Telecommunications literally means conveying information from a distance, and the industry has evolved significantly due to the demand for increased global connectivity and quick innovation that can cater to what the customers need.
With the right talent, processes, and mindset, creating connections is at the heart of the telecom industry. It is a collective effort done by the various ecosystem players, involving diversification, partnership, and implementation of new monetization models.
Amid the challenges of network load, infrastructure optimization, risk mitigation, and churn rate, telecom-oriented companies aim to reach more people and continuously offer innovative products and services. Next-generation connectivity technologies like 5G and Wi-Fi 6, AI, cloud, and other dominating telecom trends are being delivered hand-in-hand by carriers, vendors, netcos, hyperscalers, and system integrators.
This industry has been a major innovator and enabler for other disruptors to thrive. And while these companies are, without a doubt, competitive, the industry is based on interconnected networks and technological collaboration. Each one tries to communicate, cope, and collaborate across the board to spur connectivity, inclusiveness, and innovation.
Operators and vendors
Telcos and vendors alike have an enormous role to play in advancing the most exciting connectivity technologies of the 21st century. Traditional providers also known as carriers and/or operators are those that have direct connections to the internet and all the comprehensive networks used in order to deliver both voice and data services. Eventually, as the customer demands change in time, these operators have diversified, transforming into digital service providers, and solidified partnerships with vendors, suppliers, and manufacturers.
The relationship between vendors and operators is heavily shaped by streamlining portfolios, rationalizing legacy applications, and simplifying network architecture and business processes. Compatibility and interoperability of the equipment for different parts of operators’ networks are a challenge to scale and standardize. For obvious reasons like security, efficiency, cost-effectiveness, and shorter time-to-market, different pieces of network technology have to interoperate to a greater degree.
As more operators and vendors focus on enhancing digital infrastructure, the ultimate aim is to provide customers with advanced digital services and the best broadband experience using the latest high-speed bandwidth technologies.
Moreover, operators have been looking well beyond the provision of broadband and wireless services for new ways to bring in more revenue and ROI from existing customers and broaden their customer base. These include financial services, healthcare, identity and security operations, and media and content.
What is important to keep up in the supply chain of the digital economy is to recognize vendors as strategic partners while operators focus on reinventing and simplifying demand and then apply full cost transparency to have a competitive but not excessive margin. This collaborative approach can drive multi-year value and significantly impact technological competitiveness, customer experience, and overall operational efficiency.
Netcos
As per Deloitte, netcos are regarded as low-risk businesses that will generate steady cash flows over time by renting out their infrastructure, namely towers, fiber, data centers, and subsea cables. Having a targeted niche of telecom-oriented service providers and businesses, these subsidiaries are relatively straightforward and predictable in providing regulatory-approved utilities.
In the Middle East, TAWAL, Zain Global Connect, Benya Cables, and Etisalat’s SmartHub are among the infrastructure service providers that offer solutions on passive network, fiber and wholesale, infrastructure sharing, and co-location.
While in the US, netcos are also seeking to expand their portfolio to support distributed antenna systems (DAS), small cells, edge data centers, and O-RAN systems. With the needs of telcos being revolutionized through the years, netcos should focus on maintaining, upgrading, and diversifying the network infrastructure, expanding coverage, and building faster and more resilient networks. These require adopting new technologies and innovating with larger vendor ecosystems.
It has been estimated that a streamlined netco business brings greater telco value maximization, with netcos being worth more than 15 to 20 times their margin versus the six to seven times of a traditional telco.
Hyperscalers
To enable the new business context and the service demands, operators’ 5G architecture is expected to be cloud-native. This means that the cloudification, virtualization, and containerization of telco networks are evolving to become a more flexible and programmable platform. As a result, telcos and hyperscalers become closer together in terms of cloud-native 5G technology and automation use cases.
Cloud hyperscalers are indeed at the forefront of the edge computing market, making efforts in integrating their stack into IoT devices and network gateways as well as supporting private and hybrid cloud deployments. Hence, partnerships between operators and hyperscalers are starting to take place and shape the market, impacting edge computing short- and long-term strategies.
Both ecosystem players are on a learning curve and must tread in carefully designed partnerships to connect cloud-native applications, leaving each side to actualize what they do best, and not overpower the other. The fear that big cloud players would claim the telco territory is highly unlikely to probably happen anyways as executives know the complexity of the industry, which telcos are already familiarized with and leading.
System Integrators
The lines between system integrators and telecom service providers are also blurring as system integrators expand their scope to offer high availability services that need telcos’ capabilities. They have taken advantage of the rapid transformations and new-age technologies to gain a foothold in the global telecom service marketplace.
Having the capacity for system integration capabilities will boost the value chain and allow the launch of new products and services, resulting in stronger revenue growth and delivering a superior customer experience.
PCCW Global’s Cloud Connect and MEF’s wide range of APIs and lifecycle orchestration tools are examples of how systems integrators are playing a crucial role in helping enterprises accelerate their interconnection and 5G journey.
What telecom operators lack is being fulfilled by leveraging the competencies of the right system integrator. They also help manage the complexity of multiple tech, domain, and vendor environments. However, it is critical to identify the right kind of partner depending on the business priorities of the telco as some providers can integrate network systems in a specific area such as specification, security, or maintenance.
