Four Crucial Steps to Transform from Telco to Techco

By Stefania Viscusi January 01, 2024

A dynamic shift is taking place today in the telco landscape as the industry continues to transform. Innovative companies are evolving into what is called “techco” or “technology company.”  No longer just siloed and proprietary, the goal is to strategically diversify service portfolios, prioritizing platform development, fostering strategic partnerships, and seamlessly integrating digital services.

For those innovative companies already doing so, it’s proven to be a game-changer and has ushered in substantial revenue growth in comparison to traditional telcos.

According to the latest insights from ABI Research (News - Alert), the need for this transformation stems from diminishing revenues, escalating consumer demand for digital services, and a lucrative yet underserved enterprise market.

The traditional role of being mere connectivity providers is no longer sustainable. Instead, to thrive in the current landscape, telcos must become full-fledged technology companies (techcos).

"The traditional telco business model must be reinvented. ABI Research sees a clear signal for mobile operators to increasingly deploy automated solutions to streamline operations, optimize resource allocation, and drive cost efficiencies. At the same time, the big focus now for mobile operators is on added consumer services, as well as on enterprises in dire need of 5G connectivity for their digital transformation efforts," said Dimitris Mavrakis, Senior Director at ABI Research.

Its latest whitepaper, "How Telcos Can Transform into Techcos," it offers the following 4 key steps to successfully transition into a techco.

  • Embracing 5G-as-a-Service: Embracing 5G-as-a-Service involves more than just deploying the technology. Telcos need to fully integrate 5G capabilities into their service offerings.
  • Investing in Vertical Ecosystems: To transform into techcos, telcos must invest in building vertical ecosystems. This means strategically expanding their services to cater to specific industry verticals, creating a diverse and specialized portfolio.
  • Digitizing Network Management: By embracing automation, artificial intelligence, and other digital tools, telcos can streamline operations, reduce costs, and deliver more responsive and scalable services to their customers.
  • Become Active Contributors to Cellular Innovation: Telcos need to engage in shaping the future of cellular technologies including contributing to standardization efforts, participating in industry collaborations, and actively driving advancements in cellular technologies.

"Transforming into a techco can be a huge change for many mobile operators, requiring a reevaluation regarding technological capabilities, corporate culture, and target audience. Therefore, it's vital to map out the strategies that will effectively support this transformation. The whitepaper details a four-step process that telcos can use to traverse the telco-to-techco journey. It also places emphasis on the importance of The 3rd Generation Partnership Project (3GPP) standardization and Standard Essential Patent (SEP) development, and how telcos need to be involved in both standards discussions and owning a significant patent holding," said Mavrakis.

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