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Why Does the Telco Industry Need to Change?

Over the last years the telecommunications market has been regulated on the basis of operating telephony services. Internet access has been added to this in recent years but it is still essentially linked to telephone line regulations.

While major societal changes have been happening, since the 1980s at least, very few policy changes were made around the telecoms industry to enable it to play a key role in these changes.

Key telecoms reforms in the mid- and late 1990s still refused to take a more multi-media—or perhaps what we now call a trans-sector—approach towards the industry. It appeared that the politicians, economists and bureaucrats involved in policy-making thought that the telecoms environment would continue forever in the same way that it had existed for a hundred years, and that other political and economic changes would not have any influence on it.

This all began to change with the arrival of the Internet, and, in fact, the Internet became the infrastructure that was used to facilitate the social and economic changes that were occurring in the broader society. The extremely rapid adoption of these new technologies was a clear indication that the market had been held back and that this was not a matter of lack of demand, as the incumbent industry continues to preach.

It is clear that the broader society and economy is now forcing change upon the telecoms industry, something they are not used to, as they have always taken a very inward-looking approach to their own affairs.

This inward-looking approach has resulted in the telecoms industry missing out on many of the new developments—the new digital media companies have taken the lead here, both in relation to fixed and mobile technology developments.

Even in countries where telcos are taking a leadership role in this (KPN in the Netherlands and Telstra in Australia) there remain many naysayers around them.

The industry is now facing the possibility of another debacle by denying the need for reform and a trans-sector approach towards the industry. This development, like the previous ones, will be unstoppable and other companies are already working on e-health, e-education, energy and a mass of other applications. A search on the Internet shows the extent of this movement.

Yet the industry and many directly involved with them are is kicking and screaming and claiming that there is no business case for this—just as they did for mobile data, SMS, Internet services, broadband access and so on.

Unless the industry starts to show leadership other ‘Googles’ will arrive to look after the tsunami of trans-sector services that will flood the telecoms infrastructure. Nations all round the world are facing healthcare, education and environmental crises and none of these can be solved without new ICT infrastructure developments.

A major concern is that the companies that don’t believe there is a business case for these services are at the same time the ones designing the infrastructure for this digital economy. Despite their reluctance to accept this new environment they obviously don’t shy away from designing it—they are engineers and designing infrastructure is what they love to do.

However, there is an urgent need for the new world to be created with the digital economy and the trans-sector approach in mind. We (as a society and not just the telco engineers) need to make strategic decisions about what we want to do with the infrastructure and then build it to facilitate those objectives. (See also http://www.buddeblog.com.au/nbn-co-bringing-us-to-the-next-stage/)

There is growing concern in the wider business world—including the healthcare and energy sectors—that the digital economy and the trans-sector approach are not being taken into account and that the new infrastructure will be designed according to the age-old concept of traditional telecommunications.

It is essential that the broader society and business community become involved in the design of this critical national infrastructure so as to ensure that their sectors can utilise the infrastructure to their own advantage, not simply to the advantage of the telecoms companies involved.

By Paul Budde, Managing Director of Paul Budde Communication

Paul is also a contributor of the Paul Budde Communication blog located here.

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