In this earlier blog, I talked about the challenges of the emerging “Telco as a Platform” concept, and referenced a TelecomTV story on their summit on the topic. That story included a poll on the question “What are the main benefits to network operators of a Telco as a Platform strategy?. The poll cited seven points, and I want to use this blog to comment on each. Let me start by saying that my own discussions with telcos are consistent with the poll result, with perhaps some qualifications and comments I interpret from my own interactions, as noted below.
First, create new service opportunities in the enterprise market. It’s pretty obvious that the enterprise market is the only place where a telco could hope to launch a new service based on hosted platform features and have any chance of success. However there are two issues associated with that market that would seem to argue against there being much of an opportunity there for telco as a platform.
The first of these issues is that telco services for enterprises are already under pressure from things like SD Wan and cloud networking/SASE. If the services were to migrate away to something like SD-WAN over consumer broadband, it could mean that the telco is it not in a position to pursue telco platform services successfully.
The second issue is that public cloud providers have already offered most of the kinds of services that enterprise would be interested in beyond basic connectivity so there’s already established competition in this space. Do telcos believe they can compete with the public cloud provider? Or, as I believe, are they just stuck in a connection-service mindset?
Second, develop new channels to market across the portfolio. Who are these new channels? Again public cloud providers would seem to be the organizations most engaged with enterprises and therefore most likely represent new channel opportunities. Unfortunately as already noted these cloud providers are competitors to telcos for new services. Could the goal be to offer partners like public cloud providers lower level communication services to resell through APIs. If so it would seem to remove the telco from being a retail player with full margins to being a wholesale player with only partial margins.
Third, enhance innovation efforts with developers and partners. This seems to me to be the clearest statement possible that the telcos would really prefer their partners to take on the burden of developing retail innovations using wholesale almost that are provided by the telcos. If that’s the case, it’s essential that those wholesale elements not be things that the end customer is already consuming in retail form from the telco (connectivity) or it’s revenue-dilutive. But if that’s the case why would a public cloud provider even want to partner with the telco when they could provide the same services as the telco could provide and keep all of the money?
Fourth, compete better with global tech companies. “Global tech companies” here obviously means companies like Amazon, Microsoft, and Google or in other words public cloud providers. So what we’re essentially saying here is that the operators want to launch new services to better compete with the same players that they declare partners in some of the previous points. In any event, competing with Big Tech means getting into OTT-type services, and it’s obvious operators really don’t want to do that.
Carrier cloud as a concept was the real opportunity for telcos to get into competition with big tech. They didn’t take that opportunity up. Given that it seems too late at this point for them to try something like this.
Fifth, monetize their investments in cloud native and automation. What investment are we talking about here? Is it NFV? I would contend the cloud providers have already invested plenty in cloud native and telco investments have been limited to supporting hosting of their own small set of network features. Telcos would have had the opportunity to deploy edge computing in central offices and other real estate close to the edge. Again, they didn’t take that opportunity up, and it’s questionable now that they could make the investment without frightening Wall Street to death, and in time to exploit any edge opportunity.
Sixth, create market differentiation from other telcos and techcos. You you can’t differentiate at the wholesale level, except by pricing. You also can’t differentiate versus other telcos, if all of you are relying on retail providers to leverage your assets in their offering. If you’re wholesaling to partners, the partners are going to demand API commonality with other telcos who would also be wholesaling features, because their organization and target market boundaries don’t correspond with those of the telcos. They won’t want to build special versions of their retail service to accommodate API differences.
Seventh, become more attractive to investors and skilled talent. A telco as a platform strategy is not going to make a telcos more attractive to investors or to skilled talent. Any successful strategy that raises revenues, cuts costs, and improves profits through some combination of these things would make telcos more attractive. A failure of any strategy, including telco as a platform, would reduce telco attractiveness significantly. Thus, if telcos are intent on pursuing TasaP, they need to be sure they make a success of it. Can they? They only have one shot.
If you only have one arrow you need to be focused on only one target. If there’s anything that’s clear from the results of the poll it’s that telcos have not collectively settled on one target. Yes it’s true that a single telco wouldn’t necessarily have all of these objectives, but it’s also true that telcos historically operate as a collective, meaning that it isn’t enough for a telco to have a unified goal. A group of telcos large enough to set standards has to have a unified goal. I’m not seeing it in these poll results, nor do I see it in my own interactions with telcos.
Telco as a platform is not an end in itself, it’s a means to an end. The end, to telcos, should be improvement in their profits, because that’s the primary goal of any company, or should be. I believe that a rational TasaP strategy is essential for telcos to optimize the use of hosted features in new services, but having one doesn’t select service or feature targets. Before jumping into TasaP, telcos need to do their homework on their future services.
