A turning point for the 3 big telcos and start-ups

The recent launch of the True Incube start-up programme means that all three big telecoms – AIS (InVent), DTAC (DTAC Accelerate) and True – are now in a race to get the attention of local tech start-ups to be in their start-up programmes. One can foresee several investment deals by these three giants in the future. What is going on with the telecoms? Why are they suddenly jumping into the tech start-up scene?

What is going on with the telecoms? Why are they suddenly jumping into the tech start-up scene?

Having been in the telecom industry for most of my career, I can’t help but empathise with all the telecoms. The telecoms, in conjunction with regulators, have spent decades deregulating and normalising the Thai telecom industry so it can be freely competitive like other countries. Even today, the process is still not quite complete. We have a system that is a compromise between the legacy concession system and the license system managed by the NBTC. The latest 3G-spectrum auction was the turning point that seemed to have lifted the yoke of concessions from the backs of the big three.

Now that they seem to be liberated from bondage, they suddenly find themselves in a strange new world – a world where their services, the ones they fought tooth and nail for, seem to be marching towards irrelevance. Consumers view mobile operators more and more like dumb pipes whose only role is to provide Internet bandwidth.

Consumers are now using LINE and WhatsApp instead of SMS and MMS. They are using Skype and Facetime to talk with each other instead of time-metered voice call services. And then there are Facebook, Twitter and all the latest cool apps they prefer to the services that our poor telecoms were promised will generate tremendous revenue and profits by their pricey equipment vendors.

No wonder they are turning all their attention to start-ups. They need new and innovative applications to breathe fresh life into their services or risk becoming commodity bandwidth providers.

No wonder they are turning all their attention to start-ups. They need new and innovative applications to breathe fresh life into their services or risk becoming commodity bandwidth providers.This represents a good opportunity for Thai tech start-ups …, or not. It all depends on how telecoms handle their start-ups after making an investment. A naive telecom will shove the start-ups they invest in into its traditional, hierarchical command-and-control, matrix-based organisation. Sooner or later, the creative drive of those start-ups will atrophy. The energy will be dissipated fighting the red tape inside a corporate bureaucracy instead of building creative new services.

The visionary telecoms, on the other hand, will learn from their portfolio start-ups and morph their culture to be more like the start-ups they acquire. They key success factor for the new telecom space will be the ability to churn out innovations that leverage their traditional strengths as fast as possible, before being made obsolete by those innovative guys from the Valley.

In a sense, they should be competing not so much against each other but against the other innovative online services across the Pacific. They need to make their services differentiated and relevant or risk becoming the “dumb pipe” like the traditional prophecy always says about the telecoms.

Posted on The Nation