Addressing the Telecom Innovation Deficit

• Build a dedicated team to help investment portfolio vendors to succeed. For example, shepherding them through the multiple internal groups and processes necessary for success.

Innovation Processes

The critical nature of telecom networks creates a very high barrier to entry. Typically, a year or more of lab tests are conducted before limited field trials, and two or three years may elapse before any reasonable deployment contract. Diminishing participation by smaller vendors coupled with industry consolidation and geopolitical pressures have significantly reduced vendor diversity, thereby diminishing competition in the sector. This is compounded by telecom operators cutting core R&D spending and delegating innovation to a few large vendors who wield immense influence and continually seek opportunities for lock-in. Telcos should:

• Disaggregate architectures away from monolithic or single-vendor solutions; commoditize where possible and drive innovation in areas that add business value.

• Openly publish (and keep up to date) system architectural and functional models, which enable vendors to identify areas where they can contribute innovative new products.

• Clearly indicate new technology innovation requirements in RFI and RFP documents.

• Remove onerous legacy feature requirements for new vendors, and work to understand what minimum viable product unlocks the value of the new solution or vendor.

• Allocate funds to pay for lab and field trials with new vendors on an annual basis.

• Create a shared testing lab open to start-ups to accelerate testing in a realistic network set-up. The lab should be funded by government-telco partnership.

• Define clear decision gates to drive new technology from lab to deployment over a fixed time period; for example, from lab to field trial within one year and deployment within two years.

• Work with new vendors to innovate in all the telco silos (such as operations, support, finance, marketing, and so on).

• Where risks are perceived to be too great for a small vendor who has been successfully evaluated, offer to take appropriate fair patent licenses on the technology, whether the less risky alternative is an internal solution, or a solution purchased from an alternative vendor.

• Offer prepayment for requested features that require additional development.

Competition

There is not a level playing field for small vendors. Large vendors have large teams on each account and engage multiple telecom operators to identify common requirements, or influence technology choices to minimize product variants and achieve economies of scale. Telcos also demand long-term R&D engagement and participation in standards development, open source and other organizations, as well as insisting on proof of concepts which the telco is often unwilling to pay for. Telcos should:

• Identify technology, solution and business areas that require innovation and make public calls for new vendors and products linked to investment cycle and indicate budgetary spending. This also gives VCs a heads-up that the telco plans to spend money in this space.