Must Telcos Become Platforms to Become Orchestrators?

Is it necessary for connectivity providers to become a full platform to generate significant revenues from cloud-based, internet of things and edge computing solutions? How much orchestration has to occur so connectivity offers add value? The answers may well determine how successful most telcos will be in the next era. 

Also, how much orchestration of value can occur--and provide revenue growth--without a full shift to a “platform” role? That might be the more-important question, as few telcos can realistically expect to become the center of a big ecosystem, and operate as a true platform. 

Today, virtually all telcos operate as “pipe providers,” not in the direct sense of supplying connectivity services, but in the broader sense of creating a product and then selling it directly to customers. Telcos have that in common with most businesses, in most industries, most of the time. 

source: Accenture 

Accenture consultants have used a tripartite model of the potential evolution of telco services, beginning with “connectivity provider” and growing to become a “connectivity-plus-plus” provider. That would include adding roles in edge computing, security services and internet of things, for example. 

The future role of “industry orchestrator” does not actually require a switch to a “platform” business model. It does require working with third parties to create new services bundling connectivity with line of business solutions, likely in some industry verticals. 

What is important is that such an evolution does not require any telco to become a platform. It “only” requires adding more value to existing connectivity products, to provide higher value, and thereby reap a higher share of “solution” revenues. 

source: Accenture 

In large part, the move “up the stack” or “across the value chain” towards end user applications is necessary simply because the core connectivity business is close to saturation, with little revenue growth from business-to-business or consumer lines of business. 

Growth will necessarily have to come from new products beyond connectivity, as hard as that will be to achieve. That is one reason the industry has created the multi-access edge computing concept. It might allow a richer value proposition solving more business problems than “communications.” 

source: IBM Institute for Business Value 

Think of the way hyperscale data centers have created ecosystems of application, support and connectivity options for customers colocated inside the buildings. While often not a switch to a full platform model--which would require that the data center operator gets a percentage of all transactions between partner use of its platform--still uses the principle of the ecosystem to provide higher value for colocated partners, and thereby drives real estate value and revenue.