Excerpts from last blog –The time I joined telecom sector, so much have changed but still the pace of change hasn’t slowed down. To my surprise we are witnessing a phenomena (be it in terms of technical innovation, changing social need or newer business models) which we couldn’t have thought of just some years ago. We see today’s Telco out from monopolistic cell, challenged by new age entrepreneurs, constantly struggling and re-defining their business model to stay competitive and in business. I shouldn’t be hesitating in saying that these operators’ movements are directly related to their survival issue and not well thought of proactive value addition in their service offerings.This journey and the experience prompted me to write series of blog each part answering pertinent questions like:-· What has changed and why?· Value Chain Who Owns the bigger chunk?· Top trends impacting Telco’s strategic choice.· How to avoid being trapped as “dumb pipe” provider?· And last but not the least, Security impact of Telco’s changing eco-system.
“The time has come
when communication service providers should learn to exploit the emerging
digital value chain, or else they will be reduced to “dumb pipe” providers”
Need some clarification!!!! Okay I will attempt to give some insight and will try to simplify this message in series of blogs for you. Let’s find out first what exactly has changed & why |
If
you remember in the series of blogs which I had promised, part one was mainly
focusing on what changes have happened in telecom sector and why. The part-2
now mainly concentrates on understanding the value chain of this sector and who
currently owns the bigger chunk.
If we just look-back a
decade ago, the scenario was very different. Google was just emerging (with no
idea of Gmail, Google voice, Google earth, android OS, Google phone), apple was
known only for its mac-computer and ITunes (No app-store, and IPod), and, Mark
Zuckerberg (Facebook founder) was a high school student with no sign of
Facebook that we see today. Cloud computing was never heard of and no-one could
think of that app-store would be this big phenomena. Skype like services were
not there to challenge current business models.
Google, apple,
face-book and other likes have turned telecom industry in a battle field. We
can safely conclude that in today’s environment communication service means
innovative services on the top of transport infrastructure rather than just
plain vanilla voice. If service providers continue to be in cell thinking of
that traditional revenue generation streams will work, then they risk being
reduced to a low-margin dumb pipe provider from smart value added service
providers and niche players.
Telco’s too have
realized this and we have seen some movements which blurs the boundary between
telecom, media, IT and consumer electronics. In recent past some activity
suggests movement in this direction where carriers are moving into the
content-aggregation and broadcasting space, while broadcasters acquired
carriers and moved into session, hosting, and network services. There is no
other way and we can safely say that this will continue to happen over the next
few years. Pic below depicts converged Eco-system.
Let’s see what value
exactly current Telco’s bring on the table. There is immense possibility and
various scenarios which will determine if the large chunk of this remains
under-control of Telco’s or vice-versa.
Fig1
Above picture (fig-1) from TM-forum Telco2.0
tries to describe the two sided value chain that exist today for operators.
There are different possibilities in whole value chain. There could be numerous
interferences in each other’s area and business models would constantly get
redefined. There may be a scenario of accessing a carrier developed application
running on carrier application-hosting platform with carrier voice, VAS, video
services running on carrier network. This makes the case of a very integrated
and carrier controlled environment. But there is equally a possibility of far
end scenario viz. any user generated content or independent application service
provider running on independent hosting
service providers platform using independent communication services like Skype
and running on infrastructure established by virgin or Google.
Fig2-Possible
value Acquisition
Depending on the
carrier movement towards NGN / LTE it would be decided that if they would have
the capability and necessary enabling infrastructure to enhance and capture
end-to-end value chain. It is yet to be seen if Telco’s take initiative and
grab most of the chunk of value chain or they become just dumb pipe providers
as wholesale data carrier. The first step should be to determine what Telco’s
business model should be and the next, how to differentiate themselves from
competitors should logically follow. There are many possibilities and none of
them is about simply providing an access pipe.
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Part 3 - Will discuss
more on “Top trends impacting Telco’s strategic choice”. Till then ..happy
reading !!!.
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