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Are Telecom Carriers Scared Enough Yet?

Telecom carriers from around the world came to Silicon Valley recently to talk to innovators. The occasion was TC3 2010, the third annual Telecom Council Carrier Connection get-together, put on by the Telecom Council of Silicon Valley. The purpose of the event was to let carriers tell innovators in the valley the kind of innovation they're looking for, and make contact with entrepreneurs they can work with. The big question is how serious the carriers are about pursuing the opportunities that innovators present. And the key to answering the question is understanding how desperate the carriers are.

Carriers presenting at the event ranged from dominant telcos to competitive mobile carriers. They included AT&T, Bouygues Telecom, BT, NTT DoCoMo, SingTel, SK Telecom, Sprint and Swisscom. Even the major wireline carriers focused heavily on wireless businesses. And all made the case that they were looking to embrace innovators and innovation. Most had clearly thought through in some detail what they were looking for. Some had lists of specific areas they were looking to partner in. A handful even had lists of things they specifically did not want to hear about.

The carriers also described a variety of concrete steps they are taking to further their involvement with innovators. AT&T, for example, is setting up innovation centers in Palo Alto, Calif.; Plano, Texas; and in Ra’anana, Israel. BT says it talks to 500 potential partners, further investigates about 50 of those, and launches three to five new services out of the bunch every year. Sprint is doing things like setting up a 3G/4G developers' sandbox, expanding its API portfolio, and supporting and managing a developer ecosystem, all with a particular emphasis on M2M applications. Swisscom says it can offer the entire country of Switzerland, where it is pushing IP to the edges of the network with FTTH and LTE, as a test market for potential partners. And SK Telecom of Korea holds out the lure of partnering in a market that has two world-class handset manufacturers as a way to compete with the iPhone.

Slides, lists and invitations are all nice, of course. But being eager to talk to and meet with innovators isn't enough. Staffing up with smart people who "get it" isn't either. Even setting up new facilities doesn't necessarily do the trick. After all, large companies can set up entire organizations that have little or no real influence, simply to appear to be doing something in a high-profile area.

The carriers that presented at the conference are clearly doing, not just talking. But what really counts is how urgently or even desperately they're doing it. To make innovation work, large carriers in particular have to feel as if their survival is at stake. And the bigger they are, the more threatened they need to feel. Otherwise they will find it too easy to coast along on their considerable strengths, such as financial clout, marketing dominance and "ownership" of the customer relationship, until it's too late.

When gauging such feelings, of course, the only possible judgment is subjective. And based on the presentations and general atmosphere at TC3 2010, here's a totally subjective, entirely visceral and utterly non-scientific verdict: The traditional telecom industry as a whole is about one-half to two-thirds as worried as it needs to be.


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