Telecom Paradox: Building Infrastructure, Losing the Value

“I’m not dealing with that quantum stuff because it all sounds like science fiction. … I will be retired at that time, so I don’t care.” (a CISO of a Telco)

Cellular companies have one of the most critical infrastructures of the modern economy. Billions of people connect through them daily via cellular, computer, smart car and smart home. Fiber networks and fifth generation (while sixth generation is already appearing on the horizon) are the foundation upon which developments are built from artificial intelligence, through digital commerce to telemedicine.

Supposedly, they should be at the forefront. In practice, value flows out of them. While tech giants like Microsoft, Google, Amazon, Facebook, Nvidia and Tesla advance new businesses worth hundreds of billions, cellular companies remain with business models that are decades old: minutes, SMS and data volumes.

Even entries into new fields like television services, private cloud or fintech have not become growth engines on a global scale. A new report by TelcoForge, published at the beginning of the month, tries to explain why:

• Conservative culture that fears failure: Managers prefer to avoid innovative moves as illustrated by the quote at the beginning. Even when technology is mature, fear of organizational politics stops initiatives.
• Wrong economic incentives: The market rewards cost cutting and not future investments. Focus on the next quarter prevails over a vision of a decade ahead.
• Talent crisis: Talented young people flock to the worlds of cloud, AI and startups. Very few enter the telecom field which is perceived as outdated. When you don’t have young, hungry, smart and challenging power – you focus on digging in better at what you do.

And thus, the paradox is created: the companies that provide the infrastructure of the digital economy – connectivity – have become a transparent pipe. All the value and business ecosystem leaks to Big Tech companies and startups that are established on top.

The TelcoForge report leans on many closed meetings with people from the cellular industry and brings amazing quotes. Just one more quote that illustrates exactly the conception in the cellular industry:

“One of my mentors gave me some excellent advice, which was hard to swallow but turned out to be absolutely correct. The advice is simple: Every political consideration outweighs any technical consideration. So, a lot of us argue up and down about the value of 6G or fibre or whatever, but if it’s contrary to somebody’s political positioning or bias, it’s not going to happen.”

For further reading click here.