How digital identity is powering telcos' shift to ecosystems

Background and context

The telecommunications industry is at a pivotal crossroads. Traditionally centred around basic connectivity—whether mobile, internet, or broadband—telcos are rapidly evolving into digital service ecosystems encompassing everything from media streaming to financial services and home automation. 

As EY reports, 92% of telco CEOs view network-as-a-service (NaaS) models as a critical driver of growth, with the NaaS market set to reach an estimated US$6.7 billion by 2028. This shift reflects the need to tap into new revenue streams in a saturated market where competition is fierce and price hikes alone can no longer sustain growth. 

For telcos aspiring to lead in the digital ecosystem, the challenge lies in offering convenience, innovation, and trust, especially when competing against tech giants like Apple and Google. However, while these platforms set high expectations for seamless user experiences, they fall short in data verification.  

Platforms like Apple Wallet and Google Pay allow users to add unverified data, creating vulnerabilities for fraud and diminishing trust. Coupled with growing privacy concerns over how these tech giants use and store data, this opens the door for telcos to offer a distinct advantage. 

By leveraging verified digital identities, telcos can provide a higher level of security and authenticity that tech giants cannot match. This gives telcos the opportunity to build more reliable, trustworthy digital ecosystems that better protect users’ privacy and create lasting consumer loyalty.  

This blog looks at how telcos can use digital identity to stand out as they shift from basic service providers to full digital ecosystems, enabling them to enhance security, privacy, and UX.

European telcos face stagnant or declining average revenue per user (ARPU) as core services like broadband, mobile, and TV become commoditized, driving consumers to prioritize price and bundled value over brand loyalty. Saturated markets and aggressive pricing from low-cost carriers intensify pressure on incumbents, forcing a shift toward value-added services beyond basic connectivity.

Consumers no longer perceive providers based on the quality of the network alone. As more consumers shift to streaming entertainment over traditional cable, telecoms are seeing their relevance in the broader digital ecosystem diminish. In fact, 76% of cable customers said they are at least somewhat likely to switch to a tech provider, opting to rely on streaming entertainment services and wireless internet access. 

The growing popularity of Over The Top (OTT) streaming services like Netflix, Spotify, and Amazon Prime Video has shifted the focus of clients to bundled value—services that offer more than just connectivity. These platforms have successfully captured consumer loyalty by offering exclusive content, personalised recommendations, and seamless user experiences. 

For telecom companies, this presents a challenge: OTT players have set a high bar by offering attractive, cohesive ecosystems that integrate entertainment, content, and convenience. In contrast, telecoms still struggle to build similarly integrated digital ecosystems, which often lack the seamless, all-in-one experience to retain consumers. 

Alternatively, tech giants like Apple place their customer at the centre of their UX, which creates a personalised ecosystem with the Apple ID. This makes upselling and retention more intuitive for tech giants, which integrated connectivity, media, entertainment, and payment services into seamless, cohesive ecosystems.  

Telcos need the courage to break free from legacy systems that they have used up to this point, instead of using them as an excuse to avoid customer-centric change. Digital identity can be the key to making that shift away from siloed ways of working without compromising compliance or security.

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To successfully compete against Big Tech and digital-native service providers, telcos must rethink their traditional role. The next wave of growth lies in orchestrating entire digital experiences, owning the customer relationship and offering modular services that can flexibly integrate media, fintech, and IoT solutions.  

According to a survey by McKinsey, 55% of decision-makers believe that to stay relevant, telcos operators must prove they are not just resellers but true integration partners, offering end-to-end solutions as a key aspect of their value proposition. 

A strong example of this shift comes from Turkcell, Turkey’s leading mobile carrier. In 2018, it delayered its business model, shifting beyond traditional telecom services towards a growing into an ecosystem orchestrator for B2C and B2B sectors. Turkcell spun off its portfolio of digital services into standalone platforms, including business messaging, entertainment, fintech, cloud services, and other enterprise solutions. By 2021, these newly independent units had already generated $150 million in revenue, contributing to 8% of the company’s total revenue.   

In the EU, Proximus Pickx bundles multiple streaming platforms into one package (e.g. Netflix, Amazon Prime, and others), offering users a single touchpoint for content consumption. Similarly, Deutsche Telekom is leading the charge with MagentaTV, which bundles streaming services, while also making significant investments in smart home platforms, further solidifying its role as a central player in the digital ecosystem. 

Telcos can go beyond traditional communications, data, and TV bundles by collaborating with external partners to offer integrated services that meet a wider range of customer needs. Rather than relying solely on in-house offerings, telcos can partner with providers in areas like digital security, cloud storage, and smart home automation to create more comprehensive service bundles. 

For example, Vodafone UK has partnered with NortonLifeLock to provide cybersecurity services as part of its mobile and broadband packages, allowing customers to benefit from NortonLifeLock’s advanced security features, such as antivirus protection, identity theft protection, and secure VPN services. 

