These transformations could be for real

September 19th, 2016 by · Leave a Comment

This article was authored by Lachlan Colquhoun, and was originally posted on

Big old incumbent telecoms carriers have been banging about how they have to “transform” for a few years now.

In many cases, it’s been rhetoric only, some florid language out of the marketing department in speeches written for the chief executive to spruik at conferences.

At the same time, traditional telcos have wasted an incredible amount of money buying up companies, largely in the content space, as they look to transform themselves in one way or another.

It’s the classic “burning platform” approach. Terrified of their core business running down and being blindsided by new agile digital players, many telcos have gone on indiscriminate buying sprees so they can spread their bets once their old business peters out.

Trouble is, in a lot of cases it hasn’t necessarily been money well spent. Telcos have not made good publishers, health analysts or banks. Not yet anyway.

This month, though, we’ve seen some interesting examples of telco transformation, and some of it is making a lot more sense, and two of the big words are “cloud” and “collaboration.”

China Mobile, for example, is going crazy about collaboration. They signed up 42 more partners this month for their 5G global innovation center, including heavy hitters such as Huawei, Nokia, Intel and Audi.

The business models are still evolving, but for the telcos the way forward would appear to be collaboration and integration in new verticals with specialist partners.

An example of this is happening in India, where Vodafone is working with the IT arm of local conglomerate Mahindra and German component maker Bosch on a cloud based solution for fleet owners in the trucking business.

Their vehicle based platform is called “Digisense” and is essentially a cloud-based Internet of Things platform to track vehicle performance and usage.

Over in Australia, Telstra, which has been guilty in the past of not really knowing where its future lies, is also discovering the IoT, and is planning a move into the booming Australian farm sector with a new venture to deliver hi-tech on-farm ideas, such as internet linked soil sensors, drones and even field robots which enable data-based analysis.

Meanwhile, Telstra is reportedly chatting with Disney as the distribution partner for its DisneyLife video on demand service in Australia.

These examples are interesting because they show that telcos are finding transformative models which have more of a future than buying something else’s business.

Huawei, for example, continues to diversify out of making networking gear and smartphones, and is increasingly focusing on the cloud computing market with good opportunities in Europe, Russia and Africa.

Cloud was front and center at Huawei Connect 2016, with the rolling out of the BES (Business Enabling System) Cloud solution, built on a SaaS model, while the company rolled out its Video Cloud offering at the same event.

The company says it will spend at least $1 billion of its research and development budget every year on equipment and operating systems for data centers, which are a logical overlap with the equipment business which currently drives around 60 percent of revenues.

Soon, perhaps, the word telco will be consigned to the dustbin of history, and we’ll just be talking about technology companies.

Marketing departments would love that, and for once they might have some justification.

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Categories: Cloud Computing · ILECs, PTTs · Mergers and Acquisitions · Other Posts · Wireless

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