New-age telecommunications startups are gaining market share from traditional telecoms by combining technology, operational efficiencies, and customer-centric approaches. Let’s explore how and why.

1. Cloud-Native Infrastructures

Startups:

• The majority of startups have cloud-native architectures.
• Startups build networks using open-source tools and platforms with a long-term, viable, scalable infrastructure and low CAPEX.

Traditional Players:

• Traditional players have legacy infrastructures (switches using hardware).
• Traditional players see the value added of migrating to virtualised and software-defined networks, but the complexity, sunk cost, and legacy infrastructures inhibit migration.
• Traditional telecom players will have to buckle down because new-age startups have new infrastructure and rapid adoption; in fact, the clients are now preferring new startups for their products.

“The main advantages of startup companies are rapid service delivery, less complexity, cost competitiveness, and increasing adoption.”

2. Agility and Speed to Market

Startups:

• Startups iterate very quickly because they use agile methodology.
• These startups introduce some services like eSIMs, VoIP or private 5G networks in weeks, while traditional players could take months.

Traditional Players:

• In general, traditional players take more time to complete the cycle.
• For traditional players, decision-making, approvals, internal bureaucracy, and compartmentalizing decision-making limit agility and product speed to market.

3. Partnerships & Ecosystem Plays

Startups:

• Startups leverage ecosystems (API-first platforms, developer-first tools).
• Partner with OTT apps, IoT players, and other cloud providers (e.g., Twilio, Helium, 1NCE).

Traditional Players:

• Traditional players are competing (even to some degree, trying to monetize) with digital-native players rather than partnering with them.
• Traditional players operate in closed ecosystems with limited ability to innovate.

4. Customer-Centric Models

Startups:

• Startups offer straightforward, digital-first user experiences.
• AI/ML-based proactive customer service, churn prediction, personalization from core data.

Traditional Players:

• Legacy CRM platforms and call centres and as a result, are typically not capable of providing seamless digital onboarding or self-service apps.

5. Disruptive pricing and business models

Startups:

• Freemium, usage-based pricing, flat-fee unlimited.
• Innovating business model: Decentralized wireless (DeWi), community-owned infrastructure, etc.

Traditional Players: 

• Pricing models contain hidden fees.
• Flexibility in Pricing is upsent.
• Still relying on bundles and long-term contracts.

6. Focus on niche and underserved markets.

Startups: 

• Targeted specific needs: IoT connectivity, rural broadband, enterprise private networks, etc.
• Illustrative examples: Starlink, Hologram.io, BeMobile.

Traditional Players: 

• Mass-market consumer segments.
• Slow to invest and high-risk markets.

7. Lean cost structures

Startups:

• Little to no overhead in cost structures.
• Not paying for retail stores or legacy workforce-related issues.

Traditional Players: 

• Large unionized workforces and associated costs of physical infrastructure give them a much higher cost structure. 

8. Automatic Pricing structure

Startups:

• Thousands of payments per minute.
• No hidden charges.

Traditional Players: 

• Paper based Billing system.
• Chances of human error.
• Time consuming.

Examples of telecommunications startups:

1. Rakuten Mobile (Japan): fully virtualized 5G network.

2. Helium: Decentralized wireless network.

3. 1NCE: global IoT connectivity with flat-rate pricing.

4. Giffgaff (UK): community-owned MVNO.