skip to main content
Close Icon We use cookies to improve your website experience.  To learn about our use of cookies and how you can manage your cookie settings, please see our Cookie Policy.  By continuing to use the website, you consent to our use of cookies.
Global Search Configuration

Straight Talk Telecoms

Ovum view

Last week, three of the world’s largest IT and Internet companies unveiled separate initiatives to get into the business of connectivity.

During the Indian prime minister’s visit to Silicon Valley, Microsoft and Google announced initiatives to fund broadband and public Wi-Fi in villages and railway stations across India. Meanwhile, Facebook’s Mark Zuckerberg announced at a UN Forum in New York that Facebook would be delivering connectivity to refugee camps across the world.

What is significant about all this? Well, first, there was no reference in any of the initiatives to the role that telecoms operators will play. Indeed, the terms “telecoms” and “telecoms network” were not used at all. The talks centered on connectivity, broadband, and Wi-Fi. Secondly, these announcements are the latest in a series of initiatives from “Internet” companies seeking to play a role in the provision of broadband connectivity, a role which many in the telecoms industry had hitherto assumed to be theirs.

There is no suggestion that any of these projects will be revenue-generating initiatives for the companies involved. Rather, they fall within the category of initiatives to extend connectivity to the two-thirds of the world’s population without access to the Internet. They follow other projects such as the internet.org initiative led by Facebook and experiments involving drones and balloons to extend connectivity where there is no terrestrial network coverage.

Collectively, these projects represent innovation around Internet connectivity. There is absolutely nothing to stop telecoms operators from launching similar projects. But to date, telcos’ “innovation” has seen them diversify away from the core revenue streams of communications services and connectivity instead of finding ways to deliver these services more affordably to serve the unconnected.

This is not to say that operators do not have their own programs to extend their networks into rural areas. Network-sharing initiatives are commonplace, often with financial support from governments. But, to reach the unconnected, operators tend to rely on the same suppliers, the same technologies, and the same business models they have always done, meaning progress can be slow. And telecoms operators still feel that they are in the business of building “carrier grade” networks rather than providing robust and secure voice, messaging, and data services.

Internet companies’ big advantage is their “global” mindset. The technologies and business models that they develop have global reach and scale. Telecoms operators, on the other hand, tend to limit their ambitions to markets in which they own licenses and operate networks. It may be easy for a company such as Facebook to offer to connect refugee camps around the world, but a telecoms operator sees the world in terms of licenses and national boundaries. The one telco that could launch an initiative similar to Facebook’s – and even partner with Facebook – is Vodafone. The Vodafone Foundation has developed a mobile “network in a backpack” solution for regions hit by natural disasters such as earthquakes and typhoons.

There is no suggestion that any of the three programs unveiled last week are anything other than philanthropic initiatives aimed at connecting the unconnected. But, at the same time, when large corporations formulate strategies around corporate social responsibility, they find it easier to win internal support for initiatives that have deliver some value – however long term – to their core business.

For Google, Facebook, and Microsoft, it is not difficult to see how connecting the unconnected will, in the medium term, benefit their core businesses. Indeed, one of the most interesting aspects of Facebook is its popularity in emerging markets, where there is low disposable income for smartphones, tablets, and PCs – not to mention for telecoms services.

It begs the question of whether digital companies have more confidence in their ability to monetize broadband connectivity for the world’s “unconnected” – even if they are offering the connectivity part for free – than telecoms operators for whom connectivity is their core business.

Straight Talk is a weekly briefing from the desk of the Chief Research Officer. To receive this newsletter by email, please contact us.

Recommended Articles

  • Internet of Things

    IoT Viewpoints 2018

    IoT Viewpoints explore the IoT opportunity in 2018 and beyond. Download our latest e-book to get our newest collection of thought leadership articles on the emerging IoT trends, technologies and opportunities.

    Topics IoT

  • Consumer & Entertainment Services

    US pay TV: Is it facing an existential threat?

    By Adam Thomas 28 Mar 2018

    With US pay TV having endured the worst year in its history, thoughts have inevitably turned to the future. The likelihood remains that the immediate future will remain highly uncomfortable for everyone except the scaled multinational digital platforms.

  • Enterprise Services

    5G: Another technology in search of enterprise use cases

    By Evan Kirchheimer 26 Apr 2018

    Service provider interest in justifying 5G investment through its potential to open new revenue streams from the enterprise segment is growing ever greater.

;

Have any questions? Speak to a Specialist

Europe, Middle East & Africa team - +44 (0) 207 017 7700


Asia-Pacific team - +61 (0)3 960 16700

US team - +1 646 957 8878

Email us at ClientServices@ovum.com

You can also contact your named/allocated Client Services Executive using their direct dial.
PR enquiries - Call us at +44 788 597 5160 or email us at pr@ovum.com

Contact marketing - 
marketingdepartment@ovum.com

Already an Ovum client? Login to the Knowledge Center now