The telecommunications community around the world has been aware of its need to embrace digital technologies for some time. Indeed, many telcos and wireless carriers have embraced digital as a strategic imperative although digital transformation programs have largely looked inward toward transformation of the telco itself. However, for the first time, a number of service providers are looking externally and pitching their visions for becoming “tech” companies in their own right.
Progressive telcos like Vodafone have long pushed their product visions with their focus on IoT.
Verizon has made a strong push toward offering edge computing as a platform, with recent investments in its multi-access edge compute (MEC) Zones.
Telefonica has made its intentions to be a player for the Metaverse loud and clear with recent announcements at Mobile World Congress. MTN in South Africa has also announced its vision for becoming a tech company, with an announcement focused on adopting a hybrid approach to transitioning to becoming a technology service provider. In India, both Reliance Jio and Airtel are looking to position themselves as technology providers of choice for both the consumer and enterprise segments.
In the APAC region, a number of telcos are evaluating a similar trajectory. At a recent TMForum event on the “Tech Driven Telco”, a number of leading telcos from the APAC region including DTAC, SKTelecom and Axiata Digital Labs came together with technology vendors like VMWare and Cloudera to discuss how the telco industry is evolving and increasingly gearing toward a “TechCo” future. Some of the themes discussed were familiar tropes around the need for continued network and digital transformation. But what was different was a new sense of resolve and a new focus on innovation, ecosystem building and acquiring the right skill sets needed for this new digital evolution.
Co-creating value with partners requires an Open Digital Architecture
One of the key themes from the TMForum event was that telcos can’t reach the promised land alone. Internal transformation will continue apace, with progress being made across the board, from digitalizing customer touch points to network virtualization to autonomous and zero-touch operations. While all of these changes are necessary, they are not sufficient for the telcos to achieve their stated goals of becoming TechCos.
Ultimately, if telcos want to diversify and go beyond connectivity, they will need to co-create value with ecosystem partners. However, this is exactly the area where telcos have not fared well. Even defenders of telco orthodoxy have long understood that networks need to be more open to ecosystem partners. To achieve this, the TMForum has put forth their Open Digital Architecture framework. The key components of this include an autonomous infrastructure layer with 5G and edge computing networks stitched together by data and AI; a cloud-native IT and network layer that have openAPIs, flexibility and scalability; and an autonomous operations layer. The objective would be to achieve full, "zero-touch" interoperability not only up and down the technology stack but also across domains to work with partners.
What is the core product offering for an evolved TechCo?
Assuming that telcos are able to migrate to and deploy an open digital architecture and co-create value with partners, there is still the open question of what the core product offering would be. To many telcos, the low-hanging fruit would be to offer “connectivity as a service.” This makes eminent sense when viewed against the backdrop of a booming market for private 5G networks, cross border IoT use cases and dedicated network connectivity to enable digital transformation for a host of diverse verticals. But can there be more “products” that an evolved TechCo could offer?
Security is one area where a comprehensive service can be offered to enterprises, especially the small and medium business segment (SME). Many enterprises already rely on telcos for network security. Managed services for private networks are another emerging opportunity for telcos to offer a comprehensive end-to-end service to the enterprise. Another emerging area of focus for telcos is to offer edge computing services to enterprise customers.
In one of the panel sessions at the TMForum event, SKTelecom highlighted the investment it has made in building what it referred to as the “on-site edge” to place resources closer to the end user and deliver greater bandwidth with lower latency.
The new TechCo will need a hybrid data cloud for operations and monetization
While there are several “products” that the new TechCos could offer, all of these offerings will cut across domains, from the telco network to partners and customers. Many of these new offerings will cater to new use cases that will see an explosion of connected endpoints generating massive amounts of data. Some of this data will stay on-premise, and some of it will reside in the cloud, both edge cloud and public cloud. Orchestration of increasingly complex services simply can’t be achieved without a hybrid data cloud strategy that optimizes resources for the TechCo organization.
With the shift to 5G, the boundary between the technology stack and the business operations side is getting increasingly blurred. The TechCos who succeed are the ones who will be able to combine higher performing networks with increased agility in operations while also harnessing the power of data and AI to build, operate and monetize new products and services.
Shiv Putcha is the Founder and Principal Analyst at Mandala Insights, an independent, boutique analyst firm that offers insights, opinions and research on the network and emerging technologies that will drive the next billion digital opportunities in Asia. Shiv is also keenly focused on the intersection of rising enterprise productivity, Industry 4.0 and 5G. Prior to founding Mandala, Shiv covered the telecommunications industry in Asia-Pacific for IDC and Ovum, along with stints at the Yankee Group, Qualcomm and LogicaCMG while based in the United States.
"Industry Voices" are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by Fierce staff. They do not necessarily represent the opinions of Fierce.