From Telco to Techco: Part-IV – How CSPs Can Regain Control of Their Operations
Part 4: Business Model Reinvention: The Agile Innovation Imperative
As shrinking margins from core services threaten their viability, communications service providers (CSPs) must choose between transformation and irrelevance. Embracing the “techco” model is now a matter of survival, not just strategy.
The telecom industry is undergoing a profound transformation, shifting from traditional connectivity providers to dynamic, technology-driven enterprises known as “techcos.” This evolution is fueled by the commoditization of voice and data services, which has eroded profit margins and necessitated a fundamental reinvention of CSP business models.
To meet this challenge and ensure future growth, CSPs must fundamentally change their current business models and embrace a new paradigm where they essentially become DevOps-governed software development companies that excel at developing or co-developing their own code to successfully redirect their focus from the consumer to the B2B segment. At the heart of this transformation is the adoption of an agile, DevOps-driven product development business model that enables techcos to rapidly innovate and meet the dynamic needs of the digital economy.
The new techco business model consists of four building blocks.
B2B Focus: A Strategic Shift
CSPs are now turning their attention to the business-to-business (B2B) market. With fixed and mobile subscription markets saturated and average revenue per user (ARPU) declining, the B2C segment faces significant growth challenges. In contrast, the B2B market offers promising opportunities as enterprises increasingly seek advanced connectivity and value-added solutions and services to support their digital transformation.
Techcos are expanding their offerings beyond basic infrastructure to include high-margin services such as internet of things (IoT) solutions, cybersecurity, cloud services and collaboration platforms. By acting as orchestrators of complex ICT ecosystems, techcos can deliver tailored solutions to meet specific enterprise needs. Collaboration with hyperscalers and software vendors further enhances their ability to deliver standardized ICT solutions for mid-sized businesses, a scalable revenue stream with significant potential.
Agile Software Development: Accelerating Innovation
Traditionally hardware-centric, CSPs are now adopting agile, software-driven development methodologies to increase flexibility and responsiveness. Agile frameworks such as Scrum and Scaled Agile Framework (SAFe) enable faster innovation cycles, iterative releases and improved customer satisfaction. DevOps practices, such as continuous integration (CI) and continuous delivery (CD), streamline operations and reduce time to market for new services.
This shift demands a cultural transformation within CSPs. Moving from rigid hierarchies to more collaborative environments fosters innovation and breaks down silos between development and operations teams. The results are faster delivery cycles and better customer experiences through agile adoption.
Reimagining Customer Relationships
In a commoditized market, superior customer experience is a key differentiator. Techcos leverage data analytics and AI to deliver personalized services that boost engagement. By analyzing customer behavior, they can anticipate needs, proactively resolve issues and offer tailored solutions that go beyond basic connectivity.
Self-service options, streamlined digital channels and bundled offerings, such as smart home automation or entertainment packages, strengthen customer loyalty while unlocking additional revenue streams. Proactive service models reduce churn rates and foster deeper integration into customers’ lives.
Open Software-Based Architecture: The Foundation for Agility
Transitioning to techco status requires adopting an open, software-based architecture characterized by modularity, reusability and cloud-native design. Modular components streamline development processes while cloud platforms provide scalability and flexibility. AI and machine learning (ML) optimize network performance, automate tasks and personalize customer interactions.
To become truly software-driven organizations, CSPs must strategically insource core software development skills. Building in-house software capabilities gives organizations greater control, encourages internal innovation and reduces dependence on external vendors for critical expertise. While outsourcing can provide access to specialized skills, insourcing allows for the cultivation of deep institutional knowledge and better alignment of software development efforts with core business objectives.
Standardized APIs enable seamless interoperability between systems and foster collaboration with third-party developers. Techcos can unlock new revenue streams by monetizing network capabilities through innovative models like network-as-a-service (NaaS).
The transformation from traditional telecom providers to agile techcos is critical for thriving in the digital economy. By targeting B2B opportunities, embracing agile methodologies, prioritizing customer experience innovation and adopting open architectures, techcos can become indispensable partners in their customers’ digital journeys. This reinvention requires technological advances combined with a cultural shift toward collaboration, innovation and continuous learning to ensure long-term success in an increasingly competitive landscape.
The future belongs to CSPs who move swiftly to build agile organizations, harness the power of open ecosystems and position themselves as trusted partners in their customers’ digital evolution.