Navigating partnerships in telecoms: You’re joining my ecosystem, I’m not joining yours!

The term ecosystem is bandied around almost as often as “You’re on mute,” during the explosion of video conferences of late. However, the difference is the mute thing is pretty obvious whereas the ecosystem angle depends heavily on your start point and background. Common terms include open, multi-stakeholder, federated, frictionless, mutual benefit, dynamic, and adapting to market conditions. So, how does this all apply to the telecoms industry and its transformation into the digital world?

Telecoms was formerly a self-contained industry with its own rules, standards, acronyms, and practices. This was made possible since all equipment and services were controlled by the world’s PTTs. The conservative nature of telcos, combined with lucrative moves into mobile, helped maintain the prevalence of inward-looking strategies. Well, that is, apart from spending chunks of the ‘ill-gotten gains’ on systems integrators, media companies, and sporting rights, in an attempt to build non-telecoms revenues into the portfolio.

A power shift in the telecommunications industry

Liberalization of the market combined with a revolution of cloud-based computing brings us to a very different environment today. Behind the scenes, the telecoms industry has failed to build on the major shifts in the worlds of cloud and applications development. In many ways, the hyperscalers, device players, traditional equipment providers, and integrators have all developed their own global ecosystems combined with the skills to allow them to encroach on different areas of the telecoms business. 

At the same time, the world’s telcos have retrenched to be primarily national-level players and revenues have begun to flatten whilst premiums on further generations of mobile and fixed broadband are uncertain, to say the least. What is evident is that the connectivity of a broadband type is critical to building out the digital marketplace. This includes non-telecom services such as WiFi, Bluetooth, infrared, and doubtless others to come. The balance of power has shifted and the telecoms industry and its stakeholders need to adapt to a new way of working, talking the language of the cloud, of applications developers, and of the businesses and public bodies that it serves. Out go the acronyms that nobody else ever understood. In comes those of the world of app developers, cloud, user Interfaces, Industry 4.0, and of the gig economy (or whatever that turns into post-Covid).

How telcos can adapt to a new era

In order for the telecoms players to adapt to the new ecosystem era, there are both technological and cultural changes required at two levels:

  • Internally: To build a simplified future-ready network environment. This is complicated by the tension between disaggregation of the network, balanced against the simplification of the environment, and rationalisation of the supplier roster.
  • Externally: To provide the hooks to allow the digital ecosystem to flourish and build on the improved reach and quality of connectivity.

Both dynamics have significant technological elements. The blending of IT and network (and the roles of the CIO and CTO) come with massive changes, luckily facilitated by the power of the cloud. The business model and cultural implications are, in many ways, far greater. For example, connecting buildings and people was the end goal in the past, hence being able to retain end-to-end control of the process and service. Today’s and tomorrow’s services will be part of a solution, often subordinate to the applications, content, and business processes used by consumers and businesses alike.

 The telecoms industry has to bring its fixed and mobile services to the ecosystem and accept that they may well be subsumed into other companies’ offerings. After all, the broadband element is rarely unique to the service or business process involved. In order to play this new role, the industry must make its services simpler to embed in other offerings, open up APIs to facilitate the free flow of data, and help ecosystem partners deliver their services. 

As well as potentially restricting the absolute role of the telecoms industry, the emerging ecosystem dynamic will throw up new opportunities. Securing this more open ecosystem, gathering relevant data, and analysing it through artificial intelligence and machine learning present significant opportunities for the worlds’ telcos. Similarly, being one of the ecosystem partners with regular monthly billing interactions helps provide a platform for growing the relationship. 

The cloud ecosystem

Despite this more all-embracing ecosystem, the cloud era seems to be producing specialists in key areas: compute, storage, connectivity, apps, and AI all have their specialist protagonists. In theory, anyone can bring these building blocks to the table or integrate them to form a super player. In reality, in order to share the business risk, accepting your relative role in the ecosystem is critical. Technology is important, APIs are important, analytics is important but focusing on what you bring to the ecosystem is critical.  

Of course, everyone would like to be in control of the ecosystem and draw down attached revenue and margins similar to companies like Apple and, for example, its Airpods. The ecosystem here is the glue that brings the digital lifestyle elements together on the device for the individual. For businesses, the focal point for integrating services varies dramatically between industries and countries. Cloud players such as Salesforce have built their market presence by bringing together many business functions into their cloud. 

Edge is a good example of where ecosystems converge. Is the edge on the enterprise premises, in the Hyperscalers cloud, on the telecoms network, on the device, or in the home? Each requires a blend of compute, storage, connectivity and access to the apps and content for that particular situation. The mix of technology capabilities within a telco will shape which flavour of edge they are able to deliver but a willingness to work closely with adjacent providers will be essential to build out the offering.

Current developments around the potential of 5G across consumer and business markets should be used as a catalyst to change the approach.

Flexibility and adaptability are essential to maintaining a working partnership

It should be noted that the scenario for every country and telco is different. Competition, regulation, and the political complexion with telecoms alongside other utilities and data center build-out has its own set of dynamics to be considered. Whilst some have ventured into media, financial services, and integration services, this still only represents low single figure percentages of total revenue. For the majority, it looks like they will need to transform themselves internally to provide the agility that others require from the connectivity piece of the puzzle. 

As an industry, we have been so technology and inward-focused that we have missed the dramatic changes in business and how technology as a whole fits into the broader economy. Current developments around the potential of 5G across consumer and business markets should be used as a catalyst to change the approach. Being curious about how people and businesses leverage technology and how connectivity can be adapted to fit in with those changes will help drive the cultural change required. The technical aspects can follow, but only if the right ecosystem positioning is identified and built into the DNA of the telco.

[This article first appeared in Futurithmic in November 2020]

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: