16 Dec 2002:
In a new report from IBM Business Consulting Services, telecommunications industry strategy consultants predict that modest growth--up to two percent across the industry through 2006--is possible for telecom companies that are willing to fundamentally change and embrace new business models, focusing anew on core competencies, customer-led product innovation, and strong strategic partnerships with other industries.
In the IBM report, "Burning Up the Phone Wires," authors Lawrence Kenny, Mark Gregory and Salvador Arias observe that by 2006 customers expect converged voice/data services will be available wherever they are--in the car, office, home, a taxi, airplane or distant locations. Loyalty to specific devices and networks will decline as more choices emerge. Customers will use the combination that best meets their needs, and the telecom industry must be ready to respond to those dynamic demands.
Outlining new business models for mobile, consumer and enterprise telecommunications companies, the report urges telecom companies to make tough decisions now to transform their business so they can ultimately offer the innovative products and services that exceed customer expectations--resulting in increased customer profitability and shareholder value in the future.
"To prepare for a transformed future, telecommunications executives must balance the demands of managing a maturing business today while taking the necessary risks to create complex new businesses in order to achieve growth," said Lawrence Kenny, partner and Americas telecommunications industry leader for IBM Business Consulting Services. "This is key for surviving in the near term--and, we expect, potentially thriving in the longer term."
Some of the highlights from "Burning Up the Phone Wires" include:
- Enterprise-oriented mobile network operators face a burgeoning market and should move into higher-end mobile enterprise applications by aiming to become a wholesaler of capacity to other mobile players. They also need to become the "partner of choice" by providing network integration as well as basic connectivity and acquire comprehensive systems integration capabilities to compete across all dimensions of the enterprise market
- Mobile operators in the consumer market need to decide where and how to operate. Three options include: the "MobileLife" operator that positions the mobile device as an essential lifestyle tool and develops content, marketing, payment, digital rights management and transaction sharing; or the "Wireless Partner of Choice" that resell others' services as well as its own, using third-party content and applications to stimulate demand; and/or the "Wireless Transco" who acts as a wholesaler of mobile data carriage, investing in multiple network capabilities to stimulate use of its services.
- Consumer wireline telecom operators can achieve growth as they: "Anchor the wireline" by participating in collaborative product development (CPD) to increase cross-platform operability with wireless providers; "Own the broadband" since broadband services will be the critical consumer growth market, with penetration expected to increase to fifty percent of U.S. households by 2006; and learn to "Straddle Regulation" as they look for more creative ways to keep regulation from hampering their ability to differentiate competitively.
- Enterprise telecom operators need to move "up" or break "out" by exploiting new opportunities to enable networked business models and wireless enterprise systems for customers. The market for managed services will balloon to US$250 billion by 2006 with utility computing being a driving factor. Profits will be possible for enterprise telecom players who master the provisioning and management of new technologies, provide (or subscribe to) network operations outsourcing, and in turn, sell these new capabilities.