cloudA new research report from ABI throws some water on the cloud, digital transformation, and IT opportunity fire for telcos. The research suggests that technology buyers continue to see connectivity as the principal value provided by telecom operators, with some vertical specific applications also of interest.

Over half (55%) of technology implementers expect to use telecom carriers for connectivity services only, looking elsewhere for cloud and digital transformation services, according to ABI. Thirteen percent do see telecom carriers favorably for ecosystem development with cloud, IoT, and IT services.

“While telcos aspire to soon become technology enablers for several end markets, more than half of the actual technology implementers surveyed show limited interest beyond basic connectivity,” says Dimitris Mavrakis, Research Director at ABI Research in a press release announcing the findings.

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There is an opening for services beyond connectivity, albeit a smaller one. Thirty-one percent of technology implementers see some vertical-specific opportunities that are layered on top of connectivity services. ABI refers to these opportunities as ‘Connectivty+’ and they include data and device management, security, and analytics, among others.

This view is somewhat confirmed with recent activity in the tier one carrier segment, with many larger tier one carriers divesting their cloud and data center assets. ABI says their research could only find 4% of technology implementers who plan to look to telcos for cloud computing services, a number that will decline to 1% in the next five years.

Cloud, Digital Transformation Opportunities
There is debate within the telecom industry regarding digital transformation opportunities, with most vendors pushing their telco customers to embrace the opportunity. ABI thinks telcos should tread cautiously, especially when this approach may compete with webscale heavyweights like Google, Amazon, and Microsoft.

“Competing with Web-scale companies in their own field is impossible for telcos,” said Mavrakis. “Implementer requirements and telco strategies seem to be disparate for the moment.”

While I may agree with Mavrakis on large scale enterprise opportunities, I tend to think there may be an opening for smaller scale cloud and transformation opportunities in the SMB segment with smaller carriers, particularly in smaller and more rural markets. SMBs are making some of these same cloud based transitions and it’s hard for Amazon AWS to scale down to their needs. Smaller telcos and service providers have great relationships there that could bear some fruit.

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