Earlier this month, the multi-national carrier MTN announced a rebranding, and along with its logo refresh, announced that it was moving to focus on being a technology provider. The new look, “aligns with our evolution from a telecommunications company to a technology company,” said Nompilo Morafo, Chief Corporate Affairs officer at the company. Across APAC too, telcos are looking at the shift to becoming technology companies, and last week’s TMForum Leadership Summit “The Tech Driven Telco” sought to unpack what that meant.
TMForum Vice President of Architecture and Open APIs, Ian Turkington, opened up proceedings with a review of the activity in the collaboration group geared towards technology solutions, followed by contributions from leading telecommunications companies in the region, namely DTAC in Thailand, SK Telecom in Korea, and Axiata Digital Labs, as well as technology providers, VMWare and Cloudera. Some of the themes that emerged were not new – margin pressures, digitalisation, and a search for topline growth have been key focal points for many years now. The boundary between technology and business was disappearing, the group agreed: is there a new discipline of DevSecOps, or BusOps emerging?
What are the Challenges and Opportunities in Telco Transformation?
A poll of participants inquiring as to the challenges to this transformation highlighted skills as the major area of weakness. Retaining people, training people, and attracting the right kind of talent would be critical to the success of the business. By extension, ecosystem development was similarly important, insofar as service providers could partner for skills gaps, and flex capacity where needed.
Another key topic was that of innovation. Clearly the emergence of virtualized network infrastructure is a domain offering lots of scope for new services and new roles for the service provider to play in enterprise solutions, and the idea of an open programmable network,has great attraction both to service providers and their enterprise clients. 5G networks offer tremendous benefits in terms of performance and security, and crucially, they open up significant possibilities for the Internet of Things (IoT) and connected businesses. Serving that market goes beyond providing ‘commodity connectivity’, no matter how fast and reliable it is! It means becoming a solution provider, generating much more ‘digital empathy’ towards enterprise clients, and understanding their needs more deeply than ever before. That’s a new challenge for the “techco.”
Some of the other trends discussed included the move beyond virtualization to true cloud native networking, a move that will take some time to evolve. Moving from a closed to open system is as much a cultural challenge for the service provider as it is a technical one, but nevertheless it is essential in becoming a genuine platform. As a platform play, the techco must open itself to developers who will drive innovation, asthe innovation is unlikely to come from the service providers themselves.
Telcos Face Competition from OTT services
One contributor noted that historically, the industry has been focused on a narrow range of services, and on reliability and robustness, with a concentration on service quality. This was not true of OTT type services, which instead launched a massive variety of services. The difference was that many of these OTT services were unstable until they reached critical mass, with competing principles of quality. Ultimately, while the most important OTT services matured to more closely resemble the quality standards of telco (think social networking, or digital streaming), the telco was rarely in a position to compete, as it moved more like the tortoise than the hare.
Critical for Techcos: Data and AI
Data and AI are key competencies and unique features for the techco. Its abundance of data, its capacity to handle at-scale data, and its data intimacy – particularly as it relates to location and human/machine communications – give the telco-as-techco genuine differentiation when compared against the major cloud vendors and other technology competitors. Jurisdiction and regulation too are crucial in defending a localised enterprise solutioning capacity, and many enterprises will partner with local service providers for those reasons. Telco as an industry has been doing big data for many, many years – far longer than even some of those leading technology providers – and has the processes and the culture of data that those teams may lack. Telco loves its data!
There are echoes of previous transformations in the ‘telco to techco’ narrative: In the desire for more services, to drive topline growth, and services diversification. But there are real reasons to be optimistic, too . irst of all, the cloudification of the core network demands a shift away from network standards to IT standards. Second, the need for a return on 5G network investment seems to substantially depend on enterprise services. Could we finally be witnessing the emergence of a new kind of telco?
For more about how a hybrid data cloud accelerates a telco’s shift to a techco, read the whitepaper here.