Sponsored By

Why CSPs are making the journey from telco to techco

Telecoms.com periodically invites expert third parties to share their thinking with our audience. In this piece Ari Banerjee, SVP Strategy, Netcracker Technology, checks in on the state of telco transformation.

Guest author

January 24, 2024

6 Min Read

Communication service providers (CSPs) are at a critical juncture, where previous ways of doing business are no longer financially viable. A recent International Telecommunication Union (ITU) report highlights that diminishing revenue-generating opportunities, due to steady growth, has resulted in market saturation. In part, the report cites that as of 2023, there were 111 mobile-cellular subscriptions and 87 mobile-broadband subscriptions per 100 inhabitants and at 8.9 billion, the number of mobile-cellular subscriptions now exceeds the world population. Simultaneously, fixed-telephone penetration has decreased by nearly 50 percent, from 20 subscriptions to 11 subscriptions per 100 inhabitants.

In parallel to limited subscriber growth, CSPs are driven by competition and market demand to diversify product lines, launch new segment-related revenue streams, and focus more on enterprise services, while ensuring customer service needs are met. It’s becoming increasingly essential for CSPs, especially in mature mobile markets, to capitalize on these new opportunities to diversify and grow their revenues beyond competing at the margins for churning subscribers. With the emergence of 5G core, edge compute, and network slicing, telcos have an opportunity to monetize their networks in innovative ways and engage more deeply in B2B and vertical industry sectors.

By providing deeper value to their customers, CSPs are essentially transforming into techcos – technology-driven companies.

No longer constrained by connectivity alone, techcos deliver what the customer needs. For consumers this may mean bundling healthcare or financial services with their mobile offers. For enterprises this can mean a strong focus on the vertical to couple digital services and vertical industry applications with telco connectivity. With a greater focus on end-to-end solutions, techcos will have a strong partner ecosystem to plug in the pieces they don’t have.

Transforming from a telco to techco: What it takes

Extending beyond technology, digital transformation is changing virtually everything, from the way interactions take place to virtual and instant communication. While digital transformations are complex, it forms the foundation telcos need to become techcos. Given the extent of its reach, business and network operations have become the new battleground where agility and scalability need to be prioritised. To remain relevant in this new environment, CSPs need to do the following: make their networks future ready, transition to being data-centric and cloud-enabled businesses, migrate legacy IT systems to an open, modular cloud-native IT stack, digitize customer-facing and B2B services, and deliver seamless, consistent, and personalised experiences via AI-driven omnichannel systems.

These changes, as well as diversifying product lines require CSPs to become more partner centric, which is contrary to current practices of either handling alone or relying on a few technology partners for new feature and service development. As techcos, CSPs need to provide more comprehensive end-to-end solutions such as offering consumers and businesses value added services bundled with connectivity or making their network available to partners on an as a service basis through plug and play APIs.

However, becoming a techco requires more than just changes to technology and systems. Success also requires organisational and cultural change. CSPs need to develop and embed specialist knowledge and skills in technologies such as cloud, predictive AI, generative AI, and software development. Additionally, modern operational concepts such as Agile development and DevOps should be used across the business.

Given that co-creation is a fundamental requirement for modern IT environments, the techco culture encourages and supports customer-led joint development projects and embraces collaboration inside new ecosystems. During the telco to techo transition, CSPs need to identify partners who will support their immersion into IT and cloud solutions, enrich their joint development strategy, and work with them in finding a balance between outsourcing and self-sufficiency.

Unlocking new opportunities

By embracing their role as a techo, growth opportunities previously unattainable will be available, enabling them to position themselves as a leader in the digital era. While the end game is the same, CSPs may travel diverse paths to becoming techos. For example, some will focus on expanding their reach by exposing network services in easy to consume APIs to developers. Others will adopt a partner-based strategy to create the right mix of services that will delight customers and businesses alike. And in some cases, the techco will diversify into new business areas, leveraging their existing assets in finance, industry 4.0, healthcare, or other sectors.

Co-creation platforms will be significant in contributing towards creating new business value from 5G and fiber network investments, cloud, and edge technologies. By using open APIs, innovation, streamlining automated operations, and collaborating with partners, these co-created platforms will create new growth opportunities, while driving cost efficiencies and agility across the business.

Fundamental to the platforms are in their ability to help CSPs reduce IT spend through BSS/OSS consolidation, modernize IT software, and automate operations on any telco or hyperscaler platform. Co-creation platforms also need to provide support for real-time charging across different services, partners, or business models. The ability to offer new and diverse monetization models will help CSPs create profitable value chains and position themselves as B2B2X enablers.

Although some CSPs have already begun to offer financial services through device financing schemes. As a techco these capabilities could be offered alongside IT and network services – providing customers a one-stop-shop offering to third-party online retailers for home entertainment systems, consumer electronics, or other goods for example. Many large techcos, notably in Asia, are moving into the mobile space and are actively looking for synergies which will allow them to leverage their online services with their mobile subscribers. Not unique to Asia, CSPs across the globe are looking for opportunities to monetize capabilities and expertise held within their own subsidiaries or associated investments, across their large multinational subscriber bases. These moves not only represent changes to traditional business models but provide an increase in return on investment.

The increased business agility that is inherent as a techco will empower CSPs to adapt faster to market needs, stimulate innovation, and add value on top of their current network investments. By equipping themselves to serve diverse customer segments – both human and non-human – CSPs can reap the monetary rewards from 5G, cloud, and edge technologies. Even amid the challenges of this ongoing process, transforming from a telco to a techco positions CSPs to succeed in the digital future and beyond. With many CSPs at varying stages of their telco to techo journey, the digital future is at hand.


Ari Banerjee works for Netcracker as Senior Vice President of Strategy, responsible for the company’s strategic direction and enabling it to address changing market and technology opportunities. He is responsible for all aspects of Netcracker’s strategic initiatives across its portfolio of software solutions including customer, product and technology management, market direction and corporate communications. Ari interfaces with CTOs and CIOs at customers and prospects to ensure the alignment of technology, products and services while providing strategic input to the CTO office, product management and R&D teams. In his role, Ari collaborates with industry organizations, standards bodies, media and analysts and is responsible for running marketing and strategic partner programs for Netcracker.

Read more about:

Get the latest news straight to your inbox.
Register for the Telecoms.com newsletter here.

You May Also Like