Is Innovation no Longer the Real Engine of OSS/BSS Evolution?

With MWC upon us again, I thought I’d pose a question about how our industry, and the 500+ OSS/BSS vendor market within it, is currently evolving.

Telcos spend billions on transformation programmes every year. They talk about massive disruption like cloud-native stacks, open architectures, AI-driven automation and next-generation digital experiences. On paper, it sounds like the perfect environment for ambitious startups to rise and challenge established OSS/BSS giants.

Yet very few have in recent years, for a variety of reasons. Few operators place mission-critical bets on up-and-coming software vendors. Not because innovation is missing. Not because new ideas are scarce. Quite the opposite. But because in OSS/BSS, the operational and commercial risk of disruption almost always outweighs any theoretical upside by innovation.

What keeps operators up at night is not implementing a wish-list of new features that drive new competitive moats. It’s a disrupted bill run, or an extended network outage, or a portal being unable to take new orders.

Trust, risk and fear matter more than disruption. Proof of operations at scale matter more than the most advanced features.

This has a tendency of favouring the incumbents…. and a slow rate of change.

In this market, you could even argue that consolidation through acquisition is the engine for driving change.

In this article, we’ll take a closer look into five reasons why and consider how we can use these reasons to leverage up.

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Reason 1 – Architecture Complexity Creates a Defensive Moat

OSS/BSS stacks are not single applications. They are deeply interwoven systems spanning billing, mediation, CRM, product catalogues, order management, inventory, orchestration and assurance. Over time, these layers become tightly coupled through integrations, custom logic, workflows and operational workarounds.

This creates a powerful gravitational force that keeps pulling us back to Earth.

Customer histories, rating rules, product hierarchies and network relationships accumulate over years – sometimes decades. Replacing one component is rarely isolated. It risks destabilising multiple adjacent domains. It’s a monolith by entanglement.

For a telco, failure is not a minor inconvenience. A billing defect can impact millions of subscribers. A provisioning error can disrupt emergency services (and the public safety). This lands them on the front page of newspapers, websites and local television news.

That reality alone acts as a structural moat around incumbents.

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Reason 2 – Telco Procurement Systematically Favours Incumbents

Even if a startup offers superior technology, procurement processes introduce another barrier. Enterprise sales cycles commonly run 18-36 months. Deals are scrutinised by technical, commercial, legal, risk and executive committees.

Big businesses tend to prefer to deal with other big businesses.

On any major transformation programme, leaders / sponsors within the operators carry significant personal and political exposure. If a known vendor underperforms, it’s unfortunate. If an unknown vendor fails, careers can suffer. The “safe pair of hands” bias is powerful.

This bias is not irrational. Operators must demonstrate due diligence to boards and regulators. Selecting an established vendor with a global support footprint and large-scale, referenceable deployments reduces perceived exposure – even if it does not always maximise innovation.

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Reason 3 – Trust, Production Credibility and Scale Favour Established Vendors

Within all the other activities we undertake during procurement processes lies one word: Trust.

Billing and operational systems must support national-scale transaction volumes, complex wholesale agreements, regulatory constraints and evolving commercial models. Established vendors have proven, over decades, that they can productionise this complexity (even if there’s a multitude of smaller failures and challenges along the way).

They can point to reference customers running convergent charging at scale. They can demonstrate resilience under peak load. They have services teams capable of standing behind multi-year transformation programmes. They have the scale of workforce / talent that can be thrown at problems at short notice if a situation gets particularly dire.

For startups, this is extraordinarily difficult to replicate. Or even if they can, it’s even harder to prove.

A pilot is not the same as full production. A sandbox success does not equal resilience under real-world stress. Even if the architecture is modern, operators must believe the vendor can carry transformation risk across years, not just up to the date of handover.

This production credibility gap often proves more decisive than feature comparison.

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Reason 4 – Fragmentation at the Edges Masks Core Platform Dominance

At first glance, the OSS/BSS landscape appears fragmented. There are hundreds of niche vendors offering automation tools, analytics engines, AI-driven optimisation platforms and workflow overlays.

Innovation is happening, particularly at the edges or the “glue.” Many startups are currently focussing on API layers, analytics, AI wrappers (integrations, UI/UX/CX, reporting, etc), observability, robotic process automation or data enrichment. These solutions are valuable and often deployable with lower risk.

However, most of them integrate back into core platforms rather than replace them. They enhance, extend or abstract incumbent systems. These are just extra vines of entanglement of the existing systems. Very few innovators attempt to displace the full stack. In part because it’s just too big a task to even dream of tackling.

This creates the illusion of disruption. In reality, dominance at the core often remains intact. The centre of gravity (eg billing engines, customer management, order fulfilment, network inventory) continues to sit with a small number of large vendors.

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Reason 5 – M&A Is the Default Scaling Mechanism

As described earlier, there are 500+ vendors in the market today. That’s a huge level of fragmentation.

