China Mobile, NTT DoCoMo and SK Telecom have traveled furthest among a dozen of the world’s largest telecommunication operators on their digital transformation journeys, according to a recent report from Omdia, with results highlighting the ongoing challenge operators face in monetizing their vast network investments.

The analyst firm found that trio of Asia-Pacific-based operators beat out nine other global operators in showing progress toward embracing the oft-sought digital transformation journey that will allow them to better monetize their extensive telecom investments.

China Mobile scored 31 points out of an available 40 points in Omdia’s report, with the analyst firm highlighting China Mobile’s high-speed broadband platform; work with artificial intelligence (AI), big data and security; and digital services targeted at enterprises and vertical markets. Omdia also cited China Mobile’s ability to generate nearly 30% of its service revenues last year from “new digital services.”

Japan’s NTT DoCoMo was just behind China Mobile, scoring 30 points on Omdia’s scale. The operator was cited for “strengths in software and services, and in the enterprise market.” SK Telecom scored 28.5 points, highlighted by “new AI services … which it plans to launch around the world with other telcos.”

Spain-based Telefónica ranked a clear No. 4 in the report, bolstered by its cybersecurity and Telefónica Tech division that is focused on enterprise digital services. AT&T, e& (formerly Etislat) and Vodafone all garnered 26 points and a three-way tie for No. 5 on the Omdia list.

Matthew Reed, chief analyst for service provider strategies at Omdia, explained in the report that “a telco that has adopted the techco model successfully is a software-based organization that offers services in areas such as AI, big data, the cloud and IoT, and can implement digital transformation for specific vertical sectors.”

“Overall, the operators covered in the benchmark are making good progress toward a software-based operating model and with their development of enterprise digital services,” Reed added. “But their vertical markets focus is less advanced generally and is an area that needs more work.”

ABI Research late last year laid out what it sees as four steps telecom operators should make toward becoming techcos, steps it says they need to make “to survive.” From a high level, these steps include embracing 5G-as-a-service, investing in vertical ecosystems, digitizing network management and becoming active contributors to cellular innovation.

“The traditional telco business model must be reinvented,” Dimitris Mavrakis, senior director at ABI Research, wrote. “ABI Research sees a clear signal for mobile operators to increasingly deploy automated solutions to streamline operations, optimize resource allocation and drive cost efficiencies. At the same time, the big focus now for mobile operators is on added consumer services and enterprises in dire need of 5G connectivity for their digital transformation efforts.”

That work is becoming an increasing focus for operators as they look to squeeze a financial return on their 5G network investments.

IDC released a report late last year that predicts $3.9 trillion will be spent on digital transformation efforts around the world in 2027, however, only that firm’s European analyst cited telecommunication providers as being a driver for that spend in their respective region.

Dennis Hoffman, who leads Dell Technologies’ telecom systems business, sympathized with this challenge, noting that the telecom industry faces a number of unique challenges that make their digital transformation journey more perilous.

“I would say the big difference in telecom is that any change effort implies risk and in telecommunications it’s for very good reason one of the most risk-averse industries in the world,” Hoffman told SDxCental in an interview. “They are held accountable by law for being up and being reliable.”

Hoffman noted that while these concerns are legitimate, telecommunication operators need to continue to work with their vendor partners to surmount these technology challenges. This includes admitting to and putting efforts toward this change.

“It’s about time we acknowledge that we have to change. It’s no longer an option,” Hoffman said, adding that smaller operators have begun to show that this transition is possible. “Some of the larger operators are now starting to embrace this more in earnest and I think it’ll snowball from here because the question will be, ‘do I really want to compete with somebody that’s got this all figured out?’ … There is risk inherent in architectural change. I am in a very risk-averse industry, and pursuit of opportunity has not been significant enough a motivator to get over that fear. I think we’re getting to the point where, frankly, suppliers and operators alike are all basically deciding it’s time.”

Hoffman said that 5G deployments based on disaggregated architectures and cloudification have laid the foundation for these transformation efforts, but that operators now must take that next step in taking advantage of that new network architecture to support revenue-generating digital applications and prepare their networks for further advances.

“Since this is a heavy lift, you do not want to do your architecture transformation at the same time as you’re doing a new ‘G,’ you’d want to split them up,” Hoffman said. “You’ve got a new ‘G’ coming in about five years. … Now that the initial rollout of 5G is done, go clean up the underlying infrastructure architecture, get those applications fully virtualized and make the 6G transition a software upgrade instead of a hardware upgrade. We’ve got a really interesting window of time on our hands here.”