Telcos often proclaim their intentions to be techcos. But it never is entirely clear what that means. Skeptics might argue it is merely the latest in a long line of efforts to change investor and customer perceptions by attempted rebranding.
Worse, the whole effort might be doomed to failure, as the whole “techco” movement proposes that “telcos” essentially become something they have not been, and, more importantly, probably cannot be.
Though it can be argued that “becoming a techco” is merely a shift of culture, attitudes, processes and use of technology, something more is afoot.
Techcos already exist, so we can know something about them.
Many might agree that the term “techco” (technology company) is simply a way to describe a company that is primarily focused on developing and delivering technology products and services. So Apple, Google, Microsoft, Oracle, Samsung and Meta would likely qualify.
So what is a "telco?" Is it still a communications company that provides services such as voice, data, and internet? Those might also be considered technology products. But ask anybody in the telecommunications, media and technology space to categorize firms, and one is likely to see something like this:
No equity analyst or market researcher is going to produce a list that differs from that pattern. What is embedded in the notion of “becoming a techco” is that telcos “become” firms like Apple, Amazon, Alphabet or Meta. In other words, telcos become firms that operate in a different part of the internet value chain.
So the issue is whether that can be done.
Some might argue affirmatively, but mostly In its soft form. In other words, being a “techco” might mean a telco operates using information technology more extensively than once was the case. But one might say that is true of a growing number of companies of all types, if not virtually all companies and persons.
In other cases it might mean changes of financial priorities or disaggregating assets.
Sometimes it seems to mean becoming cloud centric. Sometimes it seems to mean that operations are automated. Sometimes it is suggested that use of ecosystems or multi-vendor suppliers characterizes a techco.
Often it seems a techco is a company that has digitally transformed its operations, at least in part. Yet others might say a techco is characterized by softer attributes: it is agile, entrepreneurial, focused on innovation. In that vein, some might try and distinguish telcos from techcos by differences in business models, customer perception of value or role or “culture” (fast or slow, bureaucratic or nimble, stodgy or leading edge).
Some might argue that use of technology (more) and culture (be more agile) is all “being a techco” requires.
Others might argue that is less than what the term implies.
In its most-challenging--or strong form--a “techco” might be a firm operating significantly in other parts of the internet value chain.
If you have been in the “telecom” industry long enough, you have seen many efforts to shift language from a “traditional” to a “new” term.
“Telco to techco” is merely the latest iteration.
To be sure, telcos can own and operate “techco” assets. Telcos can own data centers, supply cloud computing services, supply their own apps, operate media businesses and so forth. They can design, build or sell their own devices or semiconductors, if rarely.
The point is that, aside from “being more digital,” techcos operate at different parts of the internet value chain. So when a telco talks about becoming a techco, it often means it is seeking another role in the value chain, not simply a shift of culture and technology use.
So is the “telco to techco” initiative another way of saying “digital transformation? Is it more a shift of company culture? Or is it also a desire to move elsewhere in the value chain? And how realistic are each of those shifts?
Is it simply the latest version of a positioning battle telcos have engaged in for decades? Is it just another way of saying “digital transformation?” Or is there really some serious intent to expand operations in other parts of the value system?
We will know the answer in some years, when we have moved on to the next set of preferred nouns.
