Some things are predictable. A computing-related trend promising new use cases and business models arises. And even if it is not a core competency, telcos jump in.
So it comes as no surprise that some telcos (Deutsche Telekom, Orange, Telefonica, SK Telecom and Singtel) have already launched GPU “as a service,” aimed at enterprise customers who might use those resources for artificial intelligence training and inference workloads.
Of course, that also means competing against other firms in the cloud computing industry that arguably offer computing as a service as a core competence. And while some might achieve modest success, history suggests wild success will not happen, as most such diversification efforts fail.
Telco | Initiative | Category | Description | Outcome / Reason for Failure |
Verizon | Go90 | Content / Application | Mobile-first video streaming service targeting millennials with short-form original and licensed content. | Shut down (2018). Failed to gain traction against YouTube, Netflix, etc.; unclear value proposition; high content costs. |
Verizon | Oath / Verizon Media (AOL/Yahoo) | Content / Media | Attempt to build a digital media and advertising giant by combining AOL and Yahoo assets. | Massive write-downs; sold off to Apollo Global Management (2021) as "Yahoo". Failed to effectively compete with Google/Facebook in digital advertising. |
Verizon | Verizon Cloud (Consumer) | Computing | Consumer-focused cloud storage service for photos, videos, contacts etc. | Consumer service shut down (2022). Focused shifted to enterprise cloud; couldn't compete with established players like Google Drive, iCloud, Dropbox. |
AT&T | Time Warner / WarnerMedia | Content / Media | Massive acquisition to become a vertically integrated media and distribution powerhouse. | Spun off and merged with Discovery (2022) after facing integration challenges, massive debt load, and strategic shifts away from owning media content. |
AT&T | AT&T TV / AT&T TV Now / DirecTV Now | Content | Series of attempts to launch Over-The-Top (OTT) live TV streaming services to replace traditional pay-TV. | Multiple rebrands and restructurings; ultimately spun off DirecTV, U-verse, and AT&T TV assets into a separate company (2021). High costs, complex pricing, intense competition. |
Vodafone | Vodafone 360 | Applications / Platform | Integrated services platform syncing contacts, social media, and apps across devices. | Largely discontinued (around 2011-2012). Poor user experience, technical issues, limited device support, failed to compete with native OS ecosystems (iOS, Android). |
Vodafone | Vodafone Live! | Content / Portal | Early WAP/mobile internet portal offering ringtones, games, news, and multimedia content. | Became obsolete/less relevant with the rise of smartphones, app stores, and the open mobile internet. Its initial walled-garden approach didn't last. |
Orange | Orange Vallée | Innovation / Hardware | Internal innovation unit intended to rapidly develop and launch new consumer devices and services. | Limited commercial success for its launched products (e.g., Orange Tabbee tablet); unit eventually restructured/absorbed. Difficulty competing with dedicated hardware/software companies. |
Telefónica | Joyn (via GSMA alliance) | Application | Telco-backed Rich Communication Services (RCS) initiative intended to be an advanced messaging competitor to WhatsApp. | Failed to achieve widespread adoption or displace OTT messaging apps; inconsistent carrier implementation and marketing. (RCS itself lives on via Google Messages on Android). |
BT | BT Fusion | Hardware / Service | Early fixed-mobile convergence product using a special home hub and handset for calls over broadband/mobile. | Discontinued. Ahead of its time, technically complex, limited handset choice, overtaken by better Wi-Fi calling and smartphone capabilities. |
Deutsche Telekom | Tolino (Initial direct involvement) | Hardware / Content | E-reader and associated bookstore platform, initially with significant direct DT involvement. | DT reduced its direct role, becoming more of a platform partner within an alliance. Faced intense competition from Amazon Kindle. |
We might point to edge computing, app stores, consumer electronics and other hoped-for opportunities as examples of telco inability to compete with others in the ecosystem that are unconstrained by the need to operate as suppliers of “connectivity infrastructure and services” and are able to concentrate at the application level.
Keep in mind the fundamental distinction in the internet era between applications “using networks” and suppliers of connectivity.
“Permissionless innovation” is possible because no app developer requires the assent of a network connectivity provider to use the network. At the same time, “running communications networks” remains the core competency for telcos, not applications.
It takes little insight to suggest the latest initiatives will largely fail to gain significant market traction.
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