Monday, March 14, 2022

Telcos Need to Change: We've Been Hearing that for 40 Years

It might be one thing for an industry under threat to agree it has to change to survive. It is quite another matter to figure out precisely where to go and what to become, as part of that effort. And difficulties are greater when roles occur within an ecosystem.


That is the thing about open ecosystems: it is vastly easier to construct new value in the internet ecosystem, compared to the older world of closed networks and applications. 


You might think that is a good thing for connectivity providers: it should be easier to change. But it also is easier for others in the ecosystem to make the changes, and occupy new roles, themselves. In that sense, change is easier for everyone in the ecosystem. But that magnifies the threat of competition.


w3.org 


“The reality of transformational business models and technologies…it is incredibly hard to foresee what is really going to work, and how,” say researchers at STL Partners. 


Firms and industries generally hate uncertainty. It raises questions about where to invest capital, what skills employees require, how to manage demand curves, what products to create. 


One thing seemingly has not changed: advice to connectivity providers to change, which has been routinely heard for four decades. 


“A big question in all this is whether operators have really understood how outdated their traditional operator centric view of the world has become as the industry has changed,” says STL. “Value has increasingly moved to the players that can make all the stuff work: systems integrators and other technology and software players.”


That is what one would expect when vertical integration is replaced by disaggregation; when ecosystems and dynamic marketplaces replace bi-lateral relationships; when friction is removed from business processes by removing or replacing whole segments of the value chain. 


Consider machine-to-machine use cases, which Ericsson notes are built in a fragmented industry context.

source: Ericsson 


Basically, if connectivity providers want to become more relevant and add more value, they are literally forced to consider taking on additional roles in the ecosystem and value chain. That rarely is easy. 


Nor will industry advice-givers ever stop pointing out that telcos have to change, and change faster. All of us have been saying that for 40 years.


Uncertainty--perhaps more than change--is a reality in a connectivity industry that finds its roles changing; new competitors emerging; older value disappearing and new roles as suppliers of value yet to be created. 


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