The new challenge facing telecoms companies: moving beyond connectivity to become ‘ecosystem orchestrators’

The drivers are well known: connectivity has now become a commodity; unlimited voice and data packages have squeezed margins; and hyperscalers have captured the value of the digital services built on top of the networks. Meanwhile, investment in infrastructure continues to grow – fibre, 5G, edge computing – without returns keeping pace. The result is a sector that invests like a utility but is valued by the market as a declining business.

The strategic response that emerges from the analyses and real-world examples is not merely a tweak, but a comprehensive rethinking of the business model. Telecoms companies are repositioning themselves as orchestrators of digital ecosystems, leveraging three distinctive assets that hyperscalers do not possess: the widespread geographical coverage of their networks, their direct relationship with millions of customers – both consumers and businesses – and their ability to ensure security, identity and compliance in regulated environments.

The sector is thus facing a radical paradigm shift: the network is no longer a finished product sold to the end user, but a set of programmable capabilities made available to an ecosystem of partners who build services for their own customers.

This repositioning is structured around various strands, which can be summarised into three main areas. Firstly, there is cloud and edge computing. Telecoms companies are building infrastructure distributed across the country, capable of delivering ultra-low latency for industrial applications, connected vehicles and augmented reality.

This is an area where they can certainly compete with the hyperscalers: the latter have centralised data centres, but lack the extensive network of points of presence close to the end user. Tim in Italia, Orange in France and Deutsche Telekom in Germany have all launched edge cloud projects aimed at the enterprise market, often in partnership with the major providers – AWS, Microsoft Azure and Google Cloud – whilst retaining control of the physical infrastructure.

In the field of cybersecurity, the rise in threats and regulatory requirements – including NIS 2 in Europe – are driving businesses to outsource their security. Telecoms operators have specialised operations centres, dedicated networks and certified expertise. The market for managed security service providers is growing at double-digit rates, and telecoms firms are positioning themselves as the natural providers for SMEs and the public sector, which lack the resources to build in-house capabilities.

Finally, there is the area of digital identity. The joint venture between the four major European operators on this project is merely the most visible example of a wider trend. Telecoms can verify users’ identities via their SIM cards, geolocate devices and authenticate transactions. These are valuable capabilities for fintech, e-commerce and digital advertising – sectors that are seeking alternatives to cookie-based tracking mechanisms.

The transformation is not merely technological. Nokia explicitly refers to a ‘cultural and commercial challenge’ that must be overcome. For decades, the telecommunications sector has operated in a vertical and protected manner: proprietary standards, long development cycles, and closed relationships with a small number of suppliers. The digital ecosystem works in the opposite way: open APIs, rapid cycles, and multiple partners who co-create value.

In its analysis of telecoms ecosystems by 2030, Detecon describes a future in which operators interact with dozens of different ecosystems, each with its own topology, its own specialist partners and its own governance rules. No longer a company selling a product, but a node that facilitates value flows between diverse players.

To achieve this, new skills are needed – software development, API management, data science – and a rethinking of business models. The shift from recurring subscription-based revenue to models based on usage, revenue sharing or transactions requires accounting and governance systems that many telecoms have not yet developed.

The most promising market for telecoms companies’ new positioning is that of businesses and the public sector. The consumer market is already dominated by hyperscalers and platforms; B2B and B2G (business-to-government), on the other hand, offer areas where telecoms companies can capitalise on their competitive advantages.

European public administrations are looking for reliable suppliers who comply with local regulations and can guarantee data sovereignty. American Big Tech firms are struggling to meet these requirements; national telecoms operators can respond with sovereign cloud offerings, managed services and dedicated connectivity. In Italia, TIM is one of the main technology partners of the National Strategic Centre for the Public Administration Cloud.

Businesses, particularly SMEs, need integrated solutions – connectivity, cloud, security, collaboration – that do not require in-house IT expertise. Telecoms operators can position themselves as a single point of contact for a comprehensive package of digital services, simplifying management and reducing integration costs.

The repositioning of telecoms companies as ecosystem orchestrators is underway, but the outcome is by no means certain. Hyperscalers continue to expand towards the network edge; software providers and system integrators manage relationships with enterprise customers; fintechs and digital platforms capture value in payments, identity and data.

Telecoms companies can capitalise on their unique assets – extensive networks, relationships with millions of customers, and the ability to operate in regulated environments – but they must learn to monetise them in new ways. Those who succeed in completing this transformation will be able to capture a significant share of the $100 trillion in value that, according to Accenture, digital ecosystems will generate over the next decade. Those who remain wedded to the traditional model risk becoming a low-margin utility, overshadowed by services built by others.