Operators "missing the big picture" when it comes to innovation

Operators are “missing the big picture”, “exaggerating the threat from over-the-top (OTT) players”, and “misunderstanding the broader benefits of innovation”, according to Ovum.

The research firm examined more than 3,500 new operator service launches since 2009 and found that for the past five years, operators have been misunderstanding their role in the ecosystem while they have pursued the next “killer app”.

According to Emeka Obiodu, principal analyst in Ovum’s Industry, Communications, & Broadband practice, the pursuit to create the next big consumer facing product or service has been a futile one and operators had not accepted that their core role is in facilitating connectivity.

“We wouldn’t expect telcos to be the ones to be coming out with the next iPhone,” he said. “Telcos have finally come to that realisation and I believe we are coming to the ideal state for telco innovation, which is grounded in reality, and an acceptance of the telco’s role. It is grounded in the acknowledgement of the limitations of a telco’s capabilities and of what it can do within the ecosystem.”

Obiodu added that one way to encourage innovation is through partnerships with academic institutions, research bodies, start-ups, industry standards bodies, small vendors, OTT players and universities. However, he stressed that operators must take a more humble approach to partnerships than they have done so historically.

“Telcos should have a more genteel approach to these sorts of partnerships. In a classic telco partnership, operators have always seen themselves as the dominant partner in any partnership they have been involved with. They have mostly treated their partners like suppliers.”

Obiodu added that in contrast, Apple and Google have partnered with companies and organisations in a more symbiotic manner and that they see their partners as co-innovators.

“You won’t ever have a fully democratic partnership scenario but it is important for operators to be more humble in their approach to partnerships. That’s why we are encouraging operators to collaborate more, but in a humble way.”

A seperate report published this week by recruitment consultancy European Leaders suggested that the fact that the boards of the world’s ten largest operators are dominated by executives with legal, financial and engineering backgrounds has resulted in a conservative culture that “struggles to drive and nurture innovation”. Boards of OTT giants, which have large proportions of strategy, marketing and operations professionals, contribute to a more innovative culture, the firm argued.