Telefónica in Spain partners with local and global tech companies to offer cybersecurity services and smart living solutions through Telefonica Tech, including advanced threat detection, firewall protection, and malware prevention for both personal and business customers. Telefónica also provides secure cloud services, network security solutions, and IoT security.

To boost competitiveness and digital capabilities, telcos are partnering with Big Tech—like Deutsche Telekom’s expanded collaboration with Google Cloud to deploy RCS Business Messaging across Europe. This upgrade to SMS enables secure, app-like interactions within native messaging apps, offering verified IDs, media sharing, and real-time features. By leveraging Google’s scale, Deutsche Telekom positions itself as a trusted alternative to OTTs like WhatsApp while unlocking new enterprise messaging revenue.

Additionally, Deutsche Telekom's T-Systems and Google Cloud have deepened their partnership to deliver sovereign cloud services for German enterprises, public sector, and healthcare organizations. This collaboration combines scalable public cloud capabilities with strict data sovereignty and regulatory requirements. 

Boost user experience and simplify compliance with verified digital identity

Trust is fast becoming a major differentiator for EU telcos as they compete with Big Tech companies to be the preferred ecosystems for customers seeking end-to-end digital experiences. In a digital economy where personal data is currency, being the provider that consumers trust most can unlock new revenue streams, higher retention, and a more resilient brand reputation. 

While platforms like Apple ID and Google accounts offer convenience, they rely on self-declared or loosely verified information—making them vulnerable to fraud, account takeovers, and cybersecurity threats.  

Unlike tech giants, telcos are legally required to verify their users through KYC processes using official identification documents. This means that they already hold verified digital identities—an asset that can be leveraged as a unique selling point. More than merely centralising logins, telecoms can leverage digital identity frameworks that prioritise security, trust, and compliance from the ground up. 

Additionally, in recent years, companies like Meta, Google, and Amazon have faced mounting criticism and regulatory action over issues ranging from opaque data practices to unauthorized use of personal information.  

Big tech platforms are commercially driven, aiming to capture as much user data as possible and to build dependency around their ecosystems. In such contexts, compliance often comes second to growth. Therefore, telcos have a unique opportunity to position themselves as more transparent and privacy-conscious than Big Tech, especially in services like messaging, cloud storage, or identity verification, where consumer trust is crucial. Ultimately, the ability to build and maintain trust gives telcos a strategic advantage over Big Tech players that face entrenched scepticism.

As telecom operators expand beyond connectivity into digital ecosystems—including streaming platforms, fintech apps, and smart home services—identity is emerging as both a strategic advantage and a critical challenge. To stand out in this crowded landscape, telcos must ensure a frictionless, secure user experience across all bundled services. A unified, verified digital identity is key to making that possible. 

In 2017, digital identity platform itsme^® was developed through a unique collaboration between Belgium’s leading telecom providers and major banks, recognising the critical role digital identity would play in safeguarding the digital economy. For telcos, it was not simply about enhancing convenience, but about taking responsibility for secure, reliable access to digital services. 

• Enhancing UX: By integrating a secure, interoperable identity framework, telcos can eliminate fragmented user interactions and enable seamless access across multiple services. Managing multiple logins and passwords is a known pain point for users. Digital identity platforms allow telcos to introduce secure, passwordless logins with built-in multifactor authentication. For example, Belgian telco Proximus uses itsme^® digital ID platform to let customers log in, manage subscriptions, and verify their identity without relying on traditional credentials or manual checks. 

• Personalisation: The streamlined access made possible through digital ID has practical upsides. A family, for instance, can manage devices, adjust data limits, and control content—all from a single interface. Unified digital identity also supports role-based access, allowing telcos to offer tailored bundles for groups like students, small businesses, or households. 

• Customer service: Digital identity can also resolve long-standing customer service issues. Many telcos struggle to authenticate users efficiently—especially during support calls—leading to frustration and delays. A verified identity solution allows secure, instant authentication, cutting support friction while protecting user data. 

• Security is another major win. Telcos still rely heavily on outdated methods like SMS for two-factor authentication, which are no longer secure. Verified digital identity offers a more robust alternative—linking authentication to multifactor authentication and official ID documents rather than vulnerable channels. Unlike traditional login systems, digital identity platforms like itsme^® verify a user’s identity using official documents and biometric checks—enabling secure onboarding in just minutes, without compromising on compliance. 

• Compliance: In addition, a verified identity enhances data portability and consent management. Telcos can maintain consistent user preferences across services while giving customers greater control—a key benefit in an EU context where GDPR and eIDAS 2.0 demand high compliance standards. Big tech platforms are commercially driven—they aim to capture as much user data as possible and build dependency around their ecosystems. Digital identity tools like itsme^®, however, we have no commercial stake in user data, which makes them committed to providing a compliant, privacy-focused solution. Such platforms advocate for data minimisation, protecting the user’s privacy by design.

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