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Icons of Progress
 

New Business Models for Telecom

IBM100 New Business Models for Telecom iconic mark
 

In 1986, the Irish telephone company Telecom Eireann began upgrading its network to digital technology. Customers were demanding digital networks so they could receive detailed phone bills—information that analog systems weren’t equipped to provide.

However, Telecom Eireann had a relatively new analog network, one that still had a life cycle of 10 years. Telecom Eireann was faced with a difficult decision: it could overhaul the network for the second time in a short amount of time, or let its current system finish its life cycle and risk losing customers.

Telecom Eireann reached out to IBM, which offered a third alternative. Working with Telecom Eireann’s engineers, IBM developed an innovative call-logging tool that could collect advanced data about analog networks. IBM modified the IBM ® PC XT to create a device called the Exchange Processor and installed it across Telecom Eireann’s analog network. The Exchange Processor gave Telecom Eireann the ability to meet customers’ needs without completely dismantling its existing infrastructure. The solution also offered IBM the opportunity to use its strengths—technology and analytics—to make telecommunication systems work better. By shifting just a small portion of its IT management to IBM, Telecom Eireann maximized the value that its infrastructure offered its business and customers.

Today, IBM is a leader in telecommunications infrastructure management. It has tackled nationwide systems in emerging and established markets. In India, cellular telecommunications company Bharti Airtel wanted to focus resources on growing its business by expanding its network, strengthening customer relationships and offering innovative pricing systems. However, in a fast-growing and competitive market, the company was spending precious time in managing its back-end systems. In 2004, Bharti and IBM came up with an innovative business model under which Bharti outsourced its IT call center and billing activities to IBM.

This initiative was a first of its kind in the world and an unprecedented shift. No longer would Bharti Airtel have to devote energy to infrastructure maintenance or systems management—it was free to develop creative pricing models and innovative services for current and prospective customers. Upon joining the project, IBM found a complex web of siloed systems. Bharti sales personnel were unable to provide billing assistance. Activation personnel could not access customer promotions. By reworking the backend systems, IBM was able to integrate the account activation process with key backend and billing systems for an improved customer experience. Instead of being transferred from place to place, customers had easy access to account information and the latest special promotions.

More importantly, IBM helped decrease the time it took Bharti Airtel to activate an account by 90 percent. India’s cellular business is one of the fastest growing in the world, and Bharti’s subscriptions jumped from 6 million in 2004 to more than 223 million today (India, Sri Lanka, Bangladesh and Africa). Being able to add accounts quickly was essential. Bharti thus expanded from the smallest company in the sector to the segment leader. IBM’s systems allowed for flexible pricing models; Bharti was able to make that transition without major increases in capital expenditures.

Beyond just transforming Bharti Airtel, improved telecommunication technology is changing the lives of India’s 1.2 billion people for the better. Indian industry estimates that telecommunications contributes 1 percent of India’s GDP growth. Small businesses have seen large increases in profits. Fishermen can make a catch, contact markets on either shore and find the highest price for their fish—raising their yearly income by 50 percent or more. Rickshaw drivers equipped with cell phones can schedule pickups in advance, making travel more efficient for their customers and their business.

In 2010, Bharti Airtel and IBM announced an ambitious expansion into 16 African countries. Their 10-year alliance is designed to deliver affordable 2G and 3G mobile services across the continent. Accelerating the pace of economic development in Africa has proved to be a daunting challenge for government aid workers and non-governmental organizations (NGOs). And rather than integrating the systems of one country, as they did in India, IBM faces integrating telecommunication systems from the Democratic Republic of Congo to Zambia.

The motivation, though, is telecommunications’ unique ability to fuel rapid growth. “In modern commerce, in this digital age … telecommunications has the same type of role as interstate highways or air transportation and shipping did as we exited the industrial revolution,” said Sam Palmisano, chairman of the board and CEO of IBM, announcing the African expansion. African business will see an instant increase in the amount of data they have at their disposal, helping them make better decisions. IBM’s automated processes can deliver data in real time, so businesses and retailers can use mobile devices to increase their efficiency. And advanced information security systems help protect the privacy of customer data and make enterprise systems more resilient to threats.

IBM also plans to implement technologies developed by its research department to help impoverished or disabled Africans take advantage of the Internet. One such tool is IBM Spoken Web, a voice-enabled technology that allows people to access and share information by speaking over a telephone. By using Spoken Web, populations with little or no literacy or access to personal computers can still receive the benefits of enhanced communications. Farmers can check weather forecasts, giving them critical information about how to increase their yield—making their farms more productive. Unemployed workers can search for jobs that match their skill set, enhancing their earning potential while giving small businesses easier access to prospective employees.

IBM’s groundbreaking work in the telecommunications industry mirrors much of its other work—helping to raise the standard of living, and making businesses more efficient by improving systems with technology and better understanding of data.

 

The Team

Selected team members who contributed to this Icon of Progress:

  • Manoj Kohli CEO (International) and Joint Managing Director, Bharti Airtel
  • Dr. Jai Menon Group CIO, Bharti Enterprises
  • Samuel J. Palmisano Chairman, CEO and President of IBM
  • Ramesh Awtaney Vice President of Strategic Outsourcing for Asia-Pacific at IBM
  • Mario Domingo Head of Product Design and Creation, Globe Telecom
  • Scott Stainken General Manager, Telecommunications Industry at IBM
  • Marian Castillo Manager, Brand and Communications at IBM Philippines
  • Tony Joyce Project Manager at IBM Ireland