Much has been written of the magic of Silicon Valley. Derek Kerton, Principal Analyst at Telecom Council of Silicon Valley here adds a unique perspective to highlight the industry’s incredible history in the innovation capital of the world, and share some measures of its growth.
It’s understood that the view from the highest point has the best strategic value – a 360° view offers constant visibility of surrounding activities, engagements, and threats. As innovation facilitators working as much with telcos and vendors as we do with startups, the Telecom Council is the highest point in Silicon Valley. We lean into all the innovation conversations, and share all the autonomized take-aways to help get more ideas to the market, faster.
A Brief History:
Telecommunication is a child of the Second Industrial Revolution – an era driven by scientific discovery that lasted from 1850 through the First World War. The era was characterized by a surge of innovation in all technological areas, including encoding and transmitting signals, and ultimately voice. Thanks to entrepreneurs like Edison, Tesla, and Bell, communications became the nervous system of commerce and fostered further economic development.
After this initial surge, through most of the 20th century, telecom innovation was notably slow. The only upside to the stifled pace of innovation was the rapid spread of the technologies that had been developed. Investments weren’t focused on new technology so much as new deployments and a land grab for customers.
This “too comfortable” pace was prodded somewhat by government in the 1980s. The slight increase in the competitive environments delivered payback. But outside of call waiting and voicemail, most innovation was taking place to score operational efficiencies in the core, with digitization of telephone exchanges and core trunk lines.
Innovation sped up a little more in the 1990s. UNE-P started emerging around the world, driving more competition for telecom service – not just long distance, but even local lines. Complacency was no longer an option.
At the same time, a separate revolution was rocking the world: the Internet had been born, not by telcos but by university researchers. It was new telecom service that disrupted the entire cozy ecosystem.
The telephone industry was set on a collision course with the high-tech industry.
By the turn of the century, the merging Internet and telecommunications industries had brought the rapid pace of Internet evolution to bear on communications services. Instant Messenger, email, mobile WAP. Broadband was displacing dial-up after just a decade. Always on consumers demanded more and more, and usually some startup popped up to give it to them.
Winners and losers came and went – existing services replaced by innovative new services that operated Over The Top of physical networks. Innovation was accelerating, but that innovation was not coming from the telcos anymore. What happened?
Well, while telecom was having its midlife doldrums, Silicon Valley was furiously inventing, testing, investing, failing, and trying again. So much so, that it became the global center of high-tech innovation. It seemed everything high-tech started from, or ended in, Silicon Valley – from database companies to server makers, and from networking companies to portals, of from dot-coms to search.
Because of the high profile of such ahem “sure-thing” startups as pets.com, the growing role of Silicon Valley companies in telecom went largely unnoticed for years. While startup companies were doing interesting things that would have long term impact on the telecom industry, their significant progress was just noise compared to the high profile booms and busts of dot com companies.
Silicon Valley’s break into telecom took place mostly under the radar.
When did the world finally take notice that Silicon Valley had taken an interest in telecom?
In 2007, Apple lit a fuse that exploded the industry-standard business model and people finally stopped to look. What they saw was a Silicon Valley that had become a global capital of mobile and telecoms innovation.
Today, the region is home to the two dominant smartphone operating systems, portal and search empires, powerful social networking companies; leading hardware, VoIP, and IP networking companies. The mobile app and the content industries are also prevalent, and new significant companies emerge every year.
There has been much said about why Silicon Valley is a hotbed of innovation, but let’s cut to the most important factor: the Valley is as ruthless to itself as it is to any roadblock in the way of progress. New companies are started here daily. Continuous disruptive innovation kills faltering companies as fast as new ones are born.
And that’s the world with which Telecom has now merged. Fast moving, ruthless, and willing to go Over Top of you if you don’t provide a better path.
Luckily for operators, there is a better path. No telecom operator wants to become a dumb pipe. But how does a telecom operator catch up, or even keep up with the pace of innovation?
Well, what we’ve seen at the Telecom Council of Silicon Valley is that, since 2007, there has also been a surge of progressive telcos setting up shop in Silicon Valley to capture and harness the regions innovation.
Carriers are shedding the Not Invested Here credo, and are aggressively seeking partnership with entrepreneurs. They use a combination of tools, such as scouting programs, incubators, VC relationships, venture funds, sponsorships, prizes, and PR.
Today, there are over 25 fixed, wireless, and satellite operators from around the world with offices in the Silicon Valley. All have common goals, but slightly different execution. The most successful Silicon Valley – based innovation programs have the same characteristics:
- Ability to openly discuss ideas
- A top-down commitment to innovation
- A systematic approach to innovation integration
- An empowered local staff
The operators also join membership in the Telecom Council of Silicon Valley, because we offer the tools to accelerate engagement between the operators and innovators.
Telecom is in a new era of insanely fast innovation and creative destruction. There are two choices: partner to move forward, or fall woefully behind.
Derek Kerton is Principal Analyst at Telecom Council of Silicon Valley- follow them on Twitter.
This post originally appeared on the Telecom Council Blog.
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