Spotlight on Tech

Four strategies to support a thriving telecom startup ecosystem

Azita Arvani
North America, Rakuten Symphony
June 8, 2023
minute read

Recently, I had a great discussion with some distinguished industry colleagues about RAN Intelligent Controller (RIC), its benefits and how we can bring that power to telecom faster.

A big part of unlocking the power of RIC is around leveraging third-party innovation via xApps (near real-time scenarios) and rApps (non real-time scenarios) in radio networks. While developing a RIC framework and designing open and interoperable interfaces have rightfully enjoyed tremendous efforts from some of the industry’s brightest minds, creating a blueprint alone is not enough. For RIC to succeed, we must also create an environment for xApp and rApp developers to thrive in. And that goes beyond RIC and across the board for the industry. For telecom to transform, we need to make it easy for the new blood to run in our veins.

Telecom hasn’t always provided the friendliest of atmospheres for welcoming external innovation. In particular, startups have continuously encountered formidable challenges introducing new tech into the industry. This is in spite of the vast potential upside that exists as competition grows ever more fierce. Having worked closely with global operators, prominent vendors and compelling startups, I've had a front-row seat to the struggles startups face as they navigate the complexities of driving demand within major operators and establishing a channel to sell to them. This is bad for startups and bad for the operators, especially as speed emerges as the most consequential competitive edge.

There is hope for improvement. In my current role as CEO, North America of Rakuten Symphony, I have seen proof of a more successful approach. As telecom attempts to move confidently into a world defined by 5G, open RAN, RAN Intelligent Controller and cloud-native technology, now is the time to improve how we work with startups to foster a robust ecosystem that will attract a diverse set of vendors and technologies that will help the industry accelerate transformation.

2G thinking in a 5G world

It is an inconvenient truth that even current 5G network deployment strategies remain rooted in antiquated mindsets reminiscent of the bygone 2G era. In other words, operators are simply not optimized to collaborate with lean, nimble players. Instead, new technology is predominantly acquired through vertically integrated, vendor-locked stacks. For a startup attempting to break through, it must jump through a series of hoops to sell its solution to an operator and then convince the operator's chosen vendor to integrate its technology. This process can be arduous and fraught with challenges, hindering progress and limiting success.

It usually begins with startups engaging in demand generation with operators as they subject themselves to rigid contractually terms and rigorous evaluation processes that can span years. If they actually succeed in gaining buy-in from the right internal audiences, they then have to figure out how to integrate their tech into the operator’s network. In this channel creation phase, they’ll typically partner with an established vendor that serves as a conduit to the operator. These vendors will do the integration at the operator’s request, but they’ve also got their own business interests to consider so will proceed with caution.

Keep in mind, significant time has passed, and energy expended, and even by this point there usually has not been any financial reward for the startup. These long cycles with little or no revenue is one reason VCs can sometimes be reluctant to invest in startups targeting telecom. This is suffocating innovation at a time it’s needed most.

Strategies to foster startup success

It is time for operators to embrace an entirely new paradigm in fostering startups and cultivating indispensable innovation. By fostering strategic partnerships, Rakuten Mobile has helped usher in the beginnings of a paradigm shift. Through nurturing a thriving startup ecosystem, it has successfully built and powered the world's largest open, cloud-based telecom network. It's a testament to the immense potential that lies within collaborative innovation.

With this in mind, I offer four strategies toward a supportive telecom startup ecosystem.

1) Break free from prolonged sales cycles

It is time to embrace a more efficient approach where we don’t hand off startups to large vendors for time-consuming integrations. We must find ways to streamline the three to five-year sales cycles. Operators can achieve this by establishing direct channels of communication between startups and decision-makers within their organizations. This allows startups to engage in meaningful discussions, practical technology integrations and an expedited sales process. Additionally, stakeholders can develop dedicated programs or incubators tailored to supporting startups, and providing them with resources, mentorship and networking opportunities. While many forward-thinking operators have attempted to establish a direct channel, it is imperative that we transition towards a more institutionalized paradigm rather than an ad-hoc process.  

