Moving Beyond Connectivity to Integrated Ecosystem Solutions

The telecom industry has undergone a remarkable transformation in the past decade. The evolution from basic landlines to 5G-enabled smartphones, IoT, and AI-driven connectivity has strengthened the value proposition of telecom companies. Today, 96% of Americans have mobile connectivity, showing just how critical telecom networks are in the digital economy.

However, as mobile services become commoditized, telecom operators now face financial challenges. Despite investing over $1 trillion in network upgrades since 2018 and a whopping $81 billion just on the 5G spectrum(US), telcos are struggling to generate substantial returns. Revenue growth is slowing, and the financial strain is pushing them to explore new revenue streams, shifting from traditional service offerings to integrated ecosystem solutions.

The Financial Pressures on Telecom Operators

The Communication Services Providers (CSPs) are in a tight spot. The investment required to keep up with technological advancements, especially 5G, has left many with significant debt.

Voice and data services, once their primary business model have become commoditized, resulting in a revenue slowdown. Although data and connectivity services are growing, they cannot fully offset losses from legacy services. The B2C market has reached its saturation point, and growth opportunities in this segment appear limited. However, the B2B segment still shows tremendous potential, especially with 5G being a strong business enabler.

The B2B Opportunity - A Shift to Ecosystem Integration

To realize their full potential, telcos must move beyond their traditional connectivity provider role and position themselves as robust ecosystem integrators. While 5G was once touted as the transformative agent across industries, but so far, only a handful of use cases have translated to substantial revenue opportunities. To change this narrative, telcos must move beyond just connectivity to offer comprehensive tech solutions that drive enterprise digital transformation. This requires the integration of connectivity services with EDGE computing, IoT solutions, and AI, within a robust security framework.

Some examples of integrated ecosystem play include: enabling smart manufacturing with real-time monitoring, healthcare through telemedicine and remote patient monitoring, smart city solutions for traffic and energy management, and optimized logistics through real-time tracking.

The market for these integrated services is growing at a double-digit CAGR, far outpacing traditional telecom services, yet their revenue contribution remains less than 10% of overall telecom revenue (McKinsey). For telecom operators to succeed, they need to move beyond simple network access and become key enablers of digital transformation, offering solutions customized to specific industry needs.

Leveraging Value-Added Partnerships

Developing these complex solutions is a costly and resource-intensive task and the strategic imperative is to adopt a Joint Go-to-Market model. Rather than building solutions from scratch, telcos need to collaborate with System Integrators (SIs) like Tech Mahindra, who have expertise in managing multiple vendors, integrating technologies, and providing vertical-specific solutions.

SIs bring years of experience in designing solutions at competitive prices and are instrumental in addressing the challenges faced by various industries. By partnering with SIs, telecom companies can leverage SI’s deep knowledge of other verticals, creating vertical solutions that combine virtualized networks, cloud services, data, applications, and security. This approach allows them to offer a comprehensive suite of solutions and services without having to make large upfront investments.

A great example of such collaboration is the Sahabat-AI project, a large language model (LLM) ecosystem custom-trained for Bahasa Indonesia and other local languages. The project was developed by Indosat and GoTO, in partnership with government agencies, tech partners like Nvidia and AI Singapore, and Tech Mahindra orchestrating this end-to-end solution. Sahabat-AI can process vast amounts of data in Bahasa Indonesia and its local languages, preserving essential cultural and linguistic nuances. This demonstrates the power of value-added partnerships (TelecomTalk).

Global Collaboration for Continued Telecom Success

The theme for this year’s World Economic Forum, “Collaboration for the Intelligent Age,” reflects on the challenges and opportunities in the telecom industry. It addresses the need for global cooperation to leverage emerging technologies and address complex challenges. Telecom equipment providers like Ericsson are embracing this idea of global collaboration. For example, when they decided to join forces with 12 leading global telecom operators, to create a global network platform enabling developers to build use cases using the network APIs from multiple telcos.

This global collaboration will leverage 5G and other advanced technologies, allowing operators to explore a wider range of business opportunities. By sharing resources, knowledge, and technology, telecom companies can innovate faster and offer more compelling solutions to their enterprise customers.

Conclusion

While the telecom industry is just emerging after a slowdown, the financial challenges to remain innovative continue. To see maximum impact from their network investments, telcos must evolve into orchestrators of interconnected solutions, offering high-value, vertical applications.

Telcos can maximize the value of their network investments by focusing on strong partnerships, increasing the penetration of AI-powered tools, and delivering targeted industry solutions. Collaborating with system integrators and leveraging proven technologies will help them address immediate market needs while gearing for sustainable growth. This shift towards integration is not just a competitive strategy but a necessity in the digital-first business environment.