Imagine a World without Telecom Operators

by Jeff Wiener on June 5, 2015

With the continued blurring of the once sharply demarcated lines between tech and telecom–with companies like Google delving into the realm of communications, and with non-traditional communication companies like Dish Network and others gobbling up available spectrum–it seems the traditional role of the telecom operator is quickly becoming redundant, with even it’s current job as a “dumb pipe” for others’ data services is quickly being usurped by newly emerging competition.

The problem for telecom operators is that entire framework for how communications services are delivered to the public and subsequently monetized such services is changing, and operators are feeling pressure both from the hardware and the digital content sides of things, as both network equipment providers and content providers continue to discover that there indeed may be life (and profits) without the telecom middleman.

Now granted operators still rule the telecom roost; equipment providers still see operators as their primary customers and content providers are still trying to effectively monetize their services. But as the market continues to change and revenue streams continue to evolve, it’s certainly within the realm of possibility that within the next five to ten years telecom operators will be obsolete, standing on the outside of the data networks they created, unsure of exactly where things went wrong.

At a recent Cambridge Wireless Seminar, Simon Tonks of PA Consulting noted that in order for telecom operators to survive the evolution of the telecom industry, they’re going to have to find out exactly what they do that no one else can do, they’ll have to do it extremely well, and they’ll have to make it more affordable than ever before. If operators can increase the value of their services, that might be the lifeline such companies need.

But exactly what do operators do that no one else–either from the hardware side or software side of the industry—can do? Of course until recently the answer was, provide the network. Telecom operators have built and still control the keys to the digital world; they have the networks that the content side of the digital world still needs.

Of course network equipment providers are quickly discovering that their hardware is really the backbone of the digital world, the task of telecom operators is, in actuality, only the deployment of said equipment. Such hardware providers are now increasingly realizing that they could establish their own networks without much additional effort, and could then lease those networks to whomever they want, from content providers to the operators themselves.

In an effort to avoid this fate telecom operators need to focus on what Tonks calls “intelligent bits,” the advanced monetization capabilities operators still have access to. Among these, Tonks notes, is the ability for operators to supply complex business solutions, as operators are better situated then digital content providers to supply complex, multi-channel solutions (and better situated to monetize such services) then anyone else in the industry. Further, he writes, operators have access to a swath of user data, meaning they’re sitting on a veritable treasure trove of information; relevant, “real-time context-based customer insights” that could be sold to interested content providers.

In the end let me say that the traditional role of the telecom provider is over, as the evolution of both the hardware and digital side of the communications industry has increasingly made the operator’s role redundant. In order to stay relevant, therefore, operators will need to change what they do, discovering what makes they unique and quickly finding ways to monetize it; otherwise they’ll soon find themselves left out in the cold with very few people feeling sorry for them.

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