Telcos to TechCos: Gearing up for a tectonic shift

The role of Telecom Service Providers (TSPs) has undergone a profound transformation over the past couple of decades. The transition from being a traditional voice and data provider to a dynamic Digital Service Provider (DSP) has been inevitable, driven by the growing demand for seamless connectivity, personalised experiences and innovative digital solutions that cater to the diverse needs of modern consumers and enterprises.

Today, telcos are no longer just communication enablers; they now shape the infrastructure of our hyper-connected world by leveraging advanced technologies such as the cloud, the Internet of Things (IoT), Artificial Intelligence (AI), and Machine Learning (ML). This evolution from telco-to-techco comes with challenges but holds significant promise for business expansion and revenue optimisation. According to Accenture, telcos could unlock at least USD 700 billion in new revenue through this tech transformation.

Telcos’ Transformation Journey

The rapid pace of technological advancement has dramatically reshaped industries over the past few decades. The proliferation of smartphones and high-speed mobile networks has ushered in a new era of connectivity, significantly increasing reliance on digital solutions. This growing dependence has naturally elevated consumer expectations from telecom service providers. Today, customers demand more than just reliable connectivity; they seek innovative digital solutions.

By embracing new technologies and fostering a culture of innovation, telcos are positioning themselves as key players in the digital economy.

To evolve into a techco, telcos must embody four key characteristics: client centricity, digital experience, automation, and data utilisation, according to KPMG. This approach requires a radical shift from the traditional modus operandi. Telcos that adopt these traits are more likely to thrive in the Digital Service Provider (DSP) journey and maintain a competitive edge in the evolving telecommunications landscape.

This transition involves offering platform-based products and services as part of a broader digital ecosystem. Beyond providing essential network infrastructure, telcos are now delivering various innovative digital services, including mobile banking, enterprise mobility solutions, cloud services, connected vehicles, smart homes, smart factories, pay TV, and solutions in cloud computing, IoT, AI, and cybersecurity.

For instance, Reliance Jio recently outlined its plans to evolve into a technology leader in India, announcing advancements in AI, cloud computing, and digital streaming. The company also revealed its intent to establish a national AI infrastructure aligned with its vision of ‘AI Everywhere For Everyone.’ Similarly, Bharti Airtel has partnered strategically with Google Cloud to provide cloud and generative AI solutions to Indian businesses. Through this partnership, Airtel will adopt Google Cloud’s suite of solutions to accelerate its cloud adoption and modernisation efforts.

To evolve into a techco, telcos must embody four key characteristics, including client centricity, digital experience, automation, and data utilisation.

By investing in cutting-edge technologies, telcos are striving to deliver best-in-class services to their customers and contributing significantly to the country’s technological progress.

Key Enablers of a TechCo Business Model

To facilitate a smooth transition from telcos to techcos, telecom operators are increasingly partnering with various vendors to ensure the solutions they adopt are both future-proof and cost-effective. This strategic shift also involves embracing new business models built around three key components.

#1

Cloud Infrastructure: The integration of cloud technologies enables telcos to launch new services and respond to demand surges rapidly. It also helps reduce capital and operational expenses by streamlining data management and application deployment. Migrating to cloud infrastructure not only cuts costs but also improves profit margins.

#2

Artificial Intelligence and Machine Learning: AI and ML enhance network management through predictive maintenance and automatic fault detection. They also help deliver a more personalised customer experience with advanced analytics and intelligent automation.

#3

Internet of Things: Embedding digital with IoT allows telcos to expand into the B2B space with industry-specific services in healthcare, transportation, agriculture, and smart cities. In the B2C domain, they can offer connectivity services and IoT-specific data plans. IoT applications in telecom drive differentiation, open up fresh product offerings and provide assured revenue streams.

Moving toward an open, modern, software-based architecture enables telcos to become modular, cloud-native, AI-ready, and built with standardised components. This transition also improves agility, allowing them to quickly respond to market demands and stay competitive in a rapidly evolving landscape. A cloud and automated software-based architecture also drives significant cost savings, further supporting the shift to a techco business model.

Challenges in the TechCo Transition

While the shift to the techco model is imperative for TSPs to remain competitive in the digital age, the transformation is fraught with challenges. Many telcos are weighed down by legacy systems that can be difficult to integrate with newer technologies.

A cloud and automated software-based architecture can drive significant cost savings, supporting the shift to techco business model.

The costs associated with maintaining and upgrading these outdated systems can be substantial, diverting valuable resources away from innovation. Additionally, despite various initiatives and programs, a significant skills gap continues to hinder progress, preventing telcos from fully harnessing the potential of cutting-edge technologies.

Opportunities Amidst the Obstacles

For years, telcos have faced declining traditional revenue streams due to the rise of Internet services, a lack of monetisable 5G use cases, and insufficient returns on massive infrastructure investments. However, these challenges also present opportunities. Telcos now have the chance to turn the tide by leveraging new technologies and diversifying their business models.

Moving forward, telcos will find an expanding business landscape, driven by new technologies and data-centric use cases, allowing them to diversify their revenue streams while optimising network resources. In India, the momentum around 5G has just begun, and it is only a matter of time before telcos fully capitalise on the new business opportunities that will shape the digital economy.

The transformation from telcos to techcos is a strategic move designed to ensure long-term sustainability and growth in an increasingly competitive digital landscape. By embracing new technologies, diversifying offerings, and fostering a culture of innovation, telcos are positioning themselves as key players in the digital economy.

India is waiting to witness the next digital revolution driven by 5G. It is estimated that 5G subscriptions will contribute about 65% of all mobile subscriptions by the end of 2029. The impact of this growth will be felt across sectors and applications beyond communications. With telcos at the forefront as enablers of this technological transformation, the growth potential is immense, and the opportunities are boundless.

The author is a decorated military veteran who retired as Signal Officer-in-Chief, the head of the Indian Army’s ICT. He was also the first CEO of the Telecom Sector Skill Council (TSSC) and is the Director General of the Cellular Operators Association of India (COAI).

Lt Gen Dr SP Kochhar

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