Is innovationism, not capitalism, driving the decline in telco?

It’s a completely silly question to ask you whether you’ve noticed that the world of OSS is changing rapidly isn’t it? Of course you’ve already noticed that it has and is. Do you already have plans to learn new concepts to help you adapt to those changes in 2023?

If so, are you thinking about learning more about technology? Maybe a new programming language? Maybe a TM Forum course? Reading a new book on AI or playing with AI tools? Getting cloud or network certified?

Of everyone I’ve met from our industry, almost every single one of us is inquisitive by nature (and probably inquisitive by necessity in this ever changing world of ours). We’re constantly on the look-out for ways to learn and improve. But the thing I’ve noticed is that almost all nominate technical learning as their primary knowledge growth path. They’re already highly technically proficient, but they want to learn even more technical skills.

This actually perplexes me, for similar reasons to why the Rattlesnake Canyon experience described in our previous post, “Does your Telco/OSS/BSS world feel like a Zero Sum Mental Model?” was such a bombshell to me. We are already surrounded by technical brilliance. By the bucketload in every telco or OSS-related organisation I’ve worked with and the people I speak with via my blog, LinkedIn, etc. We’ve built fantastic technical solutions too.

I feel that our next big leaps forward as an industry will come from taking a completely different perspective. This is one of the reasons I seek inspiration from seemingly unrelated industries (you’ll see that my favourite book list, “An uncommon list of OSS books” is evidence of this). One of those eclectic information sources turned up something really interesting recently. It was alluded to in the “Zero Sum” post mentioned above and just a few hints already resonated with two readers (hello Sarmad and Seshan) before even writing this follow-up post.

In a podcast with James Altucher and Jeff Lerner (on the Unlock your Potential podcast), James highlighted that capitalism is a misnomer. He believes that capitalism is actually innovationism – where Silicon Valley has thrived not just through the application of capital, but by the application of capital to great innovations.

Let’s look at that through the lens of telco in the last 20-30 years compared with the 50+ years that preceded it.

The telco industry has certainly applied a lot of capital in the last 20-30 years (just think of the global 5G roll-outs in recent times as a single example). Yet, it’s fairly safe to say that the industry has gone through a structural decline in that time. All that capital should’ve bought some impressive results. But, now look through the lens of innovation. If I think of the biggest game-changer innovations to hit the telco industry in that time – the smartphone, Internet, cloud-computing, network virtualisation, social media / apps – they’ve all come from outside the telco industry. There’s been a convergence of IT and telco, in part because IT is where the innovations have come from. Capital has been applied to innovations coming from outside. Telco has happily delegated responsibility for innovation for the most part and missed out on the revenue opportunities that have come with it.

Compare that with what I’d refer to as the halcyon years of telco (pre-1990). The telco industry funded primary research that unearthed innovations that have drastically changed our way of life – transistors, lasers, optical fibres, satellites, microwaves, communications theory (which facilitates digitalisation), the telephone, UNIX operating system, the C programming language, OSS/BSS, solar cells and many others. It’s an impressive list isn’t it?

Another recent post, “The tree analogy” discussed how telco used to own the platform (the network) and all services that utilised the platform. It owned the entire (not very) long-tail of services at the time. Over time, many other third-party services have found a way to leverage the telco / Internet platform, diluting telco’s share of wallet in the process. Today, telco still provides the delivery platform (access networks), but can’t directly offer even a tiny percentage of the long-tail of services consumed by the market. That’s a genie that’s never going back in the bottle, so an entirely different mindset is required. Probably a non-technical mindset.

Perhaps an interesting insight comes from Seth Godin’s “The platform and the curator” article. He argues that curation was key to the platforms of old such as television, radio, bookstores, etc. The platform thrived when the operators made decisions on what their customers would like most (i.e. which shows, books, etc) and prioritised them.

Godin contrasts this with modern platforms like social media (and telco networks fit this criteria too), which are purported to serving everyone equally, with no curation or bias. He suggests that taking the modern “platform mindset is sort of helpless“. It is a perceived helplessness that arises when trying to serve everyone ends up serving no-one. Godin suggests, “that this platform-first agnostic non-curation ultimately leads to the demise of the platform.”

What exactly does this mean for telco you’re probably asking?

As described in the tree analogy post we, as subscribers, don’t really want a network as such. We want the services that are carried over it. This is where monetisation of APIs might well be an ideal platform for the next wave of innovation, particularly for enterprise customers. With a combination of BSS, catalogues, API gateways, orchestration, etc, the telcos have the ability to offer network services and bundle them with a curated set of services that customers (hopefully) find attractive. Localisation and edge compute could form part of this “curation” too.

This move away from “every data stream / service is equal” to curated bundling enables innovative thinking by telcos in relation to customer use-cases, applications, networks (including programmable or sliced networks). It facilitates new revenue and business models.

The big telcos are great at providing curated services (i.e. managed services) to their biggest customers and great at providing standardised services to the residential markets. It’s often in the mid-market where challenges arise. The mid-market often spends millions per annum and have specialised needs, but there are simply too many mid-market customers for the telcos to provide specialised service and support. Other providers tend to fill in the (often lucrative) gaps. Curated, simplified self-service, automated customer delivery (some of which are referred to in “A seismic shift is happening”) could represent a way to better service the needs of mid-market enterprise.

However, it will take totally different thinking – thinking of customer needs, partnerships, API as a service delivery models and more. It involves taking a risk that the curation and partnerships are not the right ones. It also takes an OSS/BSS stack that doesn’t stop at the Provider Edge (PE) or Customer Edge (CE) of the carrier network, but spreads out inside the customer network too.

The same types of services that a telco uses to run its own business (CRM, inventory, asset management, order management, etc) are also required by enterprise customers. It requires fresh thinking about how an OSS/BSS would look and what the user interfaces / interactions will be like. They become internal and external tools, not just internal (with an element of customer-facing portal to it).

The one other big thing in telcos’ favour also comes from the convergence of IT and telco. Business intelligence / analytics tools that offer insight from the massive data sets generated by telcos and their customers will give rapid feedback on what’s working and what’s not…. It just needs an incredibly nimble OSS/BSS stack to respond quickly and reduce the risk.