Telecommunications evolution: a timeline

The threats facing telcos are by now well understood. Saturation of traditional voice and data markets, coupled with the commoditisation of connectivity services, are hammering profit margins just as the rapid pace of technological advancements, particularly in digital and mobile technologies, is demanding unprecedented capital investment in network infrastructure. In 2022, for instance, free cash flow margin for the telco industry was 11.4%, down from 12.6% in 2021. Meanwhile, over-the-top (OTT) content providers continue to erode market share.

Fortunately, as the past shows, when faced with external threats or market disruption, telcos are quick to adapt. Here, we look at some of the dramatic shifts in business and operating models that telcos have embraced to date and look ahead to how they can overcome the challenges they currently face.

From convergence to data: 2000 - 2020

Entering the new millennium, telcos began exploring new business models beyond their traditional boundaries. The convergence of communications, media, and technology (CMT) sectors led to the emergence of bundled services. British telecommunications company, BT Group, was one of the pioneers in this area with the launch of BT Vision in 2006,. From the voice providers of old, telcos had evolved into multi-channel, multi-service providers for the connective tissue of the global information economy.

The proliferation of smartphones and the subsequent explosion of data consumption were the next major drivers in reshaping the telco landscape. Telcos expanded their infrastructure to accommodate the surge in data traffic, investing heavily in 4G LTE technology. Meanwhile, the advent of streaming services evolved the telco multi-service model to include necessitated partnerships between telcos and content providers.

The era of diversification: 2020 - present

The most recent phase in the evolution of telecommunications is characterised by diversification and the migration of telco to ‘techno’. Telcos are no longer just communication, media and entertainment service providers; they have leveraged a user-centric approach to verifiable digital identity to launch technology solutions for vertical industries, including:

Fintech: Orange has launched Orange Money, a mobile money service that enables users to manage finances, make payments, and access banking services directly from their mobile devices.

Healthcare: In the wake of the COVID-19 pandemic, telcos recognised the potential of digital healthcare services. Telefónica, for instance, collaborated with various healthcare providers to offer telemedicine services.

Smart cities: Telcos are at the forefront of the smart cities movement, providing the connectivity backbone required for the Internet of Things (IoT) applications. Singapore's Singtel, for example, has been instrumental in the city-state's smart nation initiative, deploying IoT solutions for smart buildings, transportation, and urban management.

The next telecommunications growth frontier

The expansion to ‘techno’ still has a lot of additional mileage. The immediate opportunity being for telcos to expand their provision of a secure, authentic, and verifiable digital identity into untapped vertical segments. One of the most promising is the digital marketing space, where the deprecation of third-party tracking cookies has opened a significant market opportunity.

Tracking cookies have traditionally been used to collect data on web users’ browsing habits to build audience profiles and activate programmatic, personalised, real-time engagement. As a result of global privacy laws and consumer demand for privacy-conscious practices, tracking cookies have been deprecated in Safari and Firefox, and are due to be deprecated in Chrome and Edge this year. The digital marketing industry is in urgent need of a replacement to keep personalised programmatic advertising alive and ensure that ad revenues keep flowing.

Telcos have a unique opportunity to provide an in-network verification service to meet this need. Taking consented (and therefore privacy-compliant) pseudonymised advertising IDs from publishers and brands, telcos can leverage their network intelligence to verify users, helping publishers and brands recognise repeat users to build 360 audience profiles. Additionally, telcos can use a similar approach to generate a second activation ID to help deliver guaranteed audiences to advertisers.

Recently, operators in Europe have collaborated to launch Utiq, an API-based approach, where data consent is secured through a dedicated pop-up on a publisher page.

Alternatively, an independent telco ID technology enabler for in-network telco verification services is already deployed in MENA and APAC with proven results. These IDs are embedded in the telco network and therefore sit behind the firewall for additional security and privacy protection. They leverage existing consent mechanisms to deliver the service.

It’s clear that a new market is growing around this opportunity, and telcos have a choice over which deployment approach works best for them. By comprehensively solving the marketing and advertising challenges facing the digital marketing industry, telcos can open a significant new revenue stream and claim a new role at the heart of the internet.

Adapt and improve

The journey of telcos from providers of voice and data services to multifaceted techno enterprises shaping the future of communications, entertainment, finance, services, and health, is a testament to their adaptability and innovation. As we continue to navigate the digital era, telcos will undoubtedly remain at the heart of technological advancement, driving innovation in new business segments and continuing to shape our world.

Tanya’s expertise sits at the intersection of digital transformation, advertising and telcos. Before co-founding Novatiq, she was Director of Mobile Data at Telefonica where she spearheaded the earliest developments of mobile network operator consent technology; later joining Vodafone to design a global customer data consent management platform which is still deployed across Vodafone’s footprint today. Previous to that she operated a global digital division for Discovery International and developed and delivered the first digital services for BSkyB including the inaugural digital interactive television services. A global thought leader and speaker on data privacy, Tanya is the chief product visionary at Novatiq, responsible for defining our best-in-class identity solutions and product roadmap. https://www.linkedin.com/in/tanyafield/