Creating a Business Blueprint for Telco Digital Service Transformation

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By Reece Hayden | 3Q 2022 | IN-6636

Connectivity costs are falling and services are increasingly becoming more commercially valuable. Telcos are beginning to respond, but they continue to struggle given their skills deficit, culture, and infrastructure-focused investment strategy. PCCW Global is one of the few telcos to make the transition, effectively achieving this ahead of the curve back in 2017 with the acquisition and integration of Console Connect. Could telcos learn from this success story and leverage similar strategies to support their much-needed digitalization strategy?

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Stiff Competition, but Console Connect Has a Strong Value Proposition


In 2017, PCCW Global acquired the software platform and proprietary technology of Console Connect. Included within this acquisition was Console Connect’s brand, platform, and technology team working under its Chief Technology Officer (CTO), Paul Gampe. PCCW Global’s goal was to build a software-defined layer on top of its existing global connectivity infrastructure.

Console Connect competes with much more established software-defined interconnection providers, such as Equinix and Megaport, which have retained their leading positions in the interconnection market due, in part, because of their global scale and strong enterprise relationships. However, Console Connect’s unique telco background and ownership of the underlying network offers it a strong “go-to-market” differential moving forward, one that other operators should strive to replicate.

Unlike, other Mergers and Acquisitions (M&A) stories, the larger telco (in this case, PCCW Global) did not consume the small software player (Console Console), but instead successfully merged skills, identities, and infrastructure to form Console Connect by PCCW Global.

What Turned This Startup Merger into a Success Story?


Console Connect is much further ahead than other carriers, as the merger helped it pivot toward a digital service platform. Below, ABI Research explores the factors that made this merger a success:

  • Startup Acquisition: Not only did PCCW Global acquire a startup, but it also deeply integrated the technology, brand, team, and platform-agile working practices throughout its identity—Console Connect by PCCW Global. This had a significant impact on company culture by focusing closer on client-value creation and time to market.
  • C-Suite Integration: By making Paul Gampe CTO for both PCCW Global and Console Connect, the new entity was able to pivot strategy entirely. Gampe’s position as PCCW Global’s CTO underpinned the intention to focus on Software-Defined Networking (SDN) and pivot away from infrastructure.
  • Upskilling: Without rampant rehiring across the entire business, through the adoption of a Scaled Agile Framework methodology across the business and an extensive training program, PCCW Global was able to provide existing employees with the skills required to develop and manage software-based services, rather than just managed infrastructure.
  • Building on Top of Global Network Infrastructure: As opposed to other interconnection providers, PCCW Global owns the underlying transmission and Tier One Internet Protocol (IP) network infrastructure, which helps with messaging and a “strong value proposition.”
  • Remained Small and Software Focused: Unlike traditional telco models, Network-as-a-Service (NaaS) requires agility and flexibility to pivot toward new services to drive monetization. Console Connect remains at around 1,000 employees, all aligned around an agile culture and methodology.
  • Automated Cloud Interconnectivity: Early on, Console Connect sought to integrate with major cloud providers and develop automation to simplify multi-cloud support, driving cross-cloud connectivity. It focused on building deep relationships with cloud service providers and an extensive ecosystem of Software-as-a-Service (SaaS) providers to develop a different value proposition from established competitors (i.e., Equinix).

Where Should Other Operators Focus?


Telco digital transformation is complex and requires re-thinking, re-structuring, and re-skilling to transition from an infrastructure to a service provision model. Operators can learn a lot from Console Connect by PCCW Global, but to apply these learnings, ABI Research believes that telcos should look to transform three areas of the business (explored in greater depth in Network-as-a-Service: Business, Operational, and Technological Strategies for Telco Digital Service Transformation (AN-5602)):

  • Technology
    • Acquire or partner to build out a scalable cloud ecosystem with a software-defined networking layer. Must focus on providing application customizability through Application Programming Interfaces (APIs).
    • Build SDN on top of existing global networks to provide a resilient backbone.
    • Develop integrations and deep relationships with public cloud providers to provide multi- and hybrid cloud support for enterprises.
  • Culture
    • Develop a service focus that looks to innovate in order to provide additional services to clients.
    • Place problem solving and “consultancy” at the fore to build relationships and offer valuable solutions to customers.
    • Build structures around “go-to-market” and vertical use cases to attract enterprises.
    • Focus investment on services and underpin time to market.
  • Structure
    • De-silo and encourage a collaborative ecosystem.
    • Limit internal fragmentation by integrating hardware and software to develop end-to-end solutions.
    • Bring software expertise into executive positions and the c-suite to provide knowledge and build culture from the top-down.
    • Adapt Key Performance Indicators (KPIs) and compensation to reflect a new focus on services.

It may be challenging to acquire a startup as successful as Console Connect, but leveraging some adjacent strategies, such as integrating existing software-expert c-suite leaders, will ensure that the new business direction moves away from infrastructure and focuses on digital solutions.


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