June 21, 2022

2021 saw many telcos branching out into technology communications or “techcos” in preparation for 5G, and adding new high-growth revenue streams in the expanding B2B market.

For example, Vodafone announced a plan to split up its IT and networks in order to focus on its techco vision, and BT brought in new leadership to head up a new digital business unit.

What does all this mean for Communication Service Providers (CSPs)? Although 70% of CEOs see B2B as key to monetising their 5G investments, it’s too early to tell whether their efforts will be successful.

Breakthrough innovation takes strong leadership to drive the massive organisational change required, as well as a financial commitment that will test shareholders’ patience. It also calls for a very different, more co-creative business model, partnering with clients to create innovative solutions to their individual needs, rather than mass-market products.

Closing the gap

CSPs have suffered stagnant growth while technology companies soared, so it’s understandable that they’re looking to the B2B tech market to reignite growth. The challenge is that many CSPs are B2C to the core, running on a traditional business model that’s all about centralising control, not agility. 

This may be why their share of the 5G solutions market is dropping, from 21% in 2020 to 16% in 2021. By contrast, alternative solutions providers (ASPs) like systems integrators went from 7% to 27%, putting pressure on CSPs to catch up fast.

CSPs need to close this gap by rethinking their business models and becoming true “techcos”, capable of being agile and responsive to B2B customer needs.

And as the network becomes more “cloudified”, more collaboration between CSPs and tech giants is inevitable – in fact, it’s already started, as witness AT&T’s latest collaboration with Microsoft on its new ‘Private 5G Edge’ platform.

Until now, CSPs have been too slow to adapt. For those who are spinning off as techcos, it’s redundant to measure themselves against other telcos. They need to imitate the action of the fast-moving tech giants.