Unlocking growth: How Australia’s telcos can find growth by revisiting the past.

It’s amazing what you find when you least expect it. Recently, after a busy week working with telco leaders on their businesses, I spent my weekend – like many other parents, I suspect – clearing out the garden shed with the kids. 

We were rummaging through rusty tools, cardboard boxes and flat footballs when one of my sons found a red, dusty relic in a dark corner. “Dad, what’s this?” he asked.

Neither of my children (aged 11 and 13) had any idea that they’d found a rotary telephone from yesteryear. They were bemused and amused as I explained how to use the receiver and the dial. (There’s nothing like having children to make you feel your age.)

Back in the office on Monday morning, it struck me that that old red contraption, and the network it had once plugged into, provided the foundation that today’s telcos and networks are built upon. The same need for connectivity still drives customer behaviour today, enabled by a similar network infrastructure (albeit cables in the ground and mobile towers in the air). 

This reinforced something I’d been thinking for a while: in this low-growth environment, where telcos search far and wide for growth, what if the biggest source of sustainable, long-term value is actually the core network infrastructure itself? In fact, with artificial intelligence increasing demands on the network like never before, could the core infrastructure become premium again?

Because if that is the case then a number of Australia’s telcos are beautifully placed.  

A couple of weeks later, I hosted a Telco Summit where my US colleague Matt Duffey neatly outlined where the telco industry is now, and what the future may hold.

Reflecting on the United States’ market, which has growth challenges of its own, Matt described how incumbent telcos’ search for new revenue streams (e.g. sports content, tech advisory, etc) hadn’t led to material growth and may, in fact, have distracted them from disruptive threats. 

Matt emphasised customer churn and the ease with which customers can now swap carrier providers. He pointed to aggressive pricing strategies and he warned of the possibility of big tech muscling into the market. 

Matt also highlighted emerging new connectivity via satellite internet, which is starting to make significant headway in the US. And the importance of connectivity and security to deliver the AI-powered experiences that consumers will quickly growing accustomed to.  

As Matt talked about the speed with which technology advancements (e.g. machine learning, deep learning, Gen AI) are disrupting existing business models, I thought back to that old rotary phone in my garden shed. If that is unrecognisable to an 11-year-old child today, then telco technology could be equally unrecognisable in another 11 years.

To keep pace with this array of challenges (and ideally outpace them), Australia’s telcos need to move fast too. To fully leverage their core networks in future, telcos need to act today: by reimagining what they are selling, who they are selling to, and how they are selling it.

In today’s industry parlance, ‘convergence’ involves bundling, with telcos seeking to own the customer relationship across multiple connectivity needs (e.g. wireless, home broadband, and even entertainment services). But in future, it’s going to take on a whole new meaning. 

Convergence will evolve into seamless connectivity in all locations across all networks. For telcos, the opportunity will be to supply broadband access across every device – not just for individuals but for entire households, families and organisations.

With their existing networks and infrastructure, Australia’s telcos could give themselves a head start in the race to provide such ubiquitous access. But they’ll need to evolve to leverage that capacity advantage and meet consumers’ preference for best-in-class broadband. 

It will require a relentless pursuit of new tech advancements, new partnerships, and new business models. Telco networks will need intel and flexibility to enable hyper-personalisation of offerings and tailored customer services. (For example, powered by GenAI, virtual agents could facilitate adaptable and personalised one-on-one experiences.)  

And of course, as service lines consolidate and converge, consumers will expect a bundling discount, putting pressure on telcos’ average revenue per unit and increasing the need to create customer value. So, telcos will need to provide value-added services.

Rather than moving too far upstream of downstream, telcos might consider leveraging their core network capabilities in areas like data centres, which is a very close adjacent market to their innate connectivity expertise. After all, the demand for their proprietary data (and the insights that could be packaged up from this) is only going to grow in the years ahead.

Which brings us back to that old rotary telephone. After we had cleaned it, we brought it indoors, plugged it in and – to our amazement – it still picked up a dial tone from our analogue phone line. The original underlying connectivity still worked.

I’m taking this discovery from the past as a sign that points us towards the future. The foundations of the telco industry – its core infrastructure and connectivity – remains the most profitable part of most businesses. And by building out their network capabilities, telcos can meet the demands of emerging technologies and customers.