FOREST HEIGHTS, MARYLAND—Telecom companies want to set out a path for growth in a rapidly evolving technology and connectivity landscape, but they are wary of the lessons learned from recent rounds of expensive network investment where most of the resulting economic gains associated with those networks have gone to hyperscalers, content companies, and developers of OTT applications.
So what is the path forward to 5G profits—particularly for the transport and wholesale arms of telcos? Eric Cevis, president of global wholesale for Verizon Business, spoke during an International Telecoms Week session about the possibility of security services to support new hybrid work environment, as well as making sure that this part of the industry makes its fair share on IoT deployments. He also advises that expectations around revenue-per-customer probably need to be recalibrated, from large-dollar-amount services to ones that generate a fraction of the revenue but are large in scale — what he calls a “better than zero” approach.
Keri Gilder, CEO of Colt Technology Services, noted that infrastructure companies are seeing a premium from private equity investors, and cloud providers are seeing robust growth as well. She says that for Colt, it is driving investment in fiber but that its fastest-growing business is SD-WAN and providing Secure Access Service Edge (SASE); enabling bandwidth-on-demand isn’t enough, it’s important to “enable that software claw into the infrastructure” that no one else can offer, she added.
That means developing new business models as well as attracting and training new talent, said Emmanuel Rochas, CEO of Orange International Carriers, so that telcos become more like “tech-cos.” Orange, he added, has plans to invest 1.5 billion euros to train its existing workforce on skills related to data, AI, cloud and cybersecurity in order to up-skill by 2025, in order to be able to deliver the network as-a-service.
As Verizon makes billions of dollars in investment in spectrum and its physical network, Cevis said, the company is charting a path forward in part by relying on partnerships—planning to grow with partners, rather than focusing its growth strategy on what it can do alone. “We’ve moved beyond thinking it all has to be an organic thing we do on our own,” he said. “I think we’re embracing the idea that partnerships are okay, and inorganic growth is going to drive even more growth.” He added later, “We can scale as an industry faster by working together and collaborating.”
And while tech companies like Facebook, Amazon, Apple, Netflix and Google haven’t necessarily invested directly in telecom infrastructure per se, panelists did point out that they have helped drive demand for connectivity—growth in undersea cable connections that probably wouldn’t exist without the pressing drive for more global data connectivity, and fostering demand that is leading to fiber-to-the-premise builds.
As telcos worry about commoditization of their offerings, how to compete with hyperscalers and whether they can make enough returns on the massive network investments they are making, Gilder points out that while they might be hesitant to take on the risk of new partnerships and experimentation with new services and operating models, they are already in the risky position of trying to maintain the status quo. Trying to defend eroding business models and keeping a traditional mindset may ultimately be more risky than rather than taking the leap to try new services, seek new areas to develop, new APIs to open up and new operating models that can scale.
