Embracing government incentives: How can telcos innovate beyond the bare minimum?

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Sara Rasmussen, Chief Commercial Officer at Telness Tech, takes a look at some of the government help on offer to UK telcos.

The UK government has shown time and again just how much it values the telecoms sector. Every Budget and Spending Review, new measures are announced to improve the UK’s digital infrastructure – and for a good reason. Connectivity is the lifeblood of a modern economy and fuels the way we live now.

But our telecoms infrastructure – and the telcos that operate it – are facing big challenges. As we spend more time video conferencing, instant messaging and streaming Netflix, the burden on our infrastructure is growing. At the same time, consumer expectations of speed and reliability are increasing.

Telcos are facing a do or die situation. They either modernise, or fail to keep pace with consumer demand and economic need.

Why is government support needed to speed up modernisation?

The only way that telcos will achieve the type of modernisation needed is with government support and funding. If the government doesn’t help out financially as well as pushing legally to modernise the infrastructure, telcos don’t have the prerequisites to do product and solutions innovation – which is what matters to the end consumer. This is because much of UK telecoms infrastructure – to put it simply – is old.

For much of the twentieth century (until 1983), the main civil telecoms system in the UK was state-owned. Systems were added to and iteratively upgraded, but there was no competition to drive wholesale upgrades or innovation.

Services and transmitters were gradually privatised throughout the 1980s and 90s, but many of the issues are still there -Telcos are dealing with massively outdated, complex infrastructure which is difficult, time consuming and costly to change and innovate on.

Despite this, why are telcos not choosing to innovate? It’s within the UK’s best interests to have state-of-the art telecoms networks and be at the cutting edge of infrastructure development and product solutions. If telcos don’t develop and deploy the latest technologies, such as 5G, others will get their first – and they will benefit two-fold. Those who innovate sooner will be able to do business faster and benefit from being a first-come supplier in a burgeoning global marketplace.

Incentives on offer

With UK competitiveness on the line, the government has taken steps to legislate infrastructure improvements and incentivise innovation within telecoms.

Towards the end of last year, the Telecommunications Security Act was passed. This compels providers to adopt the best security practices and, by extension, invest in developing security technologies themselves.

Landmark Acts such as this are just the tip of the ice-berg. There have been numerous other, smaller schemes to incentivise telecoms innovation. Last year a £4 million competition was launched to find solutions to help mobile companies use publicly-owned buildings and curbside infrastructure to host 5G radio equipment.

Progress underway

Schemes to modernise UK telecoms infrastructure are already yielding results. Project Gigabit is a case in point. Backed by a substantial £5 billion fund, the project deploys broadband to 75,000 homes and businesses a week, and is predicted to reach 85% of UK premises by 2025. We can’t be sure of its exact economic impact yet – but estimates suggest this could reach £120 billion over a 15-year period. This proves the power of embracing government incentives to kick start innovation and drive forward change within the industry.

However, modernisation cannot stop here. Fixed networks are only one piece of the connectivity puzzle. Similar resources need to be channeled into other areas of telecoms infrastructure, including wireless networks. Reassuringly, signs suggest this is on the agenda. The government has already held a consultation on Wireless Infrastructure Strategy, which aims to anticipate wireless connectivity needs and establish the role government investment should play in driving innovation.

Going beyond the bare minimum

While government support is absolutely essential for infrastructure modernisation, telco leaders can’t depend on policy makers to set their innovation agendas. They need to be thinking about their customers and their operations. They need to be asking: ‘how are demands on our services changing?’, ‘What new propositions are needed?’ And, ‘how can we spin these out faster?’

‘Digital transformation’ has been a buzz-phrase in management circles for decades – but this really is the only solution. Telcos need to overhaul their internal infrastructures and adopt digital technologies, including cloud, that will help them be more agile and responsive to customers’ changing needs – ultimately, it’s about putting the customer experience at the forefront.

They also need to question whether their internal operations and cultures support innovation. Having grown from public sector roots, many telcos have complex, hierarchical structures and protracted approval processes. Executive teams need to work on obliterating these and incentivising innovation. Organisations can have the greatest technology in the world, but unless people are willing to push boundaries, they’re unlikely to see its full potential.

Taking responsibility and gaining reward

Fundamentally, telecom players can’t forget that it’s within their best interests to innovate. Yes, the government has a responsibility to ensure telecoms infrastructure is able to support the UK’s economic ambitions, but telcos are still competing with one another to offer the best services to customers. They must go beyond the bare minimum and implement more than the standard requirements set by governments.

Telcos need to look at how the way we live and work is changing, and consider how hybrid and remote working are giving rise to new communications needs. Right now organisations are crying out for unified communication solutions that bring all enterprise communications (voice, messenger, video conferencing etc.) into one place. Telcos able to offer these solutions will benefit commercially and make a significant contribution to the UK economy by supporting new working patterns.

Sara holds the role of CCO in Telness Tech where she’s responsible for the company’s commercial activities ranging from communications, sales to customer success. She started her career in the value driven IT and management consultancy Netlight but quickly moved over to fintech in order to change the way people pay and get paid. Sara previously held a role as Global Head of Sales in Settle Group (formerly Auka), one of the first mobile payments solutions in Europe based in Norway. In Settle Group she was responsible for the company’s SaaS business to banks globally and before joining Telness tech she was responsible for the launch of the company’s services in Croatia. Sara is an experienced speaker and moderator in the European fintech scene.