving, and that Telco providers are very important in its development. But what is even more interesting is that the Gaming experience constructs great scenarios for the industrial solutions. For instance, look at modern retail. You can see more and more great solutions based on Augmented Reality Technology that are improving Customer experience. Also, there are Mixed Reality trainings and assistants for employees, that are being implemented more often nowadays”
If digital services are the “products” in Kyivstar’s new business model, then network infrastructure is the “factory” that makes them. Expanding and improving this factory is a non-stop process, and 23 years of the company’s existence, the work has actually been accelerating: In only the last five years, Kyivstar has spent UAH 28 billion on licensing, building, and upgrading its communications networks – 50 percent of the total amount it has spent on network development in the company’s lifetime.
These immense costs came with the launch of a 3G (third generation) cellular communications network in September 2015, and then the rollout of 4G in 2018. The introduction of these networks totally reshaped Ukraine’s communications landscape.
With 3G, Kyivstar’s subscribers gained a groundbreaking level of service – unlimited access to major internet sites and applications. 4G, bringing speeds up to 10 times faster than the previous generation, then opened up vast new possibilities for the company’s customers in video streaming, gaming, and hosts of other applications. In terms of data, the Kyivstar network’s traffic went from 326 petabytes in 2018 (a petabyte is 1,024 terabytes, or a million gigabytes), to 649 petabytes in 2019. In 2020, this figure will be around 1,000 petabytes.
To put that into perspective, you would need about 50 petabytes to store then entire written works of humankind from the dawn of civilization to the present – in all human languages.
In October 2020 alone, Kyivstar subscribers used twice as much data traffic than they did in the whole of 2016. The launch of 4G in the 900 MHz range in June 2020 made it possible to provide 1.5 million subscribers with access to high-speed mobile Internet in the rural areas with no high-speed Internet access. There are now villages in Ukraine where the consumption of mobile Internet is on average up to 40 gigabytes of data traffic per subscriber per month.
This extraordinarily rapid expansion of network capacity was partly due to the fact that the development of cellular communications networks in Ukraine had been held up by a tangle of regulations that only started to unravel after the Revolution of Dignity in 2014. Kyivstar played a key role in speeding up the development of the nation’s communications infrastructure by twice “donating” the rights to use frequencies for 4G communications – voluntarily returning to the state rights to parts of the radio spectrum in the 1800 MHz and 900 MHz bands. As a result, the market regulator was able to hold a tender for the freed up radio frequencies, which gave opportunities to other mobile operators who had a shortage of frequencies to develop new technologies.
The holdups in the rollouts of 3G and 4G in Ukraine, while frustrating, did have a major benefit: When work began to upgrade its networks, Kyivstar was able to use some of the latest cellular network technology available.
Kyivstar’s 4G network can now reach 85 percent of Ukrainian residents, and next year coverage will rise to 90 percent for the population. Despite the challenges posed by the pandemic of the COVID-19 disease and the lockdown measures to restrict it, in 2020 the company increased capital expenditure by 40 percent, connecting more than 7,000 more settlements to 4G. Today, Kyivstar’s 4G service is available in almost 15,000 settlements of Ukraine.
Big Data
The ability to transfer vast quantities of data securely around a widely accessible communications network is a fantastic development, but it’s just the start. We’ve seen how the factory (communications network) has been built and is upgraded constantly as new technology appears, and now it’s time to see what kind of products we can make using the masses of raw material (data) flowing through it.
As modern technology makes it possible to collect, store and process more and more information, Big Data will become the primary driver of business development and growth, and digital revolution as a result. Other companies turn to telecoms providers for access to large data sets to grow their businesses, and the mobile operators harness the data they collect themselves to provide new, innovative services. Big data analysis is a tool that opens new opportunities for business and government development. Today, the market offers companies products and services based on Big Data that help optimize business processes and increase the relevance of offers both internally and externally. That means to work more efficiently, increase the number of customers and earn more, improve the infrastructure of cities, analyze the tourism potential, making decisions based on specific data, and not based on assumptions. With the help of Kyivstar products, based on Big Data analytics, customers can: build a profile of the target audience, find a new audience (Look-alike models), send only interesting and relevant messages, including only a selected audience with accuracy within a separate street, district or cities (targeted communication), find the best places for placing points of sale (Heatmap and geoanalytics), analyze the security of the loan provided (Scoring), manage communications with the client online (Business Data Solutions).
Cybersecurity
But as communications networks expand and become more complex technologically, cybersecurity is becoming a crucial element in the country’s digital transformation. Kyivstar pays particular attention to the protection of its subscribers’ information and its network’s security. In April 2020, the company received a certificate of compliance from the State Service for Special Communications and Information Protection of Ukraine certifying that its network infrastructure is protected from unauthorized interference and meets high standards of network security. The company is also integrated with the MISP-UA platform. This is a state information system that provides notification to users about cyber incidents in the cyberspace of Ukraine and the world. It collects and analyzes information about such incidents, and helps to share practical advice in counteracting unauthorized interference and cyberattacks.
Kyivstar is not only concerned about the security of its subscribers, but also about the security of Ukraine’s telecom infrastructure as a whole. The company has signed a Memorandum of Cooperation with the Cyberpolice of Ukraine and the Situational Center for Cyber Security, with the parties agreeing to exchange experience and their own experience in cybersecurity, as well as implement practical measures to better protect information systems in Ukraine. The cooperation has already borne fruit, with the detection and blocking in August 2020 of a number of phishing and fraud sites that extorted money from Ukrainians under the guise of providing mobile services.
Future prosperity
Kyivstar is well on the way to transforming from a telecoms company to a modern digital IT company that can develop its own products and commercialize partner solutions on its network. For example, at the end of 2020 it plans to increase the size of its digital department by 120 people – 70 of them developers. Investment in the company’s infrastructure continues apace. Its investment in 4G – great Internet, providing 4G services in the territory where 85% of Ukrainian residents live and plans to increase coverage to 90% next year. It opens up new opportunities.
The market is changing fast, and Kyivstar is changing with it. It’s hard to predict what new technologies, innovations and opportunities will emerge over the next decade, but Kyivstar plans to be there to harness them for the benefit of its subscribers, and the future prosperity of Ukraine.
