From telco to techco: How digital transformation is revolutionizing telecoms
Branching out into new innovative services requires telco transformation. Find out how BT Group, Vodafone, and other top telcos are setting the pace.
With the launch of AWS’s Cloud WAN, Microsoft’s Azure Virtual WAN, and other network data traffic solutions that rely on telecom company connectivity and infrastructure, hyperscalers have sent a clear message. They’re intent on making inroads in traditional telco-controlled territory, with enterprise customers their prime target.
Lately, however, more telecom companies are realizing that by creatively leveraging their intellectual property and proximal relationships with enterprise customers, they cannot only protect that territory, but even expand it.To take advantage of these telco opportunities, they’ll need to evolve from telco to techco, with value-added digital services that enable them to get ahead of ambitious hyperscalers so they retain ownership of their valued enterprise customer relationships and, in the process, monetize their massive investments in 5G infrastructure and fiber access networks.
And when they can’t beat hyperscalers to the punch, they’re realizing they can join them with business partnerships forged in the spirit of “coopetition.”
Telcos and enterprise customers: Creating stickiness
Developing computing services at the network edge, as companies like Singtel are doing, represents one of the most compelling opportunities for operators to profit by evolving from telco to techco.
Launched in 2023, Singtel’s intelligent edge aggregator (IEA) solution is targeted at manufacturing and logistics enterprises. It packages cloud functionality and computing capabilities that enable customers to implement various back-end processes that require ultra-fast speeds, low latency, and high bandwidth.
Singtel delivers the service via its Paragon platform, which combines 5G networks, multi-edge computing assets, and low-latency applications and services. This enables enterprises to create network slices on-demand, deploy mission-critical applications on Singtel’s multi-access edge compute (MEC), and access apps developed by partners in the company’s business ecosystem.
Infrastructure-as-a-service plays like this represent exactly the type of solution that can create stickiness between telcos and enterprise customers, who are hungry for cost-efficient computing resources to support apps that help them operate more intelligently and efficiently.
Cloud service opportunities for telcos
Given telecom companies’ close proximity to the end customer and customers’ growing appetite for seamless and scalable access to mission-critical business data, hyperscaler-agnostic platforms for storing and accessing data in the cloud represent another promising enterprise play for telecom companies.
These services answer enterprise concerns about data sovereignty and handing control of their data to a single hyperscaler while enabling them to access the latest wave of digital automation + intelligent tools.
BT’s Global Fabric is one such service. Unveiled in 2023, it functions as a multi-cloud network-as-a-service for enterprises to house applications and data in a flexible, scalable, and resilient cloud framework and to pay based on their usage of the service. They can choose the type of connectivity for specific applications and workloads and manage the routes these take to optimize application performance, manage cost, and meet regulatory requirements across multiple jurisdictions.
What’s more, Global Fabric is expected to use significantly less electricity than current global networks, helping customers reduce their Scope 3 carbon emissions, according to BT. Built on an expansive business ecosystem with more than 630 digital service providers and over 700 data centers, it’s all held together by BT’s AI-powered digital orchestration underlayer.
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Ecosystems and network APIs
Speaking of ecosystems, a joint “economy of things” venture between Vodafone and Sumitomo Corp. has created a global digital platform where vehicles, devices, and machines securely interact and transact with one another without human intervention but with the owner in full control.
Once verified and onboarded as part of the commerce-focused, telco-led ecosystem, businesses can exchange and trade data and currency over encrypted connections and quickly launch new products and revenue streams to extract value from connected devices and the networks that support them.
Using the platform, a company that’s part of the ecosystem can assign a unique digital identity to any connected device so it can seamlessly communicate and transact with other devices using wallet and payment services secured by mobile SIM and supported by blockchain technology.
Network application programming interfaces (APIs) that enable developers to build applications requiring tailored network connectivity (such as quality on demand) or device-specific data (about location and authentication, for example) kept in the network represent another promising market in which telecom companies can differentiate themselves and bring value to enterprise customers.
McKinsey & Company estimates the network API market could be worth an additional $100 billion to $300 billion in connectivity- and edge-computing-related revenue to telecom operators.
But that’s only if they find creative ways to keep cloud providers and API aggregators at the market’s margins.
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5G private networks, cybersecurity, and partnerships
The opportunities for telcos to cultivate and expand relationships with enterprises don’t end there. Offering 5G-driven private networks as an alternative to Wi-Fi or cabled networks is another potentially fertile market, particularly for expansive indoor-outdoor operations like airports, seaports, and similar hubs where various tenants have a multitude of IoT points that require reliable networked connectivity.
Telcos are also making new inroads with enterprises by developing applications that leverage their intellectual property, such as multi-layered cybersecurity solutions like SASE (secure access service edge), videoconferencing, and metaverse interactivity.
These are all potential markets where telecom operators can use their positioning to gain a competitive edge over hyperscalers. Sometimes, however, it may make more sense for operators to partner with hyperscalers and combine their respective strengths in 5G and cloud computing.
Vodafone has forged a partnership with Microsoft to bring generative AI, digital, enterprise, and cloud services to 300 million businesses and consumers across Europe and Africa, for example.
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Building a foundation for a profitable future
Turning opportunities like these into sustainably profitable ventures can’t happen without a supporting infrastructure that enables the evolution from telco to techco.
That includes people with the skills to develop and manage these kinds of offerings, plus the ERP/finance/accounting capabilities to manage the configuring, pricing, quoting, billing, and settling responsibilities associated with these services (revenue-sharing, data-mediation and enterprise billing capabilities chief among them).
They’ll also need to put in place capabilities to support delivery of a seamless, personalized customer experience. With these foundational elements, telcos will be well-positioned to capitalize on what is a massive opportunity to extend their revenue streams beyond connectivity.
