Funding the Future: Tech Incubators

By: Jesse Cryderman

Communications service providers (CSPs) have a tough road ahead. It is no secret that their legacy revenue models have taken a big hit and they are being outmaneuvered by low-cost over-the-top (OTT) players. In telecommunications, Skype, Facebook/WhatsApp, Google Voice and Google Chat, Viber, and others have pushed the cost of voice and messaging down to zero. In video, Netflix, Hulu, Amazon Prime, YouTube and a host of other competitors have had a similar impact on premium content monetization. The arrival of direct-to-consumer options like HBONow has further fragmented the revenue model for MSOs, as consumers can now purchase a la carte from outside the walls of the cableco. None of this is breaking news. The question is: how can these organizations transform themselves quickly in order to remain relevant and profitable?

If you know anything about animals, you know that the big ones move slowly. This is one of the biggest challenges facing CSPs today. By their very nature they are slow moving creatures. In part, it is due to the their history as highly-regulated and oftentimes government-controlled providers of critical communications. In part, it is due to their organizational structure, typically driven from a focus on engineering (or over engineering, some might say). Lastly, the nature of their evolution plays a large role--large CSPs are the result of many years of mergers and acquisitions, and this creates a complex web of back-office systems, network infrastructure, disparate front-facing systems, and vast organizational hierarchies. This is what CSPs are working with, and it is not going to change anytime in the near future.

In this environment, typical project cycles stretch from 12 to 18 months. This is an eternity for the cloud generation, and cannot keep pace with Amazon, Facebook, Google, or Apple. CSPs have increasingly looked outside their own walls for answers. Enter tech incubators. By funding and leveraging small, external groups for research and development, CSPs can compete with Silicon Valley and attain a level of agility that is impossible from within their own organizations. Here are some shining examples from leading operators:  Orange Silicon Valley, AT&T Foundry, and Telefonica Open Future.

Orange Silicon Valley

Everyone knows Orange, the multi-national network operator with more than 236 million customers, but few know that Orange has had a presence right in the heart of Silicon Valley for the past four years. The division, aptly named Orange Silicon Valley (OSV), serves as a home base for research and development, start-up acceleration, partner collaboration, and networking with the region’s leading disrupters.

Each year, OSV engages with more than 500 companies through its Orange Fab startup accelerator and Orange Institute. OSV calls itself a “guide to the digital revolution,” which might be more than a pat on the back when you consider the projects they are funding. OSV is currently pursuing innovation in such cutting edge areas as cryptocurrency, the Internet of Things (IoT), artificial intelligence, digital enterprise, network virtualization, next-gen networks, and machine learning. As for who OSV targets, the company breaks this down its into four categories in its own words:

  • Seekers: We look to the ecosystem of Silicon Valley to meet new ideas and to inspire others. We expect the unexpected, and embrace the unavoidable as quickly as possible while preparing for the next wave on the horizon.
  • Collaborators: We spend our time in the Cloud, hacking new products from the Valley, evaluating them with test-beds and benchmarks, and crafting adaptations of disruptive technology for use in our networks and devices. SDKs, APIs, and frameworks are the tools all developers use, and we learn from the ecosystem by using these tools alongside them.
  • Participants: OSV experts participate in open source forums, test-beds, and benchmarks. We host events, support innovators and analysts in Los Angeles and the SF Bay Area, and maintain an active schedule of conference attendance throughout the year across the innovation center that is California.
  • Guides: We actively bring Orange senior managers, major customers, and European policymakers into dialog with the disruptor of Silicon Valley. OSV takes you behind the latest news and puts you in contact with the newsmakers before it hits the Web.
In the realm of thought leadership, OSV provides free access to heaps of research on concepts like big data, the "porous enterprise," and CEM. 


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