The Telecom Reformation: Breaking the Telco Industrial Complex
Inspired by "The Defense Reformation" by Shyam Sankar, CTO of Palantir
In the 1990s, following the breakup of the Bell System, telecom was a vibrant, competitive market. Yet, over the years, the industry consolidated, leaving a handful of major players—AT&T, Verizon, and T-Mobile—to dominate the landscape. This mirrors the 1993 “Last Supper” of defense primes, where the DoD orchestrated the consolidation of 51 major defense contractors into just five.
The consequences have been dire:
Vendor lock-in: Just as Lockheed and Boeing control defense procurement, Nokia, Ericsson, and Huawei, which is restricted in the U.S. but leads globally, controls the telco infrastructure, stifling competition.
Slow deployment: The U.S. lags behind China in 5G rollout, mirroring how slow DoD procurement has made America vulnerable in military technology.
Regulatory capture: The FCC, much like the DoD, favors legacy incumbents, making it nearly impossible for new entrants to challenge the status quo.
2. The Monopsony of Spectrum: Government as the Bottleneck
One of the largest barriers to telecom innovation is the monopolization of spectrum by government entities. Spectrum is auctioned off in a way that favors entrenched players, much like the DoD’s cost-plus contracts ensure that only a few defense primes can compete. This system:
Creates artificial scarcity, keeping prices high and innovation slow.
Blocks dynamic spectrum sharing, a model that could dramatically improve network efficiency.
Encourages hoarding, where carriers buy spectrum but do not deploy it effectively.
A market-driven spectrum allocation system, akin to the commercial space industry’s success in bypassing NASA’s sluggish procurement processes, is needed to accelerate telecom advancements.
3. Breaking Vendor Lock-In: Open RAN and Cloud-Based 5G
The legacy model of telecom infrastructure is broken. It relies on proprietary, vertically integrated solutions from a few dominant vendors. Just as the F-35 program is bloated and expensive due to vendor monopolies, Ericsson and Nokia have built a closed ecosystem that prevents new players from entering the market.
Open RAN (ORAN) and cloud-based 5G networks represent the SpaceX moment for telecom:
Interoperability: ORAN allows networks to mix and match vendors rather than being locked into a single supplier.
Cost reduction: Just as SpaceX reduced launch costs by 90%, cloud-based telecom reduces CAPEX and OPEX by leveraging commercial cloud infrastructure.
Agility: Software-defined networking (SDN) allows updates in real-time, unlike traditional hardware-driven telco models.
Much like Anduril is disrupting the defense industry with software-defined warfare, cloud-based 5G will disrupt telco by shifting network functions to agile, software-driven models.
4. The Role of Private Capital: Funding the Disruptors
The Defense Industrial Complex is being challenged by venture-backed startups (e.g., Anduril, SpaceX, Palantir) that build cost-effective, innovative solutions without relying on bloated government contracts. The same trend is emerging in telecom:
Rakuten’s Open RAN model in Japan is proving that fully cloud-based networks can be deployed efficiently.
AWS and Microsoft are entering telecom, offering infrastructure solutions that bypass the traditional telco model.
Decentralized networks (e.g., Helium, FreedomFi) are emerging as an alternative to carrier-controlled networks.
A Telecom Reformation must embrace private capital to fund the challengers rather than reinforcing the monopolies.
5. The Reformation: 10 Theses for Breaking the Telco Industrial Complex
End spectrum hoarding: Mandate dynamic spectrum sharing, allowing unused spectrum to be leased or allocated dynamically rather than being locked up by large carriers.
Break the vendor lock: Require Open RAN adoption in federally funded telecom projects to reduce reliance on proprietary, single-vendor solutions.
Encourage cloud-native 5G: Push for cloud-based telecom networks that allow software-defined upgrades, reducing reliance on costly hardware rollouts.
Decentralize spectrum access: Permit enterprises, municipalities, and alternative ISPs to own and operate spectrum, encouraging competition.
Abolish regulatory capture: Implement independent oversight of the FCC’s spectrum allocation process to prevent favoritism toward legacy incumbents.
Enable private investment: Remove barriers to venture-backed startups entering the telecom infrastructure market, mirroring the rise of private defense contractors.
Accelerate deployment cycles: Streamline regulatory approval processes for spectrum allocation, infrastructure permits, and network upgrades.
Encourage modular architectures: Promote a plug-and-play approach to telecom infrastructure that allows for rapid upgrades and component interchangeability.
Embrace zero-trust security models: Adopt modern cybersecurity frameworks that prioritize end-to-end encryption, decentralization, and user sovereignty.
Make telecom a national security priority: Recognize that telecom infrastructure is critical to national defense and economic sovereignty, requiring strategic oversight and investment.
Conclusion: The Resurrection of American Telecom
The Telecom Industrial Complex, like the Defense Industrial Complex, has failed to adapt to the realities of modern technology and competition. Open RAN, cloud-based 5G, and private capital-driven innovation are the forces that will reshape the industry. However, without a fundamental break from the legacy monopolies and regulatory constraints, the U.S. will continue to lag behind adversaries in critical network infrastructure.
As Shyam Sankar, CTO of Palantir, called for a Defense Reformation, we now call for a Telecom Reformation to resurrect the competitive, dynamic, and innovative American telecom industry.
We do this not because we oppose the industry, but because we believe in its potential. The time for incremental change has passed—revolution is now necessary.