2) Foster true partnerships with startups

To fully harness the immense value that startups can bring, stakeholders must transcend transactional relationships and cultivate authentic partnerships. When identifying innovative solutions that can enhance network and business operations, stakeholders should exert additional effort to simplify the integration of startup technologies. This entails avoiding onerous requests for proofs of concept, exhaustive audits and time-consuming business reviews that hinder overall progress. Instead, it is essential to streamline traditional processes adapting to startups’ strengths and limitations, while maintaining a realistic perspective of their organizational capabilities.

By treating startups as genuine partners rather than traditional vendors, stakeholders can foster an environment of meaningful engagement and shared success.

3) Make an investment

It is paramount for stakeholders to make strategic investments in startups. By doing so, telecom can foster innovation, drive economic growth and cultivate a vibrant entrepreneurial ecosystem.  

In today’s model, stakeholders often expect startups to provide technology or services for free or at minimal cost, resulting in significant financial strain. Instead, stakeholders ought to acknowledge the value that startups bring and their financial limitations. Stakeholders can extend support through various means, such as making financial investments, offering early contributions to revenues, or even acquiring an equity stake in the startup. This proactive approach guarantees that startups are equipped with the essential resources to operate smoothly, scale their solutions and deliver remarkable outcomes.

By providing the needed support, stakeholders enable startups to thrive, unleashing their full potential that can directly impact the bottom line and ensure beneficial outcomes for all parties involved. This will also serve as a catalyst to instill greater confidence within the venture capital community regarding the telecom sector. Consequently, it will fuel a virtuous cycle of investments targeted toward telecom innovations, further driving the progress and transformation of the industry.

4) Empower startups with dedicated champions

Stakeholders can maximize the potential of engaging with startups by harnessing the invaluable support of dedicated champions within the organizations. Identifying individuals who can guide startups through organizational processes and norms ensures a smoother and more productive collaboration.

Dedicated champions play a pivotal role in establishing clear and effective communication channels with startups. They help identify specific teams that startups will collaborate with, obtain access to required material (e.g. API and development environments), adeptly navigate any potential roadblocks and ensure a seamless flow of work. They can also work with startups to define and monitor key performance indicators (KPIs), which serve as metrics to evaluate progress and measure success.

Furthermore, these champions provide essential continuity, ensuring smooth transitions in the case that organizational roles or responsibilities changes. The commitment from champions builds a strong foundation of support and trust for startups to thrive and succeed within the organization.

Defining win-win outcomes

To achieve successful telecom transformation, it is imperative to speed up the pace of innovation, quickly moving beyond theoretical concepts and translating them into practical implementation.  

Startups serve as a vital engine for innovation, propelling the industry forward with their new ideas and dynamic approaches. Leveraging the innovation power of startups requires an environment that minimizes barriers and facilitates seamless integration of startups into the telecom industry, enabling them to efficiently and swiftly deploy their solutions within networks.

It is crucial to reassess and adapt our traditional approaches to working with “vendors”. We must be open-minded and receptive to new ideas and innovative approaches that emerge from the vibrant startup community. By embracing fresh perspectives and novel ways of doing things, we can cultivate a dynamic environment that promotes collaboration, fuels creativity and propels us toward an environment of mutual success.

How can telecom move forward and build a thriving ecosystem? Rakuten Mobile and Rakuten Symphony’s success on this front has been possible in part because of its engagement with innovative startups that have brought a new, fresh approach to an industry that has so desperately needed it. By embracing and implementing the strategies outlined here, operators worldwide have the opportunity to embark on an extraordinary journey of innovation. Collectively, we can fuel the seamless integration of startups into the telecom industry, unlocking an unprecedented wave of transformative advancements.

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