Telco’s have failed at the Cloud and Streaming. What is the future for them?


In a parallel universe, the Telco would be the dominant vendor platform of the modern integrated digital economy for both consumers and enterprise. They could have leveraged their monopolies, network, and utility, and led the way to the digital, cloud and content streaming revolution. Instead, they lag and legislate for survival and relevance.  No Telco has come close to AWS, Netflix or Microsoft. They have spent billions becoming cloud companies and in short, they provide pipe and write down assets. They will not become the dominant player. LIke their interest in application services, the outcomes will be painful and expensive.

There are many many for this. In short, the Telco’s were hamstrung by their monopolistic or near monopolistic positioning. For capioIT one of the most fundamental underlying philosophies is the importance of competition to breed innovation, in the private sector in particular. Why do we have such a creative cloud platform ecosystem? Simply because we have multiple providers who are innovative. AWS, Microsoft, Google are all investing to win and significantly innovating at the same time. A legacy telco cannot do this.

One of the other key reasons for the failure revolves around the culture of the telco. This is at the heart of their issue. I often bemoan the engineering and Capex culture of the telco in 2017. This is incredibly limiting. It also has not fundamentally or sustainably changed. Those who do wish for this sort of radical transformation of culture within the Telco are usually disappointed.

Take one large Australian telco that has spent way too much money for no significant cloud benefit. When a solutions sales person complains loudly and publicly that their parent company finds it easier to use AWS than the own internally developed solution, how can it expect the telco’s sales team to be able to sell? If you cannot get internal buy in, then how can you convince the customer. There is no point being critical of the internal service requirements, get the product right and the customer is much more likely to come.

Secondly, an ASEAN based telco has struggled with the ability to be flexible enough in the current market The reason is the board level obsession with Capex that limits the business ability to look at investments from an OPEX perspective. Offerings that were sent up to the board for approval got pushed back because of an OPEX pricing methodology that was in conflict wit the CAPEX approach of the telco. If the basic culture and investment approach cannot change, and is limiting business, what hope do telco’s have.

Capture Point

Telco’s are in trouble. Their decline was of their own making. Too many tried to legislate monopolistic behaviour and were simply unable to keep to the pace required. The cultural approaches were also unable to migrate to a cloud and digital world. What does it mean? Firstly, the telco will have to reinvent when previous attempts to reinvent have failed. That is a near impossible task. It will have to reinvent without regressing to the normal response of high charges and low service. Secondly it needs to identify relevant differentiated offerings around pipe and networks. It has to ensure that a value is placed on this. Can this be done? Probably not, so the role of the telco is not yet at the bookstore stage, but without a lot of luck and a changing culture it will continue to add to the list started by Kodak among others of industries that arguably created their future then couldn’t win in it.

About capioIT - Phil Hassey

If you require further information, please contact Phil Hassey, CEO of capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology as the world becomes Digital. Phil may be contacted easily in the digital and real world. phil@capioit.com +61422231793
This entry was posted in Uncategorized and tagged , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s