Support Telecom Providers on the Journey from Telco to Techco

During Akamai World Tour 2023, Akamai’s EMEA carrier team hosted a roundtable discussion with leading telecom companies on the topic of transitioning from telco to techco (that is, from a telecom company to a tech company). 

This theme has become a priority as large technology companies take more control of telco customer relationships and services — forcing telcos to rethink their identity in the modern landscape. 

Our discussion took place against the backdrop of 10 to 15 years of global telco revenue stagnation due to:

• The turning of voice and messaging products into commodities

• Large tech companies controlling the relationships between their services and end customers

• Operators investing heavily in 5G deployment and seeking a return on their investment

Now, the telco industry has reached an inflection point and is seeking ways to transform the business to ensure that emerging growth opportunities get addressed faster in the future.

Akamai has a strong history of partnering with service providers to deliver powerful integrated security solutions to end customers. This roundtable provided a valuable opportunity to hear our customers' challenges and ensure that we remain aligned as their requirements evolve. Read on to discover key takeaways from our conversation.

What is a techco?

A techco is a technology company that focuses on innovation and being strategically agile. Techcos spend more on research and development (typically 10% to 25% of their revenue) than telcos (approximately 3%) and they are seen as higher-growth businesses, making them more attractive to investors. 

But how can a telco become a techco? Our roundtable discussion revealed many different approaches. For some customers, going from telco to techco means boosting versatility and offering a wider variety of products. Others feel it entails focusing on partnerships that complement their core competencies (e.g., bundling services like security with network access).

Delivering more than basic connectivity

Over the past 10 years, customer demand has consistently shaped what telcos need to address, what they need to connect, and how they need to connect it. 

Beyond providing basic connectivity, modern telcos are also expected to connect all elements of the broader digital ecosystem: customers, applications, and third-party suppliers. That means developing partnerships with third parties like Akamai to provide greater customer value.

During the roundtable discussion, Akamai customers said that they are looking to create additional value for customers by bundling security services with network connectivity. For some, this can mean partnering with a third-party security provider and re-selling their solution, while others are focused on selling a fully managed service (in which the network operator assumes responsibility for deployment, in-life management, and ongoing development of the service). 

By providing a fully managed service, network operators can  work with end customers to improve their security posture over time. In doing so, operators deepen customer relationships and become an essential trusted partner, as opposed to simply reselling off-the-shelf solutions from third parties.

Simplification is the name of the game

Our roundtable discussion also highlighted that enterprise customers want simpler security solutions to protect their infrastructure. Meanwhile, telcos want to simplify things by reducing their amount of vendor partnerships.

According to our customers, modern enterprise CISOs value connected security solutions over best-of-breed point products. These solutions embed security into every enterprise IT infrastructure layer while simplifying management and configuration changes. Consolidation has its perks: A Microsoft study found that organizations with fewer cybersecurity vendors (up to 10) had far better recovery rates after a breach than those with higher vendor counts. 

Based on their experience of securing their own networks, telcos are strongly positioned to identify customers' security gaps. In doing so, they can take responsibility for their customers' end-to-end security stack by providing a fully managed service that can develop over time.

Telcos also seek to simplify by consolidating vendor partnerships. This helps them negotiate better terms with partners, influence the innovation agenda, and ensure that customers receive the best services possible. Through closer collaboration with telcos, technology partners can deliver services that align with the provider’s requirements and become a co-collaborator instead of simply selling one-off solutions.

Cultural alignment is key to a strong partnership

Our roundtable discussion also highlighted the evolution of partnerships between telcos and technology providers. Previously, engagement typically happened only at the network or engineering level. Now, product teams actively work to understand how telcos can leverage tech partner skills and capabilities to deliver additional customer value.

One crucial point raised during the roundtable was that aligning telcos and their technology partners on culture is key to driving mutual success. Telcos reported encountering challenges in go-to-market strategy and sales engagement when partners don’t mutually understand the processes operators should follow or the pace at which new products and services are typically delivered.

Akamai has a track record of successful service provider partnerships

Akamai partners with fixed and mobile network operators around the world to help protect their customers, differentiate their networks, grow revenue, and embed security as part of their network value proposition.

Our Secure Internet Access services are powered by Akamai’s market-leading threat intelligence technology and capabilities and are offered as white-label solutions so we can deliver network-branded, fully integrated security solutions to individual consumers, small businesses, and large enterprises alike.