Telecom Tech Outlook Weekly Brief
Be first to read the latest tech news, Industry Leader's Insights, and CIO interviews of medium and large enterprises exclusively from Telecom Tech Outlook
The Telco industry has made big strides since the dawn of mobile communication. Its evolution was beyond the technology aspect, bringing a rich communication experience that end users could have never imagined just two decades ago. It has kept removing barriers to adoption at all levels of the value chain allowing an exponential cycle of innovation, expanding constantly its ecosystem to new segments of users, suppliers, industries and partners.
With greater collaboration, standardization, and disaggregation of technology in the network and IT space, it promoted openness and facilitated the emergence of new business models in its entire delivery chain which benefited first and foremost the end consumer, but also the global economy. We are still in the wake of a global pandemicand, in retrospect though, the impact of the Covid-19 emergency would have been much worse and unimaginable had we been limited to the same ability to work, learn, shop, communicate and even socialize as it used to be at the dawn of the last century.
While the relevance of the industry is undeniable and more broadly acknowledged, it has been facing some structural and systemic challenges since the beginning of the last decade. With a much faster technology development cycle, more capable devices, faster networks and richer services, Moore’s law in the computing and semiconductor space extended to Telcos, where bandwidth and throughputs are increasing many folds every couple of years, while consumer prices are constantly declining. This reality has caused an opposite trend in the traditional Telco supply chain where research and development, capital intensity and fierce competition led to much higher costs for a much shorter technology and investment lifecycle.
In parallel, the application space witnessed a boom in the same period with the proliferation of apps in social media, digital entertainment, shared content, and online collaboration, to name a few.
Furthermore, the accessibility of end users to global apps and services at their fingertips reduced their switching cost and blurred the boundaries of customer ownership.
These dynamics created a sustainability challenge for the players in the Telco industry across its entire value chain. These players, vendors and operators alike, had to adapt their business model to fend off a decline in prices and margin on their income statements, while catering for a larger capital investment on their balance sheets. This is not exactly the ideal climate and playground for investors and shareholders. Their response in the last decade was predominantly focused on creating synergies and economies of scale through mergers and acquisitions, and industry consolidation at local and global levels. While it certainly served its purpose, as the opportunities for such transactions become scarcer, it is imperative for the industry to reinvent itself at a systemic level.
Today we find ourselves at a juncture where the dichotomy between consumers benefits and shareholders’ can be reconciled. With our post pandemic new way of work, the increased relevance of connectivity and higher demand for digital services, there is an opportunity for the Telcos to rebuild their business model in a way that ensures sustainability for all their stakeholders.
With the advent of greater technology ubiquity and openness, and the development of Cloud Telco, Open Networks, Network Virtualization and Slicing, Software Defined Networks, Cloud Services, Machine Learning, Artificial Intelligence, Virtual Reality, IOT applications, Micro services, Containerization and Software as a Service, Telcos stand the chance for the first time in the history of the industry to become a platform for innovation in the emerging digital ecosystem. This innovation platform has to be built on an open network architecture that promotes a broader participation between Telcos, Enterprises, Service and Application Providers across the ecosystem. While the continuous modernization of their network infrastructure is inevitable to remain relevant, Telcos have to devote more time in modernizing their application infrastructure landscape to support the development of new business capabilities that can be decoupled from their underlying vendor specific solutions, and expose such capabilities for internal or external consumption through open interfaces. These capabilities can be assembled by the Telcos themselves, or jointly with other application providers, to create, co-create or just promote new digital services that can be taken to market solely or jointly using different business and commercial models.
All the technologies are already there and developing at a faster pace than their adoption rate, but the openness of the Telco model is a paradigm shift at all levels in the organization in order to embrace a broader ecosystem that promotes innovation internally and externally. This Open Business Model for Telcos requires bigger investments in people and skills as opposed with more investments in technology kits in the networks and data centres. Telcos who are able to crack this nut while ensuring compliance with security and regulatory standards, will continue to inspire the generations to come with new digital services that improve our lifestyle and promote a better and more sustainable world.
However, if you would like to share the information in this article, you may use the link below: