- Many telcos are terrified of becoming utilities
- But Oracle execs argued that for some, that would still provide a robust future
- Regardless of whether operators go the telco or techco route, automation is set to play a key role
You’ve heard the grand declarations from telecom companies over the past few years. "We’re not telcos anymore," they’ve said, "we’re techcos." But what’s so bad about being a telco?
Techco, of course, is short for "technology company." The idea is that telcos are evolving beyond their roots as simple connectivity providers and turning into services companies. Lumen Technologies has taken this approach, as has e& (formerly Etisalat). AT&T’s CTO got in on the game at DTW in Copenhagen last month, arguing that all telcos are going to have to mature into professional software development shops. And the hype around artificial intelligence (AI) is only fueling the narrative that this transition from telco to techco is a necessity.
The underlying implication here is that connectivity is becoming a utility, just like water or electric service. And telcos really don’t want to be classified as utilities (see also: their frantic fight not to be classified as Title II common carriers to avoid net neutrality regulations).
But there’s nothing necessarily wrong with just being a telco, argued Andrew De La Torre, Oracle’s Group VP of Technology, in a conversation with Fierce at DTW last month,
“I think there is a place for telcos being telcos, and I think for some companies that will give them a really honest future,” he said. “This industry has been so afraid of the word 'commodity' for decades. But the interesting thing about commoditized products is they’re absolutely fundamental to life and they always have a future.”
He continued “They might not be the ones that become the next trillion-dollar company. They might not be the ones with 300% share price growth. But they make good money.”
De La Torre argued that while it seems to be a universal declaration that all telcos want to become techcos, that’s not necessarily the case. The industry should make room for those who want to chart their path forward as telcos, he said.
But even those that elect to remain telcos still have some transforming to do, said Shirin Esfandiari, Oracle’s Senior Director of Product Marketing. Even for companies that choose to become utility providers, automation and cloud are "still paramount,” she said.
De La Torre agreed. “Ironically, I think if you’re in the services space and you’re a technology company and you’re successful, you can afford to be more lazy than if you’re a utilities company,” he said. “If you’re in the utilities space, you need to be ruthlessly efficient in the way you run your business. So, cloud and automation are arguably more important for that than if you went in the other direction,” though services businesses still also need to be agile and quick to deliver services as well.
According to research from STL Partners, telecoms can reap significant financial benefits from automation, primarily from network research management though also from service management (OSS) and ecosystem management (BSS). Omdia, meanwhile, pegged the value of the telco network and service automation market at $1.5 billion in 2022 and predicted that figure will increase to $2.7 billion by 2028.
Our own research found that more than a third of the 133 CSP leaders who responded to Fierce Network’s AI and automation survey consider these technologies "critical for survival and maintaining competitiveness,” and nearly three-quarters of respondents said they prioritize AI and automation in their spending plans.