Delayering Telecom Operations: Embrace the New Rules Shaping the Future of Connectivity

As the telecom industry evolves, the concept of delayering is transforming the way operators manage their networks and deliver services. By separating the physical infrastructure from the service layer, telecom companies are unlocking new opportunities for efficiency, innovation, and competition. In this rapidly changing landscape, understanding the implications of delayering is essential to staying ahead of the curve.

Delayering – what is it?

Delayering in telecom is similar to how the energy and utilities industries operate today, particularly in electricity distribution.

In the energy sector, there’s a clear separation between the infrastructure—the power grid, which transports electricity—and the services—the companies that generate electricity and sell it to consumers. The power grid is often owned by a separate utility company that maintains the infrastructure, while numerous energy providers can use that grid to deliver electricity to homes and businesses. Consumers can choose which energy provider they want, but the physical infrastructure (the power lines and substations) remains the same, managed by a single entity.

Applying this to telecom, the fibre networks, towers, and other physical infrastructure are like the power grid. These are owned or managed by specialised infrastructure companies. Telecom service providers, like energy suppliers, don’t need to build their own infrastructure. Instead, they lease access to the fibre network and use it to deliver broadband, mobile, and other telecom services to customers.

This separation means that multiple telecom companies can offer services (like internet, TV, or phone) to the same household, just as multiple energy suppliers can provide electricity to a single home. The customer can then choose from different service providers based on pricing, quality, or additional services, without worrying about who manages the underlying infrastructure.

Different models

Delayering in the telecom industry can take several forms, each with its own implications for competition, innovation, and market dynamics. Here are three common approaches that are reshaping the way telecom operators and service providers manage their networks:

• Imposed by Deregulation
  In some markets, governments and regulators have driven delayering by enforcing the separation of infrastructure from service layers. Deregulation often compels incumbent telecom operators to open their networks to competitors, allowing them to access the infrastructure at regulated rates. This approach promotes competition by lowering barriers to entry for new service providers and encourages more innovation in services, as infrastructure access is no longer restricted to the original owner. A prime example is the European Union’s regulatory framework that enforces open access to legacy copper and fibre networks.
  

• Split into NetCo (InfraCo) and ServCo
  Many large telecom operators are voluntarily splitting their operations into two distinct entities: a NetCo (also called InfraCo) that owns and manages the physical network infrastructure, and a ServCo that focuses on delivering telecom services to consumers and businesses. This separation allows the NetCo to focus on maintaining and upgrading infrastructure, while the ServCo concentrates on customer experience and service innovation. For instance, Telstra’s creation of InfraCo and ServCo allows it to maximise the value of its infrastructure while enhancing service agility.
  

• Wholesale-Only Providers
  In this model, infrastructure is built and maintained by companies that do not offer telecom services directly to consumers but instead lease their networks to service providers on a wholesale basis. These wholesale-only providers operate fibre networks and other infrastructure, allowing multiple ISPs and telecom companies to offer services without having to invest in costly network builds. Examples of this approach include CityFibre in the UK and Siro in Ireland, where wholesale access helps foster competition and accelerate fibre deployment.

New Rules of the Game

Delayering is fundamentally rewriting the rulebook for telecom operators and service providers. As infrastructure is decoupled from service layers, the dynamics of competition, innovation, and operational efficiency are shifting. Here are the key “new rules” that are reshaping the industry:

• Infrastructure is No Longer a Competitive Differentiator
  In the past, owning network infrastructure was a major advantage, but with delayering, telecom providers can lease access to shared networks. This means that the real battle is moving to customer experience, service quality, and innovative offerings, not infrastructure ownership.
  

• Collaboration Over Competition
  Instead of building redundant infrastructure, operators are now collaborating with neutral infrastructure providers and wholesale network operators. The focus is on cost-sharing and efficiency, which is driving the adoption of shared infrastructure models, allowing for more widespread and faster network deployment.
  

• Agility Trumps Legacy
  With infrastructure separated from services, telecom companies can be more agile in launching new services. They are no longer tied down by the limitations of legacy networks. This enables faster rollout of innovations like 5G, edge computing, and IoT solutions without the burden of heavy infrastructure investments.
  

• Service Differentiation is Key
  As infrastructure becomes a shared resource, telecom providers must focus on differentiating themselves through tailored services. This includes flexible pricing models, specialised business solutions, and value-added services that meet the unique needs of different customer segments.
  

• Neutral Infrastructure Encourages New Market Entrants
  With the rise of wholesale infrastructure companies, the barrier to entry is lowered. Smaller service providers, niche players, and even non-telecom companies can now enter the market by leasing network access, increasing competition and offering more choices to consumers.
  

• Regulation and Open Access Models
  Governments and regulators are playing an active role in promoting delayering by encouraging infrastructure sharing and open access models. This is particularly important in extending high-speed broadband to underserved areas, creating a more inclusive and competitive market landscape.

How to get Ready?

• Define your sweet spot in the ecosystem and embrace partnerships with other players. This could enable you to expand your reach and capitalise on shared resources, driving both innovation and efficiency.
  

• Invest in your API capabilities to interconnect with other ecosystem players. This will allow you to deliver a seamless, streamlined experience for the end customer, encapsulating the whole ecosystem’s complexity.
  

• Focus on your unique service differentiation. This will enable you to stand out in a competitive market, offering tailored solutions that meet specific customer needs while leveraging the shared infrastructure.
  

• Modernise your back-office workflows and upskill internal teams to handle a more agile, software-driven, service-oriented reality.
  

• Consider investing in flexible, cloud-based solutions, simplifying rapid development and deployment of new services and seamless scaling as customer needs evolve

If you’re curious to learn how delayering is transforming the telecom industry or want to explore how your business can adapt to these new trends, our experts at Enxoo are here to help. Whether it’s navigating the complexities of infrastructure-sharing models or enhancing your service offerings, don’t hesitate to reach out to us for a deeper conversation. Let’s discuss how we can support your journey toward a more agile and competitive future in telecom.