The companies that together create the global communications industry can look forward to a brighter future than the bleak reality confronting many carriers today. The migration of substantial portions of the physical economy to the digital economy is inexorable. Despite recent market traumas, Internet usage has continued its strong growth trend over the past year. And, as products and services move to the Internet, fundamental changes in commerce as we know it will be necessary for service providers and enterprises, large and small. The immediate result of this migration will be an explosion of bandwidth usage. Nevertheless, the communications industry is facing two major challenges today: price decreases are continuing to outpace usage increases and, customers have rising expectations beyond the service levels and capabilities of most carriers. Additionally, a range of extremely difficult strategic challenges across multiple fronts, simultaneously confront today’s communications service provider leaders. It used to be that just one of these strategic challenges would be enough to absorb the investments and occupy the talents of the best and brightest people in a company. Now, carriers face them all simultaneously. It is perhaps the toughest set of challenges ever faced in the communications industry. The trauma of the industry is unparalleled. Yet so is the opportunity. Consider the implications of the following industry developments. Always-on Convergent Devices Convergence has arrived, and it is tangible! Sophisticated, elegant, go-anywhere devices with combination Personal Digital Assistants (PDA), phones, MP3 players, Bluetooth, Global Positioning Systems, and instant messaging are here. Moreover, the form factor and pricing put them in range for mass consumer adoption. But the real challenge, and opportunity, lies in the fact that these convergent devices will likely be the next enterprise tools for corporate email and messaging. In fact, early evidence shows that companies which give these devices to employees actually decrease mobile phone usage by approximately 50 percent. Convergent devices will place extra strain on the carrier’s ability to both provision and support such diversity. It will become extremely difficult to price voice services in an all IP bundle. And, there will inevitably be brand confusion. Wireless LAN and Bluetooth 3G network investment has been an incredible bet on a future opportunity. However, 3G will not solve all of the industry’s problems. There are other, lower power, free spectrum distribution technologies that need to be factored into future planning. Numerous Personal Area Network (PAN) and Wireless Local Area Network (WLAN) technologies are proving to be effective and secure for high-speed device-to-device communication. In the near term, 2.5G will likely satisfy the most important user segments before the rollout of 3G networks. These technologies, in concert with competing capital demands, could make customer migration to 3G a slower process. Mobile Virtual Network Operators A new type of competitor is emerging in the global wireless industry. They represent new brands that don’t own any network assets. Whatever you call them—mobile virtual network operators (MVNOs), or “alternate retailers”—they are successfully unbundling themselves from expensive network assets and purchasing the underlying capacity (minutes and bits) in bulk. The nature of competition has changed, and with it, the definition of the telecom carrier is changing. Are these retailers friends or foes of traditional carriers? Are the traditional carriers wholesalers, retailers, or both? The risk of losing market share to these new competitors is legitimate. Take, for instance, the automobile industry. Today, 70 percent of the cellular traffic in the US is generated from within cars. With many auto manufacturers bundling voice and data services into the price of their vehicles, it could translate into a considerable loss of retail revenue for the wireless carriers. To what extent will alternate retailers, intermediaries, and other high-use locations (cars, hotels, airports, trains, planes, etc.) operate between the traditional telco and it’s traditional end customer? Instant Messaging Instant messaging from AOL/ICQ reached the 50 million-user mark in half the time (2.5 years) it took the internet (5 years) to reach that same number of users (5 years). Already, instant messaging delivers more mail than the US postal service each day. Some analysts predict that by 2004, 60 percent of all real-time online communications (voice and text) will be driven through instant messaging technology. Don’t underestimate the technology as another consumer fad. At its best, it is a sophisticated peer-to-peer computing platform with the potential to shift the power away from the carrier to the device and software providers. Consider this, with Voice over IP delivered through an instant messaging platform it would be impossible to bill for voice minutes. It is all data, all the time, one bit indistinguishable from the next, whether it’s for voice, transactions, email, or video. How can you best embrace this inexorable change in medium and message? Web Services and Managed Hosting The network really is the computer. For a long time it was the central office switch, some copper, and a phone. It worked for businesses and consumers. Now the old equilibrium and certainty is gone. The sophistication of today’s managed hosting providers, combined with the proliferation of equipment and services in and around the network have become disruptive to the old ways. Software vendors and content providers are pushing an ever-greater volume of content and application functionality to the edge of the network. In the face of these changes, the carrier has a fundamental decision to make: where will my network and services stop? Will you provide end-to-end assurance and reliability for transactions? Does your operation support the full ordering and provisioning of services? Do you stop at the network edge, the device, the transaction, or the user experience? Or, are you just the transportation vehicle. Unlike the single challenges in the past, each of the above has the potential for a carrier to vault to the forefront of the market, or quickly be relegated to the back of the value chain. The winners will employ visionary and innovative thinking, combined with precise execution and delivery. But, the time to act is now. Talk to someone about this topic  To Top
|