Telcos need to get tough in their efforts to avoid becoming the much-maligned “dumb pipe,” and implement overdue business model changes to achieve that goal. Doing away with its unlimited wireless data plans, AT&T Inc. has made some changes on this front, as unpopular as that move may have been. Rival Sprint Nextel Corp. took a similar step when it threatened to suspend the accounts of laptop users who consume too much mobile data while roaming. Despite consumer backlash, such decisions form part of a bigger picture: devising Telco 2.0 strategies to remain relevant in a mobile Internet world. But becoming a next-gen operator requires more than what AT&T and Sprint have done so far. Further strategy shifts are in order.
At the recent TeleManagement World Forum, industry analysts and insiders laid out Telco 2.0 roadmaps. The goal is for providers to increase revenue through differentiation -- i.e., selling services subscribers really want. STL Partners, which specializes in Telco 2.0 issues, in a June 16 report talked up “comes with data” packages. Software developer Telcordia, whose customers are network operators, added walled gardens and 2.0 mashups to the list of value-adds.
Still, basic services remain table stakes. Baseline voice and data plans “are always valuable,” said Adan Pope, Telcordia’s chief strategy officer. “They’re going to continue forever because all other services depend on them.”
Simply carrying data can be profitable and provide substantial growth, STL analysts pointed out in their study, “Mobile, Fixed & Wholesale Broadband Business Models.” Authors Chris Barraclough and Dean Bubley found that global broadband access revenue will jump 52 percent by 2020, up from $274 billion this year to $416 billion in 2020.
Nonetheless, carriers who do not come up with 2.0 business models are not going to be successful. Plus-data packages that include hardware are a solid start. Providers can partner with companies such as Amazon, maker of the Kindle e-reader. The network operators sell data capacity to the product vendor, who bundles mobile Internet access with its device. The carrier profits, without having to worry about maintaining customer records or relationships.
Another option, said Pope, is for providers to offer a variation on the walled-garden experience. For example, an incumbent could sell over-the-top video, joining forces with a company such as Google Inc. and selling the set-top box that provisions the video over DSL. The biggest advantage for the operator would be getting subscribers to upgrade from, say, 2mbps Internet service to 7mbps. At the same time, the carrier could serve as a clearinghouse, Pope said. When a customer downloads content from Netflix, the network operator can oversee the authentication and security, and even do the billing on Netflix’s behalf. Carriers “need to do this sort of thing or they’ll be a utility, a basic services provider, and they’ll compete on price,” said Pope.
Finally, Pope said operators need to take on a larger role in the Web 2.0 mash-up environment. A carrier offering unified parental controls, for instance, would rack up a large following. Here’s the thinking: If a child watches Netflix one moment and Hulu the next, there’s no consolidation of permissions. But service providers could create one repository from which parents could control Internet and TV-access settings, and charge a little extra each month for the convenience.
These types of value-adds are becoming more important as content providers such as Google and Microsoft Corp. muscle their way into markets traditionally dominated by network operators. Research firm Ovum warned carriers last month to exploit Google rather than be exploited by the Internet search giant. With Google encroaching providers’ territory, operators must think like developers. Carriers also need to find ways to complement Google, Ovum said. Pope’s over-the-top video concept fits that bill.
For STL Partners’ Bubley, that’s key. Fixed and mobile operators alike need to “embrace radical evolution of their retail portfolios,” Bubley said in a statement. After all, he added, “Whoever coined the term ‘dumb pipe’ has cost the industry billions in shareholder value.”
2010-06-19
How to Craft Telco 2 point 0 Business Models
via von.com
