High-speed large-bandwidth networks and growth in rich internet applications has brought unprecedented pressure to bear on telecom operators. Consequently, operators need to play to the advantages of their networks, make good use of their large customer bases, and expand their business resources in service, platform, and interface. Network and customer resources should be integrated in order to create new business ecosystems. This paper describes new threats and challenges facing telecom operators and analyzes how leading operators are handling transformation in terms of operations and business model. A new concept called distributed intelligent open system (DIOS)—a public computing communication network—is proposed. The architecture and key technologies of DIOS is discussed in detail.