A new report from TelcoForge reveals an industry grappling with fundamental contradictions that threaten its future relevance in the digital economy. Based on candid conversations with executives speaking under Chatham House Rules, conversation aimed to identify opportunities to solve fundamental challenges in the sector. However, the report paints a picture of an industry caught between conflicting demands and struggling to define a way forward as a result.
The telecommunications industry’s identity crisis runs deeper than many acknowledge. As one executive bluntly described it:
“Telecom’s a bizarre hybrid stepchild of capitalism.”
Neither fully market-driven nor entirely state owned, operators find themselves caught between competing demands for shareholder returns, consumer pricing, and critical infrastructure reliability.
This conflict manifests in devastating ways, not least in paralysing the telco’s capacity for commercial innovation. One industry veteran didn’t mince words: “For the most part, I don’t see the big operators as innovators at all. They couldn’t innovate themselves out of a paper bag if their lives depended on it, and it’s because they’re not set up for it.”
Pushmi-Pullyu
Telecoms providers work to provide a service which has become an essential underpinning of many nations. Questions of access, cybersecurity, sovereignty and more underpin countries’ continued wellbeing, and as such fall within the remit of government. The certainty of continued services and incremental improvement are fundamentals for national wellbeing and government agencies demand this.
However, telecoms providers are put into a competitive, commercial context. They are responsible to shareholders for quarterly dividends and for running at a profit. While shareholders welcome commercial innovation, they rarely welcome risk and have small appetite for spending today in order to benefit in several years’ time.
As a result, executives in many leading telcos struggle to enact major changes, especially if nobody in the industry has tried what they are doing before. They lead companies which, like the two-headed creature in Dr Doolittle stories, face in two directions at once.
As a result incremental innovation is often what executives find themselves able to manage, as one vendor CEO explained:
“I’ve been in top, top meetings with [operators] over the years. The agenda was exactly the same thing, it was highly incremental. It was quarter-by-quarter led. It was “What can we do now?” and it was all that classical language of “Where’s the low-hanging fruit?” If anybody else asks me where the low-hanging fruit is, I’m likely to launch them across the table, because if it was that bloody easy, we’d all have been doing it.”
Regulatory Straitjacket
The report exposes how legacy regulatory frameworks designed for monopoly-era telecommunications now stifle competitive innovation.
“We’ve abstracted the physical network from the service, which wasn’t the case before. And I think a lot of our current regulation is still locked in the days when the network and the service were the same thing. And today that’s no longer the case,” one executive noted.
Of course, this point might reasonably be made regarding some areas within the telecoms industry itself, where – for example – advertising claims are often based on network coverage compared to other companies. However, this regulatory lag creates particular challenges when technology intersects with critical services:
“There were two people that died in the UK because their telehealth system stopped working [during the 2024 switchover from analogue to digital communications]. It was very clear that they weren’t BT customers, but the government said that they need to be end-to-end responsible, so that all the things above the network carry on working.”
The result is confusion about accountability and responsibility, and ultimately this goes back to what a telco fundamentally is or does:
“There is a strangeness in the aspects of what the telecom industry is accountable for or not, and how much the telecom industry is an independent capitalist endeavour or a government institution to provide basic infrastructure.”
The sector’s struggle to define itself compounds the recruitment challenge. One executive captured this perfectly:
“If we can’t explain to ourselves what telecom is, how do you explain it to younger people?”
The Path Forward
The report outlines potential solutions across six critical areas: regulatory reform, workforce renewal, intellectual property modernization, structural industry transformation, competitive dynamics, and business model innovation.
Fundamentally, though, there is a question of what the telecoms industry wants to be when it grows up. Can it continue to answer to multiple masters?
Some executives envision disaggregated market structures similar to electricity markets, where infrastructure providers focus on network deployment while service companies compete on applications and customer experience. Since infrastructure has fundamentally different lifecycles for investment, equipment and build-out compared to services and applications – and different kinds of national security implications – this would allow fund-raising and competition in different ways.
Where current commercial models fail, we might see new forms of collaboration with the state taking place to strengthen infrastructure, either with state-supported enterprises or with new forms of collaboration. Within the 6G community today, and particularly at Europe’s SNS-JU, there is work ongoing to define “Key Value Indicators”, new metrics used in parallel with KPIs. While KPIs tell us about technical performance, KVIs would provide metrics on the societal and environmental benefits of choices for e.g. network rollout, upgrades or technology options.
Many people have shied away from talking about KVIs because technology is a more familiar conversation, but these might be the unsung hero of the development of 6G. While developing KVIs is a huge lift and fundamentally unfamiliar territory for the industry, they could effectively be used to mediate between the pressure for a business case and the pressure to support society. Showing the wider societal value of a new cell site, for example, may make the case for government supporting a cell which would not otherwise have a commercial business case.
Better basics?
This would arguably be a timely change. New services in, for example, consumer-oriented robotics will require AI inference at the edge if we’re not to be placing costly GPUs in end-user devices. For that, today’s connections will not be sufficient.
“Why is it not happening today? I think one of the reasons is that the performance is not there… The main issue is around the connectivity. There is no reliable service. We still don’t have universal coverage; latency still around 50 milliseconds; so there’s no business case for robotic platforms. Now this is the first thing, we need to have the basics in place.”
For people experiencing dropped calls or patchy service, a change of model might be welcome.
“I’m paying broadband -fixed broadband, 100 megabits per second – and my video feed is cutting out. It’s not working. Think of how in Australia I’m sitting in one of the most expensive areas in the world. I still don’t have reliable broadband.”
Change is, of course, thoroughly possible given the right enabling environment and approach. The rise of companies like SpaceX demonstrates what’s possible with different thinking. As one executive reflected:
“I would have never given Musk a 1% chance of doing Starlink five years ago, and he just built SpaceX, then he built Starlink and it’s up there working.”
The Choice Ahead
The industry possesses critical assets—infrastructure, customer relationships, technical expertise—but realizing their potential requires acknowledging uncomfortable truths about current performance.
The transformation won’t be simple or rapid but delay only compounds the existing situation. Within the industry, executives face a huge challenge: to identify what their companies are going to be, and then to galvanise support for change across stakeholders within the government and the boardroom.
The full report, featuring detailed analysis and strategic recommendations across all six transformation areas, is called “Forging a New Identity for Telcos” and is available at www.telcoforge.com/reports. For an industry at an inflection point, the insights from these frank executive conversations may prove essential reading for navigating the challenges ahead.
