Telecoms is moving into its third age: the Coordination Age. Why was it so hard for telcos to adapt when content shifted from the physical to the virtual world with the growth of the Internet, and how can they learn from past experience to create new value in the next seismic change in telecoms and content?
Introduction: Three ages of telecoms…
In this report, we elaborate on what we outlined in our recent report, The Coordination Age: A third age of telecoms, as a completely new paradigm for the telecoms industry. In the earlier report, we argue that this new age of telecoms – the Coordination Age – follows on from two previous, and still ongoing, paradigms for the telecoms industry: the Communications Age and the Information Age.
Chronologically, the three ages may be represented as follows:
As the above diagram suggests, parts of the industry still exhibit characteristics of the earlier ages; and we are still working through the consequences of the paradigm shift from the Communications Age to the Information Age, even as we stand on the cusp of a further shift to the Coordination Age.
The report revisits our narrative of the three ages of telecoms to explore the different social, economic and cultural drivers and functions of telecoms in each period and the implications for telcos.
Differing characteristics and functions of telecoms across the three ages
The fundamental service and business model characteristics of these three ages, as described in the previous report, are recapped in Figure 2 below:
Figure 2: Basic functions of telecoms in the three telco eras
Source: STL Partners
The above table illustrates how the functions provided by telecoms services and networks across the three ages of the industry are radically different. In the next section of this report, we will explore some of these features of the three telecoms ages in more depth. In summary, we can say that:
- In the Communications Age, telecoms networks and services were ‘physical’ in character: physical equipment and facilities delivering physical services; the core services being connectivity and communications centring on voice, which was transmitted by physical means (e.g. for voice, analogue electrical signals sent over wired or wireless networks).
- In the Information Age, by contrast, while telecoms networks remained – initially, at least – physical in character and delivered increasingly advanced forms of connectivity, the services became digital. The ultimate expression of this is of course the Internet, which changed the role of the telco to that of providing the IP connectivity platform over which mainly third parties offered their web and digital services. Another way of putting this is that whereas telecoms network connectivity remained tied to physical hardware, the services were delivered via standardised software and compute devices: PCs and later smartphones and tablets. In the present era of NFV and SDN, the basis on which the connectivity itself is organised and controlled is now also migrating to (would-be) standardised software operating over COTS hardware.
- The emerging Coordination Age of telecoms is not purely an extension of network and societal digitisation, but could be seen as a 180o reversal of its parameters, in this respect: instead of being a primarily physical connectivity system processing digital inputs to deliver digital services (as in the Information Age), the network becomes a compute- and software-centric system processing real-world inputs to deliver real-world outcomes. We will discuss further these aspects of the new paradigm later in this report. But examples of what we mean here include networked compute-driven applications around driverless cars, IoT, and automation of industrial and enterprise processes across many verticals.
The three telecoms ages correspond to different socio-economic and human functions
We set out how the general service and network characteristics of the Communications, Information and Coordination Ages relate to the different social, economic and human functions they serve.
Throughout the main part of the report, we describe what we see as some of the fundamental social, economic, cultural and technological drivers of the different telecoms networks and services across these three ages. The three ages represent distinct paradigms in which telecoms serves different needs and purposes.
We describe these socio-economic and cultural purposes through a simplified version of the psychoanalytical theories of Jacques Lacan. It seems legitimate to explore telecoms through this lens, as telecoms networks are human constructs, and telecoms services are social, economic and cultural in their purpose and value to modern society.
In brief, Jacques Lacan distinguishes between three interdependent orders of psychological experience: the ‘Real’, the ‘Imaginary’ and the ‘Symbolic’.
- The ‘Real’ is the physical aspect of our existence: our bodies, the material universe, and the physiological determinants experience, including basic emotions
- The ‘Imaginary’ refers to the sub-rational and sub-linguistic phenomena of mental experience, through which we form mental impressions of sensory experience (e.g. sights, sounds, etc.). Together with the emotional impact with which they are associated, these ‘imaginary’ elements form the foundation of our self-image and view of our place in the world
- The third order is that of the ‘Symbolic’, which refers to language and other social, logical and cultural codes through which we give meaning to our lives, acquire knowledge, order our activities, and structure society and our relationships within it.
This is important insofar as it provides a framework for understanding the paradigm shifts that have taken place throughout the history of the industry. And it also provides a narrative account of the human needs – including economic and social needs – that are invested in telecoms services. Understanding what customers want – and above all, what can offer real benefit to them – is after all the key to driving future value.
We argue this is relevant to the situation that telcos find themselves in today and to their strategic options for the future. In our view, telcos failed to adapt their business models to capitalise on the digital service opportunities of the Information Age because the value drivers of the Information Age were so radically different from those that had prevailed over the much longer time span of the Communications Age.
Learning the lessons from this previous paradigm shift will help telcos be more aware of how they need to adapt to the radically new paradigm – the Coordination Age – that is emerging. There may be only a very short window of opportunity for telcos to adjust their business models and organisations to become ‘coordinators’ of the new network- and AI-based, automation-enabling and resource-optimising services of the near future.
- Executive Summary
- Introduction: Three Ages of Telecoms
- Differing characteristics and functions of telecoms across the three ages
- The three telecoms ages correspond to different socio-economic and human functions
- Speaking, showing and doing: The three ages of telecoms
- The Communications Age: A telecoms of the Real, mediated by voice
- The Information Age: A telecoms of the Imaginary, mediated by the screen
- The Coordination Age: A telecoms of outcomes, driven by active intelligence
- Coordination services rely on contextual and physical data, and the physical aspects of networking
- Summary: Characteristics and purposes of telecoms across its three ages
- Recommendations: A new telco age brings new opportunities but also renewed responsibilities
- Figure 1: The three ages of telecoms.
- Figure 2: Basic functions of telecoms in the three telco eras
- Figure 3: ‘Real’, physical characteristics of the Communications Age telecoms network and service
- Figure 4: The core telecoms service – circuit-switched telephony – in the first telecoms age
- Figure 5: Comparison of the social, service and technology characteristics of Communications Age and Information Age telecoms
- Figure 6: Permanent, virtual presence to others replaces real-time voice communications
- Figure 7: Driverless car ecosystem in the Coordination Age
- Figure 8: Comparison between the three telecoms eras