The huge demand for telecom services worldwide has galvanized innovators, while also raising the bar on several fronts. As innovation in wireless and broadband technologies aims to increase capacity and service efficiencies, telecom equipment vendors — like makers of network infrastructure equipment and mobile devices — must also deliver higher-end smartphones, network capacity and spectral efficiency. They must also address the frugal but high growth markets in emerging economies. It is a situation of ‘do or die’, ‘innovate or perish’.
As with any other industry, telecom equipment makers today find their innovation landscape dramatically different from a decade ago. Today telecom equipment vendors (TEVs) have to be “open to very off-the-bat suggestions.” Innovation can come from many places and one must not ignore any of them. They have to “embrace the ideas and the feedback,” assimilate and analyze the data they generate, and respond effectively. They must ensure their equipment supports the features service providers want to offer their customers.
TEVs must expand their focus to business innovation, which would then extend to exploring new markets, processes and business models. Innovating to find new markets could help identify under-penetrated opportunities such as rural markets, mobile commerce or mHealth. New processes, such as outsourcing non-core activities, could help TEVs better understand ways to optimize their operations. Technology innovation would occur at the same time, such as focusing on small cells that reduce costs and increase capacity and coverage, or remote infrastructure management for mobile networks. Innovation around business models might entail leveraging partner ecosystems to share uncertainty risks and innovation costs, create relevant talent pools, and reduce time to market.
As the telecom equipment market evolves, the sources of innovation are also changing. While many top-ranking TEVs have suffered revenue drops and a consequent fall in their R&D budgets (typically 8% - 15% of revenues), the industry is growing overall. As telecom networks attempt to push more traffic down their infrastructure faster and cheaper, they face hurdles, these will in turn provide a platform for innovation. Spectrum is a finite resource, and telecom industry participants have to find ways to get the most from it. Telecom carriers will also have to enable switching between cell phone spectrum and Wi-Fi frequencies, and implement advanced technologies like 4G networks.
Another hotbed of innovation for TEVs is around small cells, or base stations that provide small footprints of between 10 meters and two kilometres. Mobile operators see these as being crucial to provide coverage for small communities at low costs, like rural markets. Big-data analytics of customer behaviour to create suitable offerings would be another area for innovators to explore. TEV innovation must also help extend the life cycles of existing products and features mobile operators offer, to help wring more profit out of investments.
Don’t you think the need for innovation challenges TEVs to collaborate within and outside the industry? What are your views? Do share them.