I wrote in a previous column, “Telcos at the crossroads”, that the telecom industry is reaching a junction where a direction has to be taken and that decision could be critical to its survival. It is becoming increasingly apparent that the move into digital services is the key signpost at the crossroads, but is it a viable, let alone safe, direction to follow?

Key industry bodies such as the GSMA, CTIA and TM Forum clearly believe it is. But do they really believe that and can they offer guidance, or are they merely following the trend themselves? After all, don’t they have the same DNA structure as their predominantly telco members or are they changing with the times?

For organizations such as the TM Forum and 3GPP that develop and manage standards, it is no easy task taking on digital services, which are often unstructured and apply relevant processes, business or technical, in a structured fashion. The new services are also a moving target. Unfettered by any legacy thinking, they change constantly to optimize the latest technology and customer demands.

All these bodies have established some form of “digital services” division that tries to attract the new digital economy players, with varying levels of success. Unless the digital service provider (DSP) sees value in being part of the CSP community, and many don’t, why should they bother?

I would hazard to guess that in due course they may have to, whether they like it or not. Just as the CSPs are trying to move closer to them, they will have to reciprocate, when they grow up a bit. You see, digital services are still young, just coming out of infancy and moving into the troubled juvenile years. But when they mature, they will see that process is no longer an inhibitor but a means of survival.

Let me explain. Coming up with a great idea is the key element to any new digital service, and whether it comes as a web-based service or a device app, it needs investment, know-how, viral take-up and lots of luck. The competition for mind-share is fierce, as it is for market share, which comes later. With success comes growth, and with growth comes the need for more investment in developers, hosting and marketing. Unless revenue from organic growth, assuming there is revenue, is adequate, then growth stalls and death follows.

Many, if not most, “digipreneurs” seem to be on an ego trip to come up with something unique and socially popular. Getting numbers of users or followers is the name of the game – revenues are often an after-thought. Of course, when growth comes into play and investment is required, the dynamic changes – investors expect returns.

As the emphasis moves away from numbers of people to numbers of dollars a very delicate balancing act starts. What attracted many to the fledgling free app or social media changes as they become laced with advertisements, purchase options and marketing, many of which detract from the original experience. What is even worse is that investors start to exert their own influencing by inputting their own “experienced” managers, accountants and marketeers to steer the DSP into the world of profitability and increased market value, usually to sell it off before its popularity, and resale value, start to wane.

In any case, growth and expansion require (even demand) process adoption of some form. No DSP can hope to survive massive growth without it. Look at the maturity path of almost all social networks and name one that has not had to adopt strict processes to maintain customer expectations and their own operational viability. Any failure of service from Twitter, Facebook, Google+, etc. immediately attracts massive press coverage and annoyed customers. Adopting processes and standards is part of growing up and the more mature they become, the more they depend on them.

I’m not saying that all DSPs are immature, just that some lessons previously learnt by CSPs could come in handy for them as they grow up. While many may fear that the chasm of age and maturity between CSPs and DSPs is too wide, those DSPs that understand the value of what has been learnt by CSPs may be more open to an ecosystem that includes both, rather than shunning them as dinosaurs heading for extinction. As I mentioned earlier, it’s going to be quite a balancing act – for everyone.

This article was first published in TelecomAsia, December 2012