Where is Telco "Core Competency" Going?

If you ask just about any telco executive or middle manager what their firm’s “core competency” is, the traditional answer almost always has something to do with “creating and operating communications networks.”

Keep in mind that a core competency is not a list of “things we do well.” Instead, it is the combination of resources and skills that give a company a strategic advantage in the marketplace. It's essentially what a company does best and what differentiates it from competitors.

In the monopoly era before 1980, that answer would have made sense, as the law prohibited all others from operating in the business. In the competitive era the traditional answer is eroding. Firms such as Google and others actually fund, build and operate their own connectivity networks. So do cable TV companies and all sorts of mobile communications companies. 

So it is hard to make the argument that “creating and operating networks” actually is the core competency anymore, especially as new suppliers continue to enter the market.  

Decade	Core Competency Claim	Supporting Studies	Limitations
1980s	Network Building & Operation	* Caves, R. E. (1982). Multinational enterprise and economic structure. North-Holland ([study of vertical integration in telecoms])	Network infrastructure was seen as a significant barrier to entry, giving telcos a strong advantage.
1990s	Network Building & Operation (contested)	* Faulkenberry, G. D., & Caves, R. E. (1995). Telecommunications infrastructure: The missing link to economic development. Brookings Institution Press. ([study on telecom infrastructure's role in economic development])	Technological advancements and regulatory changes began to challenge the dominance of network ownership.
2000s	Network Building & Operation (further challenged)	* Witt, R. (2004). How the mobile network became ubiquitous: The telco industry and the regulators. Information, Communication & Society, 7(1), 73-95. ([analysis of co-opetition and network sharing in mobile telecoms])	The rise of wholesale fiber networks and joint ventures cast doubt on network ownership as the sole core competency.
2010s - Present	Shifting Landscape	* Brynjolfsson, E., Rockaway, R., & Van Alstyne, M. W. (2017. Platform revolution: How networked markets are transforming the economy and making winner-take-all competition irrelevant. W. W. Norton & Company. ([study on platform business models in telecoms])	Regulatory expertise, innovation & service delivery, and customer experience are increasingly seen as crucial alongside network capabilities.

Precisely where core competency might eventually be identified is among the core questions for industry leaders, especially as “network operation” ceases to be a clear and indisputable core competence. 

Some might suggest the eventual core competency could be as an “orchestrator of connectivity.” In other words, some tier-one telcos could evolve as system integrators for global communications across all networks (fiber, wireless, satellite) for businesses and consumers. They might own some of the resources used, but largely function as one-stop-ship global connectivity suppliers. 

Perhaps some might try to become “platforms” and “enablers,” essentially becoming connectivity infrastructure providers supporting business partners who develop and deliver the actual end-user services.

Roles for smaller firms could be dramatically different, as smaller telcos might not have the means to support global integrator roles, and might function as suppliers of local resources in a particular geography to the larger tier-one suppliers. 

Arguably less likely are evolutions that would reposition telcos as suppliers of targeted advertising, network optimization solutions, or location-based services supported by their ability to target network users. 

And though cybersecurity is increasingly embedded into all hardware and software, it seems unlikely that most tier-one telcos and smaller firms can become cybersecurity specialists.

The core competency underlying all  these future scenarios includes ability to manage and integrate complex communication ecosystems; creating seamless and personalized communication experiences.

If I had to guess right now, I’d assume the global connectivity integrator role would make sense for a handful of tier-one providers. 

The enabler role might become more prominent for smaller service providers, in the same way that the internet separates app development and ownership  from network access; or compute infrastructure from apps. 

The big switch is from specialized app provider (voice and data connectivity for business customers) to “internet access and transport” provider; global system integration rather than regional franchise; retail point of contact rather than physical layer transport provider. 

Even the move to joint ventures, wholesale network operation and ability of third parties to enter the business all suggest that the “network operator” competence is changing to something else.

The issue is how firms discover that new core competence.