The Tech-Co conversion story for traditional telcos – Myth or a reality

In the modern digital era of the ICT industry, one must have heard that telcos are striving hard to convert themselves as platform players or service enablers rather than being vanilla service providers. They are now calling themselves Tech-Cos of the world, a term which perhaps never existed earlier with reference to major telecom players earlier than 2022. As much as we would like to believe that this is the mantra for success for modern telecom players to realize their holy grail to make profits, one must acknowledge the realities of the modern trade and its corresponding limitations that it comes with. The legacy, which has been running for ages, is not easy to decouple and transform itself suddenly into a pure-play technology operator, given that the DNA of a typical telco beyond connectivity has always been very challenging.

The question is then why telcos are looking to suddenly transform themselves? The answer is obvious and very simple indeed – they are not making the desired top line for quite some time now and the CAGR of the industry is hovering around 2 percent globally, which is far from accepting in any industry. The result: 5G is not getting monetized at the rate it should have been, hence the aggressive mindset and fire-in-the-belly attitude of most telcos are not in place, barring a few exceptions, who are doing path-breaking work and have the right organization set up to pull through such portfolio of offerings.

Let us now explore the aspects of a modernized telco setup and what it needs to deliver as far as their business model is concerned. This is a fundamental change, which is a pre-requisite and a much-needed aspect to deliver any kind of next generation over the top service on top of the network estate to deliver tangible and optimal value to end clients. Besides changing business models, which are more networked and platform-led, one also needs to focus on the corresponding products and services portfolio of the modern telco, which should reflect beyond connectivity and alike offerings.

Once the business model is re-defined with the right endorsements in place by the stakeholders, it is imperative to understand the people landscape with the right set of organization DNA or change in organizational DNA to support this initiative of changing business models together with the new-age integrated product and services landscape. Essentially, two things are going to be very critical to support this changing organization ways of working, (a) people supporting the new-age portfolio as an integral part of their main offering in addition to the underlying connectivity services followed by (b) adaptable to technology changes and flexibility to drive change management as a function within large enterprises like telco service providers who have been in operation for decades.

Besides business model, people and organizational change, and new-age products and services, there needs to be a strong focus in realization of all these with a reference operating blueprint to support the next generation digital telco. This is what we call as part of the operational strategy, often referred to as the digital target operating model or D-TOM, which is mostly driven by large operational transformation, which comes to prominence during this next-gen telcos with their uptake of new products and services portfolio. Operating models are also responsible to drive any managed services offering, which the new-age telcos might want to roll out like cloud-as-a-service, analytics-as-a-service, or network-as-a-service, depending on their maturity, uptake, investments, and partners. Not every telco will opt for the same strategy and there will not be one-size-fits-all perspective seen in the market.

Now that we have discussed the pre-requisites from a business and operations standpoint, it is imperative to look into the engagement models and the underlying technology domains.

To start with, let us first investigate the engagement models by identifying the PILOT industries, where telcos are majorly looking to monetize their 5G network infrastructure, which they have invested in. That is the narrative, which is basic to everyone else. So, anything that can be rolled out as an over-the-top service yielding money will be given more preference as standard use cases. 5G as we know is not B2C or consumer-driven, so all use cases, which are going to the key focus areas mapped to identified industries across healthcare, automotive, engineering/manufacturing, or smart cities needs to map into the URLCC or mmTC/m-IOT domain, which will be led by B2B or B2B2X mostly. This will be increasingly focused on changing the scale of 5G operations with the implementation of selected use cases in this domain, thus impacting the engagement model of the telco with these enterprise clients being in the SME, SOHO, or large enterprise space. Besides this we also need to see stand-alone miscellaneous use cases consuming heavy-duty bandwidth in terms of NW slices, which can be rolled out as propositions to different industry verticals.

Secondly, we explore the basic technology domains and, to start with, any telco would be looking at two fundamental ones – cloud and znalytics. For cloud, the basic offering would be two-folds, one focused on application and infra modernization narrative, followed by the cloud-native ADM (application development and management story) in line with the TMForum Open APIs, and the second is the deployment of cloud-in-a-box kind of solution, targeted toward any domain within the front office, middle office, or back-office applications landscape. In continuation to this, we also package the NW cloud virtualization story where the physical network infrastructure acts as a larger cloud platform, complementing the 5G-in-a-box or private 5G connectivity deployments, which anyway will be part of the core offering in the connectivity space for telcos while targeting their end clients.

For analytics-as-a-service, the telcos can look into deploying a larger narrative of cognitive offerings where either analytics or AI is bundled as a service in a typical SaaS, targeting all selected industry domains-related use cases, given the choice of the PILOT industries that it decides to ride on as part of their B2B enterprise strategy and roll it as a service for consumption. These use cases will combine a bunch of analytical lead use cases as well as AI ones to cater to all exceptions within the detection and prediction space or to make any value proposition data driven. Analytics and AI will continue to be the underlying narrative to drive technology differentiation and benefits. Telcos of course will seek industry support and expertise from their technology partners and other platform providers to roll out these services and make them a reality.

The Tech-Co story is very much gaining traction on all frontiers as we speak, in the lines discussed above with changing business, operating models, and target industry segments at the forefront of different tiers. It is clearly visible with some digital captives being set up in major operators across geos with special focus on brand building on these digital captives driving the next-generation agenda of this transformation journey. Surely, but truly, it is the starting of a new era of partner eco-system-led play where no one knows everything and there is a unique proposition of co-opetition rather than competition at play. It is, therefore, very much going to stay with B2BX being the core focus for telcos for their long-term sustenance. This is a huge opportunity for industry at large to play the narrative well, and those who are willing to place the bets should ride the tide!

This article is authored by Niladri Shekhar Dutta, BCC & IIT Advisory Committee member & ICT Industry Personnel. Views expressed are personal.