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How telecoms can adapt and offer customers and other stakeholders an attractive way forward in markets facing inflation, and geopolitical and environmental challenges.
The key pillars to change and growth
Ten years from today, telcos could find themselves growing into national or regional champions of connected technologies, working with enterprises and governments to help the world run better. Or, they may find themselves becoming marginalised, with shrinking relationships with their customers, consigned to corners of the IT market specialising in low-cost connectivity. To establish a clear path to the more desirable option one, and sustainable growth, telcos need to commit to a long-term strategy that will require fundamental changes to their business. A long-term strategy that:
- Prioritises service innovation through strong investment in research and development
- Funds ongoing innovation by shifting away from the established capex heavy financial model
- Re-orientates company systems and culture to become an effective ecosystem player, adaptable and open to multiple ecosystem roles and business models.
Commitment to this kind of strategy should happen now if it hasn’t already. But current macro-economic and societal challenges may make this focus difficult to achieve. Telcos need to find a way to deal with more immediate turmoil and challenges, and be ready to seize any opportunities they present, while also progressing towards their long-term goals.
STL believes that the Coordination Age offers telcos a new context for growth. It is built upon demand for more flexible availability and more efficient use of all types of resources (energy, labour, time, etc), combined with multiple new technologies and capabilities (5G, fibre, AI, automation, virtualisation) approaching maturity. The resulting paradigm sees customers demanding coordinated outcomes and experiences, enabled through collaborative ecosystems, with business models spanning the digital and physical world. It is the context within which telcos can hope to become the champions of connected technologies helping the world run better mentioned earlier.
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Figure 1: The Coordination Age thrives on innovation
Source: STL Partners
More immediate concerns – the energy crisis, high inflation, possible recession, the still lurking threat of new covid strains, war, climate change – demand immediate attention. Please see our Beating the crash: What’s coming? report for more details. For all that these can crowd out focus on a more long-term growth strategy and a drive to change the role and meaning of telecoms in society, these factors are actually accelerating changes and mean that a Coordination Age approach is needed more urgently.
Figure 2: Accelerating changes means the Coordination is now a “must have”
Source: STL Partners
Telcos’ national scope and assets mean that they are well placed to take advantage of some of the new opportunities, boosting growth. But they are large and complex businesses with many departments and initiatives to co-ordinate, and broad organisational strategy has to be applied in different areas with a variety of specific goals and capabilities. In this report, STL addresses seven key strategic areas: transformation; consumer; enterprise; edge computing; networks; telco cloud; and sustainability. In each, we present our detailed assessment of how telcos can and should address current challenges and seize new growth opportunities, while building towards long term success in the Coordination Age, and how current and ongoing STL research can provide support and guidance.
Table of Contents
- Executive Summary
- The key pillars to change and growth
- Transformation: How to adapt faster and better, collectively
- Why does transformation matter?
- Why is transformation difficult for telcos?
- How telcos can operationalise adaptability
- What must telcos do to capitalise on the adaptive opportunity?
- Consumer: (Re)engaging through new needs
- Why does the consumer business matter?
- What challenges are telcos facing in the consumer market?
- A three-pronged approach to winning with consumers
- Enterprise: Becoming a transformative partner
- Why does enterprise matter?
- What challenges is the industry facing in enterprise?
- What are the potential opportunities?
- What must telcos do to capture the opportunities?
- Edge computing: Getting compute to where the customer needs it
- Why does edge computing matter?
- The key challenges and opportunities the in edge market
- So where to invest?
- What must telcos (and others) do to capture the opportunities?
- Networks: Developing and delivering the best tool for the job
- The key challenge: Moving to a world of “network diversity”
- It’s not about 5G, but the best tool for the job
- What are the potential opportunities?
- Telco cloud: Making the fabric customer-adaptable
- Why does telco cloud matter?
- What challenges is the industry facing in telco cloud?
- What must telcos (and others) do to capture the opportunities?
- Sustainability: Making it relevant for everyone
- Why does sustainability matter?
- What challenges is the industry facing in sustainability?
- What are the potential opportunities?
- How to move the industry forward on sustainability
- Conclusion
Related research
- Beating the crash: What’s coming?
- Building the learning telco
- Will web 3.0 change the role of telcos?
- Why B2B marketplace sits at the heart of a thriving ecosystem
- Telco cloud manifesto