It might not seem obvious at first, but against this backdrop, M&A becomes the natural pathway for scaling and/or evolution.

Large vendors pursue roll-up strategies to fill portfolio gaps, expand into adjacent domains / customers or acquire emerging capabilities. Startups, facing long sales cycles and capital intensity, often view acquisition as the only rational and attractive exit.

Investors, too, understand the dynamics. The probability of building a new global, full-stack OSS/BSS giant is low. The probability of being acquired by one is far higher.

Over time, this cycle reinforces itself. Innovation surfaces. It proves value in a niche. It is absorbed into a broader platform. Hopefully not subsumed and killed off though! From observing this industry for decades, it seems that consolidation, not insurgency, has become the dominant pattern of evolution.

It’s a stark contrast to how disruption has played out in many other industries in recent times. In software categories like CRM, HR, marketing automation or developer tooling, startups have repeatedly unseated incumbents by being radically simpler to adopt, faster to deploy and easier to prove value with. Even in capital-heavy arenas like fintech, new entrants have carved out defensible positions by focusing on narrow wedges (payments, KYC, lending) and scaling from there. In media and retail, distribution advantages and customer experience innovations have often been enough to trigger market reshaping.

Telco OSS/BSS rarely offers that kind of “niche to expansion” path.

The core incumbent stack is not a single buying decision. It’s a tightly-coupled operating model. The number of use-cases is enormous, the edge cases matter, and the cost of being wrong is immediate and highly visible. The product isn’t just software – it’s software plus integration plus ongoing operational accountability. That combination makes it far harder for a newcomer to prove a safe migration path, to compress time-to-value, or to demonstrate production credibility in a way that feels low in risk to operators.

So while other industries can be disrupted through simplicity, speed and distribution, telco transformation has tended to punish novelty and reward survivability. The same complexity that creates opportunity for specialised innovation at the edges also makes end-to-end displacement at the centre brutally difficult.

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What Would it Take to Break the Status Quo (Assuming we want to)?

Put another way, what would it take for a start-up to become the next behemoth in the OSS/BSS market?

We help operators with vendor selection, so we get to see a lot of vendor demonstrations (not just product, but overall capabilities).

Most vendors in this market are broadly like-for-like. Similar functional breadth. Comparable pricing models. Similar implementation timelines. Similar support constructs. Yet incremental improvements rarely justify the transformation risk.

It’s rare that we see examples of drastic differentiation or stand-out leadership by a single vendor.

The other downside of lots of like-for-like competition is that vendor selection becomes really difficult when none of the alternatives stands head-and-shoulders above all others. Lots of competition equals a large aggregated cost-of-sales (which all gets amortised back into global operator costs).

On a recent vendor selection process, we observed six functionally (more-or-less) equivalent offers from BSS suppliers. That wasn’t surprising. What was surprising was that all of them landed within a 5% pricing variance. They all had different pricing models, but when we normalised them using TCO (Total Cost of Ownership) modelling, they were almost identical… but all were more than double what the operator was able to budget.

Clearly the cost base of doing the same transformation is similar for all vendors.

We see this a lot. There are a lot of underserved markets (let’s call them blue oceans), with adjacent competitive markets (let’s call them red oceans).

The question becomes, what form of reimagination would be required to navigate from red to blue ocean without significant product changes?

To break the status quo, an emerging vendor would likely need a 10x improvement along a decisive vector. I suspect it would relate to starting from a different customer cohort and cost-base, then working out what could be done within those new constraints.

That could mean:

• 10x faster time-to-value through radically simplified deployment models
• 10x reduction in total cost of ownership via automation-first architecture
• 10x usability improvement that materially reduces operational overhead and/or integration effort
• 10x flexibility in modelling new commercial constructs

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However, even a 10x product is not enough. The trust barrier remains. To overcome the production credibility gap, a challenger would need compelling risk mitigation strategies. Just a subtle reminder here that reduced complexity also results in reduced risk (the triple constraint of OSS projects)?

In other words, the innovation must not only be superior – it must be commercially and operationally engineered to neutralise fear.

Only when a vendor combines structural product advantage with credible risk absorption does the equation begin to shift.

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Consolidation as Design, Not Accident

When viewed through this lens, the absence of breakout OSS/BSS unicorns is less surprising. Architecture complexity creates defensive moats. Procurement systems reward incumbency. Like-for-like results in minimal differentiation. Trust and production credibility accumulate over decades. Fragmentation happens at the edges, not the core. And M&A provides a rational exit for innovation before return-on-capital forces prevent it from scaling independently.

So let’s come back to the original premise of this article. The question is not whether disruption has failed. It’s whether the market is optimised for innovative disruption at all.

For a true challenger to emerge, something fundamental must shift – either in risk tolerance, in commercial models, or in the magnitude of technical differentiation. Until then, consolidation will likely remain the real engine of OSS/BSS evolution (for better or for worse).