Time for telecom industry to dump the dumb pipe

New Delhi, Oct 12:  The connectivity-driven digital revolution in the country has prompted fundamental policy reforms, a premier thought-leadership brand has stated, adding that trends in the industry are pushing telecoms to choose between 'dumb' utility models and growth-driven business models.

"A connectivity-driven digital revolution is already one of the key phenomena of our age prompting a need for fundamental policy reforms," said a Citi GPS: Global Perspectives and Solutions report published earlier this month.

The report is titled 'Re-birth of Telecoms into a New Digital Industry - Time to dump the dumb pipe'.

The report said that over the past two decades, telecom companies have been busy building infrastructure that is critical to the communications sector -- copper, cellular or mobile, cable, and fiber networks -- which are the backbone of the increasingly digital economy. 

This connectivity-driven revolution has created some of the world's largest companies who generate their profits by using the infrastructure that the telecom sector has built. 

While telecom operators have seen minimal industry growth of just 0-3 per cent in the past few years, sectors that use their networks -- Internet services -- are seeing growth at rates at least six times higher.

"The described trends, in our view, are pushing telecoms to choose between a ‘dumb pipe' utility model and a growth-driven business model based on newly built advantages in the less regulation prone digital service layer," the report stated.

The $4 trillion global digital services market is growing relatively modestly at three to four per cent per year, while telecoms have often struggled to keep up pace even with that low number. 

"It is, therefore, crucial for telecoms to choose the right expansionary areas. Internet Protocol TV, consumer video, Virtual Reality, IoT including telematics (vehicle connectivity), big data and 3D printing/scanning that constitute major potential growth opportunities for data traffic and specialised digital businesses," the report said.

The report also talked about newly arising opportunities in the service layer for telecoms willing to undergo digital transformation. 

"Such opportunities are emerging just now due to growing importance of local digital regulation and local content, as well as, local partnerships including -- corporate venture capital opportunities; technology trends such as all-IP networks and network virtualization, which potentially create new scale economies; and new opportunities coming based on internet of things or 5G," the report said.

"Telecom digital transformation in our view entails the technological overhaul of networks, IT systems, and processes; the provision of digital experience to the consumer; and the provision of tailored connectivity, cloud, big data, and other services in business-to-business," it added.