The telco services total addressable market (TAM) is projected to hit $1.49 trillion for 3.7% year-over-yar growth in 2025, according to Canalys. That sounds good, except when you consider IT services revenue is forecasted to growth 10.7% year-over-year to $1.75 trillion.
It is the relative lack of growth of telco services that is prompting Canalys to call for telcos to change their business models to include modern IT services. Canalys and others call this a Telco-to-Techco transformation.
According to a report by Canalys principal analyst Devan Adams, channel partners hold the keys to drive telcos towards a new go-to-market strategy to complete this transformation. The days are over where companies can profit just by selling landline phone lines and dial-up internet. Today’s telcos must give channel partners bundles, strategic support and improved sales tools to soar.
“Channel partners are essential in helping telcos transform into techcos, enabling them to operate more like big tech companies,” Adams writes in the executive summary of Telco Evolution: How Partners Help Telcos Perform Like Big Tech. “By formulating strategic plans based on their channel partners’ competencies, telcos can empower their partners to function as stimuli in their journey to operate and perform like big tech companies.”
Canalys research shows 80% of partners say they frequently bundle telco connectivity with IT solutions. That means telcos must offer comprehensive, integrated solutions to meet customer needs. The most commonly bundled IT services include UCaaS, cybersecurity, device management (RMM and MSM), cloud IaaS and PaaS and backup/disaster recovery. Most (55%) partners tell Canalys they prefer to buy IT and telco services from a mix of IT and telco providers. Two-thirds of partners sell telco solutions from IT distributors and technology services distributors (TSDs) such as AppDirect, Avant, Intelisys, Sandler Partners and Telarus.
Canalys highlights AT&T, China Mobile, NTT, SK Telekom, Telefonica, and Vodafone as telcos already transitioning to techcos by adopting software and platform-based models. These new models include a focus on AI, big data, and cloud services – high-growth services that can combine with telco connectivity to address specific vertical needs.
The journey from telco to techco requires contributions from six types of channel partners: TSDs/marketplaces, VARs, system integrator/aggregators, managed service providers (MSPs), ISVs and hyperscalers/cloud service providers (CSPs).
You can read the free Executive Summary here. And don’t miss: “Power Panel: The Channel Connection for Telcos” featuring channel execs Breanna Kuhl of Lumen, Shiraz Hasan of AT&T Business, and Jonathan Nikols of Verizon Business March 26 at Channel Partners Conference & Expo in Las Vegas.