Nicola Sfondrini - Partner Digital and Cloud Strategy at PWC.
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Telecommunication companies are being turned into technology companies from the inside out. A new multidimensional paradigm of connectivity, cloud-based solutions and system integration and hosting services is absorbing the traditional model of selling minutes and managing subscriptions.
The steps are numerous and will require telecommunication companies to embrace the most modern technologies and business models to stay competitive and succeed amid a fast-changing digital economy.
The Driving Forces Behind The Transformation
Telecom operators know they need to innovate urgently to avoid being left behind in the new world of digitalizing business. The rapid growth of data-hungry apps, the explosive rise of the Internet of Things (IoT) and more and more consumers demanding to interact with businesses digitally leave telcos scrambling for new, sustainable business models. Companies are using new technologies such as cloud, big data and artificial intelligence to rapidly transform into technology companies.
Key Components Of The TechCo Model
• Cloud technology. For success, telcos require the agility and scalability that cloud services provide, allowing them to launch new services and respond to surges in demand rapidly. They can also reduce capital expenses and operating expenses by using cloud infrastructure to manage data and deploy applications more efficiently.
• Artificial intelligence and machine learning. AI/ML enables improved network management with predictive maintenance and automatic fault detection as well as a more personalized customer experience with advanced analytics and intelligent automation.
• Digital ecosystems and partnerships. Many telcos are partnering with technology providers and digital service platforms to expand their service offerings from being pure connectivity plays to providing cloud services, cybersecurity and IoT services.
Use Cases In The Telco-To-Techco Transformation
Telecommunications companies across the globe are transforming into technology companies, as witnessed by an increasing number of alliances and technology integrations. Vodafone's collaborations with Google Cloud and Microsoft paint a picture of the telco-to-techco trend where service providers leverage today's technology to reinvent themselves and their capabilities.
Orange's Cloud Strategy With Microsoft Azure
Orange's collaboration with Microsoft Azure marks a significant step in its transformation from a telecommunications operator to a technology-focused company, emphasizing cloud adoption and enhanced digital services.
Under the agreement, Orange has transitioned various operational systems and customer service platforms to Azure's cloud environment—aiming to bolster operational efficiency and scalability. This move facilitates the use of Azure's AI and machine learning capabilities to refine customer interaction and optimize network management. Using AI, Orange can predict network demands and implement real-time adjustments, thus enhancing service reliability and user experience.
Additionally, the partnership includes the development of IoT solutions across sectors such as healthcare and smart cities, using Azure's robust cloud infrastructure. This enables Orange to process vast amounts of data efficiently, leading to innovative services that improve user connectivity and expand digital offerings. Through this initiative, Orange aims to not only streamline its operations but also to advance its position as a leader in digital transformation.
AT&T's Comprehensive Digital Strategy With Microsoft
AT&T’s deal with Microsoft marked the telco's move into the world of cloud migration and AI integration. Under the terms of the agreement, AT&T relocated several of its non-network infrastructure applications to Azure as part of a joint "hybrid cloud" project.
The aim was to simplify AT&T’s infrastructure, cutting operational costs and increasing operational agility through Azure's program of AI services and tools. This strategic alliance gives AT&T the ability to streamline workflows and deploy services faster through using Azure to, for instance, apply AI to configure and optimize networks to take advantage of 5G technology. The AI that AT&T uses predicts network load and real-time data traffic management, improving the reliability aspect of telecommunications service by avoiding network congestion.
Additionally, AT&T announced "edge computing" solutions through the collaboration with Microsoft, which entailed deploying computing resources closer to the data source or the end user. This approach is highly beneficial for low-latency applications like augmented reality and virtual reality. Such applications—used, for instance, in gaming and simulations—can benefit greatly from the combination of 5G and edge computing.
For AT&T, this means that processing data closer to the user can result in faster and "cleaner" services that it can leverage to help it improve customer engagement for applications used in real-time service provisioning.
Future Projections
As telcos evolve into techcos, they face several challenges, including regulatory constraints, cybersecurity threats and significant cultural shifts within their own organizations. However, the future is promising, as the integration of advanced technologies paves the way for new growth opportunities, innovative business models and new market strategies.
This transformation requires telecom companies to navigate both cultural and technical challenges effectively. Those that successfully adapt, investing in and leveraging new technologies, will not only survive but thrive—shifting from traditional network operators to dynamic service providers and developers. It's a move that could reshape the entire industry.
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