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During a recent series of interviews with industry executives, one cruelly summed up the telcos as companies with data centres and a bunch of fibre and antennas sticking out of them. Is this indicative of the shifting dynamics of the telecoms industry?
Data has undoubtedly taken front and centre of stage when it comes to network design. Hence, the data centre takes a far more prominent role in the architecting and strategy of the telcos and their repositioning for the future. Combine with this the virtualisation and commoditisation of so many of the underlying components and the future ICT infrastructure looks very different.
Another dynamic impacting the future of the telco is the global, regional, local nature of business. No doubt the technology element is global, with only minor variations. All of the equipment and software providers that build the data centre, antenna, fibre combo play at a global level. The OTT players also benefit from the economies of scale of being global. The telco contribution, on the other hand, is fundamentally local, well possibly regional. Economies of scale are emerging with tower and network sharing but telcos do suffer from a widely spread portfolio of investment cycles from the 25 year investment in fibre and the physical network, through to the literally weeks of developing new apps.
Data centres come somewhere in between the two. All of the telcos I talk to emphasise their focus on the customer. This is a major volte face for them. In the past the innovation was done in the labs of the telco and eventually released to the customer, admittedly, robust and ready. The innovation cycle today comes from the developer community and businesses and their wish to engage with customers through whatever channel the customer prefers. Hence, the telco has to shift from its old inside out model to an outside in one where the customer drives the innovation. This is a major cultural change for the telecoms industry.
The IT industry has ben more accustomed to being customer focused. The beauty and the danger of the emerging digital eco system is that anyone and everyone can adopt and adapt the digital building blocks of data centre, antenna and fibre, coupled with the relevant applications and service layer, to look like a true digital player.
The analogy that most often resonates with audiences around the industry is that of children in a sand pit/box. Ask the kids to play nicely together and build a nice sand castle. They tend to do their own thing and throw sand in each others’ faces. SO, who is going to play nicely together in order to build that nice sand castle for the customer? All participants need each other but
. Hence, new players, without the computing industry, telecoms industry or traditional software industry baggage, can slip in unnoticed and, using those digital building blocks, actually match customer demands.
In the same executive interviews, one former CEO of a top 10 telco said that they didn’t expect to be buying connectivity in 10 years, but just transactions. The eco system has some work to do in order to get the blocks lined up and optimally aligned so we can all purchase transactions/solutions/business or personal processes and not technology.
In short, all players need to look very closely at how they work with their fellow suppliers in the emerging digital eco system and how it all lines up to support future customer needs. The good news is that there has never been such high levels of demands for services to support the digital lifestyle. The bad news is that there are many more potential players out there attempting to address that demand.
Hear more from Chris at the
panel on Thursday at 11:40