Partnering: Telcos That Walk the Walk

Author: Derek Kerton, Principal Analyst of The Kerton Group and Chairman of The Telecom Council of Silicon Valley

By now everybody knows, in theory at least, that the concept of NIH (Not Invented Here) should be put to rest. Gone are the days of vertically integrated solutions, where one company does R&D and builds the complete offering for the consumer. Open technologies, IP based communications, and fast-moving competitors have forced all industry players to disaggregate their solutions, and re-build using best-of-breed components from the most qualified vendors.

 

The problem remains that, in the largest of organizations, the NIH momentum is still palpable, and it’s not always the case that partnerships which make a lot of sense, are actually made and implemented all the way to deployments. Big companies also prefer to deal with a smaller number of established vendors, as opposed to multitudes of smaller partners. As recently as 2006, one major carrier actually outsourced its handling of developer partners to a third party company in another city — essentially outsourcing their innovation as something not worthy of their own attention. Things have come a long way since then, and even that carrier now has incubators and a multitude of programs to interact – directly – with start-ups and innovators.

 

Today’s leading mobile carriers are no longer just talking the talk about “partnerships” or “capturing innovation”, they are walking the walk. Market forces and the rapid pace of change have killed the ability for an internal R&D group to even pretend like they can fully keep up. In Silicon Valley, at least 35 large global telecom carriers have set up field offices, trying to be even closer to the innovators there, with the obvious goal of making the right partnerships, and making them faster.

 

These carrier efforts bear fruit. R&D today means being part of an innovation community, having open lines of communication, spotting winners in the crowd, and choosing new partners to build on existing platforms, or to launch new ones. Is this for real? Sprint made a deal with gaming app ecosystem company PlayPhone, Telstra made a deal to modernize their billing with Matrixx, Verizon made a deal with Mojave around improving mobile security, and Vodafone made a deal with Argyle Data around leveraging Big Data and real-time analytics. These case studies and many others are available to the public at the TC3 Summit on Oct 1-2 in Silicon Valley.

 

It’s true that carriers aren’t making hundreds of deals each per year, but the deals mentioned above could never have occurred a decade ago. Today’s best carriers are not just making partnerships, but are re-architecting their networks and operations in order to be able to partner and adopt even faster in the future.

 

The payoff for carriers is in competing better within their home markets, in lowering CapEx, and in reduced OpEx. And it doesn’t matter if that market is a $10 ARPU market like India, or a $40 ARPU market in the West – those payoffs remain the same. Every carrier needs to compete not just with other network operators, but with a seemingly endless stream of cutting-edge Over The Top (OTT) entrants. Carriers may be able to leverage scale and distribution, but leverage means nothing if you’re standing still.

 

Silicon Valley and the TC3 Summit may showcase the symbiotic relationship between innovators and telcos, but telcos are interested in innovation regardless of where it comes from.  Virticalization is dead. The world has become flatter. Leading telecom industry players have reacted and are out in the field trying to source and engage with innovators on their home turf.

 

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