Operators – Intelligent Partners In The 2020s?

April 19, 2023

Written by Alex Lawrence

“I feel like I’m a little bit of a cheerleader most days, just getting people to understand how complex and important the partner ecosystem is for the overall organisation,” said Kimberley King, SVP of Strategic Partners and Alliances at Hitachi Vantara.

As the telecoms world starts moving increasingly to more open and collaborative models to build services, propositions and revenue streams, strategies and philosophies for partnering will become increasingly significant for success. This is, unfortunately, an area where the telecoms industry has tended to do badly, from the desire to control walled gardens of services in the days before 3G to the modern day. Are there ways we can do better as an industry?

King thinks so, and a good deal of this comes back to how people think about the concept of “partners”.

“Five years ago, when I came to Hitachi Vantara and I took on the partner program, it was very much a transactional model,” she explained. This is a common approach – building up a wide variety of “partners” in the way that, for example, Amazon does.

“I think at the last count AWS had 120,000 partners. How do you effectively manage 120,000 partners and give them what they need?” King asked.

“They spoke to me and they basically said, ‘Just turn all your customers over to us.’ I asked: ‘What’s in it for us?’ and they replied ‘Oh well, your customers will get services from us’… but that then cannibalises and upsets my ecosystem. And so they look at it from a very myopic view.”

Partnering in the telecoms industry tends to look different, but still faces its challenges.

“Amdocs is all about “You take the front-end and sell, we’ll own the back end and the infrastructure.” It’s a very collaborative relationship,” King said. But she highlighted that an approach that brings a genuine partnership where the strengths of each are on show is relatively rare. This is particularly true of the operators.

“I would say they want to own the customer relationship,” King explained.

“They don’t want to give up that relationship. That’s part of the value that they have – being the front end and being vocal to that customer. So a telco would typically say “We just want you to be an agent”.”

This desire to control the end-user relationship is understandable but is also reminiscent of the way in which operators wanted to control walled gardens of applications in the early 2.5G to 3G era.

Doing so allowed the operators to often command 70% of revenues from the applications and have tight control of what happened on the devices… but compared to building for an OS like Apple or Android, relatively few app developers could afford the overheads to strike and manage deals across the different networks, let alone for a small proportion of the revenues. This positioned them poorly to compete against the likes of App Store or Google Play.

“I think at some point telcos need to learn that they have to let go,” King mused.

“Not everybody wants to be an agent, and I think if the telcos don’t change that model, they’ll start to see less of the right level of engagement with their more valuable partners.”

Indeed, in a report last month analysts TBRI underlined some of the ways in which the sales and compensation models at most companies in the telecom sector need to evolve to a more partner-oriented approach.

“Companies that continue to focus on selling SIM cards, point products and disparate solutions (and compensate employees based on these metrics) are at a competitive disadvantage versus companies that sell (and compensate based on) outcome-based solutions,” they note.

“Systems Integrators (SIs) have generally been doing a good job on this front, evidenced by the high-value digital transformation contracts they are winning.”

Investment In Partnering

What’s the alternative then? King has been working on a very different approach – relatively few close partnerships, but ones which are based on very concrete wins for both sides. This is resource intensive compared to Amazon’s ‘partners’, not least because of the intensity of the planning before anything is agreed with a prospective partner.

“We are very, very thoughtful about partnering and I think every company should do that,” King explained.

“We sit down and do a workshop… looking at the vertical offerings that you would take to market with them; and when we get to that piece, you can then decide which is the most valuable. How do we work together? How would we target customers? How do we train our sales organisation to work with their sales organisation?

“It’s not about saying “Well, here’s the product, now go figure out how to sell it,” which is what a lot of companies do.”

King gave the example of Hitachi Vantara’s collaboration with Cisco. She explained that they are going to be publicising the successes it has brought, but it wasn’t straightforward.

“It took us two years to get to this point co-selling and driving a joint go-to-market with Cisco. Two years actively engaging, building use cases, and then integrating products together. What people don’t see is all that hard work that has to go into it.”

The recent MWC highlighted that this idea of integration with some other players might make sense for telcos. The major operators taking part showcased some impressive services, but they were overwhelmingly services such as XR, holography, drones, robotics and so on.

Absolutely fascinating, but services in which the underlying network is only one part.

Building strong relationships throughout, for example, the autonomous vehicle value chain or the holography value chain might offer rewards similar to those of Hitachi Vantara and Cisco. The telecoms industry has a poor track record of trying to control such value chains, such as AT&T’s purchase and subsequent sale of Time Warner. Partnering to influence them may work better.

Another Way

While becoming closely aligned with a few players can make sense, especially where there are obvious complementarities, there is another option. Through the recent Open Gateway initiative telcos have the opportunity to position themselves as a potential collaborator with any application developer, offering APIs that will work across many of the globe’s telecoms providers. This would help telecoms providers move away from the Walled Garden model by allowing potential developers to integrate once and deploy anywhere, offering more of a role as a platform. Google, Facebook and others have made good businesses this way.

However, there are two elements that still need elucidating.

While the Hitachi Vantara approach to partnering is one in which companies develop some clear commercial reasoning and processes for how to proceed, neither the GSMA nor the Linux-based CAMARA project managing the technology development mention commercial models.

It is unclear whether there are mechanisms in place at all for operators to directly monetise the Open Gateway APIs, either by direct billing or by something more indirect such as requiring any companies using the APIs to subscribe to membership of CAMARA or a related body. Without those mechanisms, telecoms providers may become more useful to the wider tech industry, but it’s unclear what the value-add would be.

Moreover, to present a unified platform position would imply a degree of collaboration among telecoms providers which would need to be carefully managed. Antitrust legislation in different territories is strictly enforced to encourage competition, and especially price competition, among rivals.

While closely managed partnerships like Hitachi Vantara’s demand a change from the industry’s established methods, both in terms of philosophy and operations, arguably the shift to emulate global platforms will need a similar shift. In this case, who is the competition?

Arguably, in the push to take on a global platform approach regulators should be treating initiatives like Open Connect as competitive against the hyperscalers, not against other telecoms providers. If regulators accept this as the case, ultimately it will both enable and also necessitate a different kind of integration and collaboration – not so much between telco and customer, but between the telecoms providers themselves.

Ultimately, individual telecoms providers could go down any of these roads and stand a chance of creating useful commercial impact. However, in all these cases we still need the skills and mindsets to partner effectively, which is in turn driven by incentive structures from the executive level downwards. There’s a good reason why King is an SVP – it’s easy to take a stab at ‘partnering’ and make no impact.

“We used to call them those ‘Barney relationships’,” King smiled. “Everybody loves each other but nothing gets done.”

Note about the title: In 2012 the author arranged a conference session at Mobile World Congress titled “Operators As Intelligent Partners”. The concept was met with general hilarity from much of the industry.

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