Four Reasons Telecom Pros Should Connect With Silicon Valley

Author: Derek Kerton, Principal Analyst, The Kerton Group & Telecom Council Chairman

For telcos and their tier 1 vendors, the pace of innovation is daunting. There is no longer an option of competing in the marketplace using only in-house technologies, or else Over The Top (OTT) companies and competitors will leave the slower players eating their dust.

2013US-Telecom-Investment-PiechartThe solution, which has become increasingly obvious over the past half decade, is to partner with the fast movers in an effort to capture the benefit of the latest technologies without the costly and slower in-house R&D. But innovation capture is also difficult. Which companies should be brought in as partners? How small is too small? Is there an established, predictable process for evaluating smaller companies and coming to a yes/no decision in a reasonable time? The best-of-breed large companies have set up a “funnel” process, much like that used by VCs, to evaluate as many companies as possible, and to make good decisions fast with limited knowledge. This is the only way the telco or Tier 1 vendor of 2013 stays on top.

In order to fill the “funnel” with lots of good startups and small innovative companies, the bigger firms need to leave their comfort zone. When you’re turning over stones, you need to go to where the stones are. For this reason, carriers have set up field offices in hot places like NYC, London, Barcelona and Silicon Valley. But as a global epicenter of mobile and telecom innovation, Silicon Valley is the heavyweight, with over 50% of telecom venture dollars being spent in the Valley. With the two biggest OSes, the biggest Internet companies, and the full ecosystem of partners, professionals, and talent readily available, Silicon Valley is an innovation powderkeg.

But the valley is not focused on telecom. All high tech lives here, from big data to biotech, and from security to apps. For this reason, even in this hotbed of wireless and telecom innovation, it’s easy to lose sight of the telecom companies in the forest of other high-tech industries. For this reason, groups like the Telecom Council of Silicon Valley filter out the noise and hone in on the signal. The Council brings the telecom community together, and helps define the healthy ecosystem of partners that lead to mutual success. At the Council’s TC3 2013 Summit, over 200 startups and developers were on the scene looking to meet and partner with the bigger companies (including 30 telcos and a nice group of large vendors), who represent a potentially lucrative path to market. The carriers and vendors seeking to populate their “funnel” were present to make the connection to as many interesting startups as possible (in fact, you can download their 2014 Calls for Innovation). TC3, and the Telecom Council as a whole, are the kinds of tools the telecom professionals seeking innovation are learning to leverage in order to lasso potential partners.

To wrap it all up, here is the obligatory Top 4 List of the reasons telecom professionals seeking innovation are in Silicon Valley, and are leveraging tools like the Telecom Council network:

1. Network. Over 1,000 telecom companies are located in the Silicon Valley –that’s some powerful networking potential! And the ROI in building a strong business network goes beyond the benefits of today’s pitch meeting or deal – it’s about long-term relationships that stretch into your deals of tomorrow. The opportunities to connect with the right people, in an atmosphere that fosters these kinds of high-value connections, is rare – there are countless “unparalleled networking opportunities” available, after all. But a member-driven club which grows slowly by word of mouth, like the Telecom Council, offers the kind of audiences made up of people who can sign contracts. It puts attendees closer to done deals.

2. Innovators. The large firms are often known to be less nimble, but they can tap into partnerships to capture innovation. It’s no surprise then that watching the innovation trends coming from the startup space can tell you a lot about where we’re headed. With 50% of US venture investments going to startups in Silicon Valley, if you need to watch innovation, you need a foot in the Valley.

3. Telcos. In the communication industry, the telcos are where the money gets collected. In the US, the average monthly cellular bill is almost $50. The resulting pool of funds drives much of the industry. The telcos have learned the advantages of tapping into the innovation community of Silicon Valley, and of leveraging tools like the Telecom Council to meet prospects, source ideas, and make deals. In fact, the number of Telcos sending representatives to scout new ideas in the valley has been steadily growing over the past ten years. The Telecom Council’s monthly Service Provider Innovation Forum meetings, for example, started in 2001 with 3 telcos, and today has over 30 in regular attendance.

4. Culture. The valley is as ruthless to itself as it is to any roadblock in the way of progress. New companies are started here daily, but continuous disruptive innovation kills faulting companies as fast as new ones are born. The valley fosters a fast-moving, short life cycle not found anywhere else in the world – invest, invest, test, fail, rebuild, succeed, and restart.

 

See what types of innovaitons the telcos are looking for in 2014 in the Telecom Council 2014 Telco Innovation Roadmaps Report.

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