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    Home » Opinion » Why telcos need to become ‘techcos’

    Why telcos need to become ‘techcos’

    By Sudipto Moitra2 March 2021
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    The author, Sudipto Moitra, argues that telcos need to partner with IT companies and move up the value chain

    Across the world, disruption has become a reality that is driving changes across business sectors. Included in this disruptive environment is the telecommunications industry, which is having to take account of changing technologies and the challenges these changes bring to the way the sector has traditionally done business.

    Under examination must be the industry’s twin roles as a primary provider of telephone services and platforms to content and other “over-the-top” suppliers to launch their offerings to users.

    Internationally, experience shows that there has been a decline in average revenue per user as IT suppliers, offering focused services, have made products built around mobile and data less critical to end users. Although some different market factors apply to the African and South African markets, we are not exempt from these trends when we are compared to changes occurring in major economies.

    The future success of telcos will require that they become one-stop diversified technology service providers…

    There is no doubt that market disruption has the potential to create uncertainty and to be a game-changer across the telecoms sector. The biggest losers will be those who allow adverse events to occur and who have failed to develop the flexibility and strategies required to safeguard and modify their corporate market offerings.

    Driving the levels of uncertainty are rapid technological, regulatory and customer demand changes. The future success of telcos will require that they become one-stop diversified technology service providers and change attitudes towards what have been traditional functions. This change will ensure that telcos participate across different market segments and sell a range of technologies as well as professional and managed services across on-premises and cloud environments.

    Embrace disruption

    The opportunities are better today than ever for industry players that embrace disruption, re-imagine their network service capabilities and drive growth.

    The challenge for players like MTN is to transition to the delivery of new services and products in the business-to-business (B2B) and business-to-business-to-consumer (B2B2C) spaces. It is in these spheres that there are openings to maximise opportunities by developing and introducing services and products for the use of clients.

    Essentially, the change will involve becoming a “one-stop shop” by adopting technologies and creating bespoke applications for B2B and B2B2C, and assuming the role once occupied by ICT companies who developed applications that were then flighted on the telco network.

    Telecoms today is about so much more than simply building infrastructure

    Pursuing growth will, therefore, require a new emphasis on the formation of effective partnerships, investments in people and in automation — enabling movement up the “technology stack” and into the ICT space.

    This move, up the stack and into a new environment, could, however, require a mind shift in the short to medium term. The change in strategy — leaving the traditional telco space — could require different demands on investment and impact on the ways that returns on investment are calculated.

    Moving up the stack will, however, require selected partnerships with niche players. This need will exist regardless of whether these potential partners operate within the cloud, the Internet of things (IoT) or hyperscaling domains. This is because it is in these sectors that skills that are not commonly found within telcos.

    By creating partnerships and simultaneously moving up the stack, the strengths of different companies will complement each other

    Customers will also benefit as they will no longer have to adopt multi-sourcing strategies to meet their operational needs. They will be able to adopt single-sourcing strategies to meet their diverse requirements.
    As technologies converge, so customer demands — and the way they source personal and business services — are evolving. This allows an opportunity for both customers and the overall market to benefit.

    Effectively, by creating partnerships and simultaneously moving up the stack, the strengths of different companies will complement each other. The trend will be to move away from the past technology silos to provide improved customer outcomes.

    At the same time, a disciplined approach to change is needed.

    Too hastily

    There are many examples around the world of telcos that entered the ICT services sector too hastily. For instance, many tried to convert their traditional hosting and managed services to move to cloud computing. In their efforts to satisfy their clients’ expectations, they underestimated the complexities of the change. They ended up incurring high costs and unfortunately failed not only themselves but disappointed their customers, too.

    Perhaps the most critical error was regarding the task of moving to the cloud as only a technical change. In several cases, this led to design operations necessary for such a significant transition being neglected.

    The focus should have been on a hybrid model, including the traditional on-frame approach with that of the hyperscalers. There is space for both. As many telcos have found that the move into the terrain of hyperscalers has not been successful, they must now look to their investments in the traditional hosting and core location centres together with the cloud.

    To be successful, change at this level cannot be undertaken in isolation. As it involves a change in corporate focus, it must be accompanied by a business and cultural change understood and supported by the workforce.

    Market analysts also point out that transformation was attempted before backend integration had been fully accomplished, and business support was lacking. Add to this the fact that the market’s strategic direction and selling points had been misread, mix in the inability to meet and exceed customer expectations, and all the elements were there for a perfect storm.

    The overriding lesson is that all the elements — from connectivity, to infrastructure, through to user security and customer-focused services — must be considered and work together effectively to achieve positive results.

    Operational silos are, therefore, obstacles to meeting disruptive challenges with success. The industry must acknowledge that a more collaborative and symbiotic approach is needed to solve problems and take advantage of opportunities. All of this will further boost the ability of telcos to diversify and expand their ranges of products and services, thereby setting the course for the next logical step: the shift from telco to techco.

    • Sudipto Moitra is GM: ICT at MTN Business in South Africa


    MTN MTN Business MTN South Africa Sudipto Moitra top
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