Telecommunications companies around the globe are making bold moves to transition away from their traditional role as mere “dumb pipes” behind internet connectivity, seeking to position themselves as tech-driven innovators. At the Mobile World Congress (MWC) technology conference in Barcelona, several telecom CEOs outlined their ambitious plans to leverage emerging technologies like artificial intelligence (AI), next-generation 5G and 6G networks, satellite internet, and smart city initiatives.
Makoto Takahashi, president and CEO of Japan’s KDDI, discussed the company’s plans to build a smart city called Takanawa Gateway City in Tokyo. He also revealed plans to offer direct-to-cell satellite internet connectivity, in collaboration with Elon Musk’s Starlink venture. This strategy aims to bring innovative connectivity solutions to underserved regions.
Ralph Mupita, CEO of Africa’s largest mobile network operator, MTN, highlighted the company’s efforts to evolve beyond its traditional role in wireless connectivity. Mupita emphasized MTN’s significant investments in financial technology services, including payments, e-commerce, insurance, lending, and remittances. “The telco business has served us well. It has iterated since. But the future is really about the future of platforms,” Mupita said during his keynote. He added that MTN has also aggressively invested in media streaming and financial services as part of its strategy to diversify.
From ‘Dumb Pipes’ to ‘Techcos’
The telecommunications industry has been grappling with a shift in its business model, as technology giants like Meta, Google, Amazon, Apple, Microsoft, and Netflix have disrupted the landscape. These companies have thrived by delivering content directly to devices and creating seamless communication and cloud storage solutions—without having to manage physical infrastructure like telecom firms.
For decades, telecom companies have been seen as the enablers of Internet connectivity, often relegated to the role of providing the network infrastructure that supports Internet services. This perception has led to the use of the derogatory term “dumb pipes” to describe telecom firms. As competition in the tech space intensifies, companies in the telecom sector have been forced to rethink their business models and find new ways to stay relevant.
“I remember early in the industry, even before mobile internet when SMS used to be the killer app,” said Hatem Dowidar, CEO of UAE state-owned telecom company e&, according to CNBC. “We used to make messaging revenue. We used to make voice revenue. All this over the years got disrupted by over-the-top players, to the point that today, a lot of telcos around the world are reduced to being a pipe of packets just getting data across the networks. And competition is not staying still. They have the scale, they have the investment to go and disrupt even further.”
AI Becomes the Key to Transformation
To evolve from traditional telecom services to more tech-oriented platforms, many telecom companies are turning to artificial intelligence (AI). Ryu Young-sang, CEO of SK Telecom, explained how AI is being integrated to improve network efficiency, particularly in wireless communications. AI-driven solutions were prominently showcased at various telecom booths at MWC, highlighting the industry’s commitment to harnessing AI for both operational improvements and consumer-facing innovations.
While the concept of telecom companies transforming into tech platforms is not new, the recent surge in AI technology has accelerated this trend. Kester Mann, director of consumer and connectivity at market research firm CCS Insight, acknowledged that although he’s not particularly fond of the term “techco,” it reflects the growing importance of AI in the telecom sector. “AI can influence so many areas… and obviously that does play to that trend around telco to techco and operators positioning themselves more than just a connectivity provider,” Mann said.
The telecommunications sector is clearly shifting gears, with a renewed focus on leveraging advanced technologies to create more value for consumers and expand their roles beyond providing network infrastructure. As AI, 5G, 6G, and satellite internet continue to evolve, telecom companies are positioning themselves to become vital players in the tech ecosystem.
