Telecom operators appear content to let industry vendors do the heavy lifting when it comes to research and development (R&D), spending drastically less in this category despite the touted promise of cloud-native 5G.
Telecom vendor Huawei notably spent more than $23 billion on R&D in 2022. A look at financial filings showed Ericsson spent roughly $4.6 billion (SEK 47.3 billion) last year while Nokia spent about $4.9 billion (4.5 billion euros).
Globally, there are a few telecoms who are major R&D investors, such as the U.S.’s AT&T or Spain’s Telefonica, but much of the industry reports little dedicated R&D spending, choosing instead to buy promising technologies that arise. Some consultants say the result for customers is that carriers are largely indistinguishable outside of network reliability.
Zeus Kerravala, principal analyst at ZK Research, told Silverlinings telecommunications companies have historically raced not to innovate, but to be cheaper than their competitors. That's led to cutting R&D spending to slash expenses more broadly.
"The big issue is that the only telco differentiator is price so they spend more effort on taking cost out of running the network than they do innovation which just leads to even less differentiation and the 'spiral of death' continues," he said.
Here's a rundown of who's spending the most – and least – on R&D today.
Biggest spenders
Nippon TT Corp. – $3.6 billion 2022
Nippon Telegraph and Telephone Corp. opened NTT Research in Silicon Valley in 2019 as an affiliated startup to take on basic research and advanced technologies, boasting a physics lab, an information security lab, and a medical health informative lab.
Broadly the company has claimed it spend more than $3 billion annually on R&D, with at least $1 billion appearing to be dedicated to telecom-related technologies. Within the industry Nippon is unique in creating its own technology startup within the US.
AT&T – $1.24 billion in 2022
The Dallas, Texas-based AT&T is a rarity in the telecom industry in how it boasts of its R&D spend as well as how much it dedicates to research.
The company has long been the industry leader: reporting more than a billion in R&D investment each year from 2020 to 2022. The company’s scientists and engineers take on research around IP networking, network design, network and cybersecurity, network options support systems, and data analytics, according to investor reports.
Most of the money is going to making AT&T’s network more reliable for customers, according to company filings.
BT – $747 million in 2021
BT Group, a London-based multinational telecommunications holding company, reported spending £604 million ($747 million) on R&D in their fiscal year 2022 (the 12 months ended March 31, 2022), according to company filings.
BT is one of the largest telecoms in the U.K.
Telefónica – $716.6 million in 2022
Spain’s Telefónica has seen its R&D spend drop steadily from about a $1 billion in 2020 to $716 million in 2022, according to company filings.
As a percentage of sales the investment in R&D in shrank to 1.6% in 2022 from 2.2% in 2020. Still, the company reported registering 14 new patent applications in 2022, most of them in Europe.
Like AT&T Telefónica's investments were dedicated to network reliability.
Orange – $632 million in 2021
Orange S.A., formerly France Télécom S.A., is a French telecom that like its competitors in Europe has gradually lowered what it spends on R&D over the years.
The company was spending more than $700 million per year from 2016 to 2018, according to company financial filings, but starting in 2019 started lowering that spend, down to $632 million in 2021. Compared to sales, that spend has never been high — never exceeding 2% of R&D spending as a percentage of total sales.
The budget conscious
T-Mobile – $121 million in 2022
T-Mobile is listed here with an asterisk – the company reported receiving $121 million in tax credits related to R&D last year but hasn’t outlined its total spend.
The company got $195 million tax credits in R&D and related spending in 2020. Like its competitors the company has injected millions into building out and securing its network.
Comcast – $104 million in 2022
Like T-Mobile, Comcast doesn’t list out its dedicated R&D spending on financial reports and doesn’t have a dedicated research entity like Nippon.
The company, however, reported receiving $104 million in federal research and development tax credits in 2022, down from $164 million in such tax credits in 2020.
Comcast’s annual report nods to the importance of innovation stating: “our businesses depend on keeping pace with technological developments.”
TIM – $58 million in 2021
Gruppo TIM—or just TIM—is an Italian telecom with a major footprint in Europe and Brazil.
The company reported spending more than $80 million on R&D in 2020, but it’s spend as a percentage of sales in recent years has never exceeded 1%.
Deutsche Telekom – $33 million in 2022
The German telecom is the largest of its kind in Europe but reports a small investment in R&D each year.
The company reports spending $33 million on “pre-production research and development, such as the search for alternative products, processes, systems, and services.
Verizon – Your guess is as good as ours
Like many in this space, Verizon doesn’t report a line item for R&D spending in its annual reports or financial filings. So the company appears to have no R&D spending.
However, the telecom giant has reported spending more than $23 billion on its network in 2021. The company has expanded its mobile broadband infrastructure and acquired C-band licenses with that spend.