Original http://www.adventis.com/downloads/TelcosoftheFuture_0505.pdf
Sorry for the bad copy and paste job. Rather read the PDF.
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W W W. A D V E N T I S . C O M
On the 6th April 2005, ADVENTIS convened its Board of Advisors at Cliveden House, England. Attendees included ADVENTIS Board of Advisors and executive guests from the computing and telecom industries. Professor Mario Monti, recently the European Commission’s Competition Commissioner, addressed the group during lunch.
The theme of the session was the “Telco of the Future” – and the group, led by a number of ADVENTIS executives, engaged in lively discussions around several discussion points. Amongst the issues discussed were key industry drivers, emerging customer needs, new business model options and how to recast the Telco business. Placing the theme of the day in context, ADVENTIS highlighted to the group how the telecom ecosystem is, once again, in flux. Four key forces are shifting the sands upon which Telcos have their foundations:
• Changing customers demands with diverging delivery requirements
• Th e increasing interoperability of IP and other technologies
• An explosion in the intensity and complexity of competition
• A relentless pace of innovation across the telecom ecosystem worldwide
THE WINDS OF CHANGE
ADVENTIS IS A GLOBAL CONSULTING FIRM ADVISING TOP MANAGEMENT IN THE TELECOM, IT AND DIGITAL MEDIA SECTORS
THE TELCO OF THE FUTURE
A MEETING OF THE ADVENTIS BOARD OF ADVISORS
TELCOS OF THE FUTURE
The focus of the discussion was on how these forces are causing the “end of an era” for the traditional vertically integrated, generalist Telco, and on what would be the successful Telco business models of the future.
CONVERGENCE AND CUSTOMER DEMANDS
Th e topic of convergence and changing customer demands inspired spirited debate. Customers, it was generally agreed, were not actually concerned about “convergence” per se but that a converged infrastructure is essential to address their needs. In business markets in particular, with CIOs increasingly focused on business change rather than on technology, convergence was felt to be the means by which service providers can eff ectively respond. Converged services were also felt to be a critical way for the Telcos to manage the decline in their traditional revenue cash cow, voice services. However, converged services need to be clearly thought through. As one participant put it “the ability to get a single bill is neither convergence nor is it market disruptive.” Gaining more of the revenue associated with new services was also felt to be vital to the survival of the “traditional” Telco – as one Silicon Valley CEO put it “Th ere’s a big party going on and the Telcos are supplying the alcohol and food but are stuck in the kitchen trying to fi gure out how to run the microwave.” Providing simple compelling services for both businesses and consumers was felt to be essential for future success.
The group acknowledged that Telcos had brought many of their woes on themselves. Commenting on the collapse in telecom pricing, one attendee stated that the industry had to bare responsibility for this in off ering “all you can eat” price plans and “letting the genie out of the bottle” with unviable business models. Reconsidering the business model is now as important as it had been for the major airlines when confronted with the realities of a RyanAir/Southwestern low cost model.
The group was warned that while the discussion had focused on fi xed line players, there was no reason why the collapse in value will not impact the wireless world similarly. The challenge thrown to the wireless members of the group was to disrupt your current business model before some one does it for you.
THE INTEROPERABILITY IMPERATIVE
A key challenge facing Telcos is the decline of traditionally high barriers to market entry. As the telecom ecosystem moves toward open standards based on IP and modular architectures, vertically integrated business models may fi nally become a legacy. With the emergence of three distinct horizontal delivery platforms, the service layer, the control layer and the network layer, the group felt that the critical layer for service providers to have a presence in was the service layer. Th is allows service providers to provide VoIP and is the glue vital to link together disparate networks.
CUSTOMERS ARE SEEKING VALUE,
FLEXIBILITY AND SIMPLICITY – SERVICE CHARACTERISTICS THAT CAN BE DELIVERED THROUGH A CONVERGED SERVICE PLATFORM.
TELCOS OF THE FUTURE
All delegates agreed that the shift to IP was creating an entirely new competitive landscape with players from the IT world entering the network layer. The key to success was felt to lie not just in technical superiority but also by positioning against the new opportunities with viable business models. However it was acknowledged that technology would remain an aspect of competition with WiMax and “naked wire” DSL serving as the fi nal battering ram to the PSTNs last mile monopoly of access to the home. There was clear consensus amongst the group that change needed to take place – what shape these changes might take was the subject of the afternoon’s debate.
NEW BUSINESS MODELS
The group addressed the benefi ts and shortcomings of business model options including:
Play Out the Status Quo – Remain vertically-integrated, seizing most customer segments with a full service line
Focus on a Segment or Sub –Segment with a full service line
Redesign the Delivery Model –
Shift the underlying economics and exit from low value-adding activities Seize the High Ground –
Focus on the most attractive segments and participate selectively in critical value chain activities While the group did not come to consensus as to optimal business models, all agreed that all major players were going to have to make diffi cult choices in terms of business model, segment focus, product scope and delivery platforms.
Sorry for the bad copy and paste job. Rather read the PDF.
-------------------------------------------------------------------------------
W W W. A D V E N T I S . C O M
On the 6th April 2005, ADVENTIS convened its Board of Advisors at Cliveden House, England. Attendees included ADVENTIS Board of Advisors and executive guests from the computing and telecom industries. Professor Mario Monti, recently the European Commission’s Competition Commissioner, addressed the group during lunch.
The theme of the session was the “Telco of the Future” – and the group, led by a number of ADVENTIS executives, engaged in lively discussions around several discussion points. Amongst the issues discussed were key industry drivers, emerging customer needs, new business model options and how to recast the Telco business. Placing the theme of the day in context, ADVENTIS highlighted to the group how the telecom ecosystem is, once again, in flux. Four key forces are shifting the sands upon which Telcos have their foundations:
• Changing customers demands with diverging delivery requirements
• Th e increasing interoperability of IP and other technologies
• An explosion in the intensity and complexity of competition
• A relentless pace of innovation across the telecom ecosystem worldwide
THE WINDS OF CHANGE
ADVENTIS IS A GLOBAL CONSULTING FIRM ADVISING TOP MANAGEMENT IN THE TELECOM, IT AND DIGITAL MEDIA SECTORS
THE TELCO OF THE FUTURE
A MEETING OF THE ADVENTIS BOARD OF ADVISORS
TELCOS OF THE FUTURE
The focus of the discussion was on how these forces are causing the “end of an era” for the traditional vertically integrated, generalist Telco, and on what would be the successful Telco business models of the future.
CONVERGENCE AND CUSTOMER DEMANDS
Th e topic of convergence and changing customer demands inspired spirited debate. Customers, it was generally agreed, were not actually concerned about “convergence” per se but that a converged infrastructure is essential to address their needs. In business markets in particular, with CIOs increasingly focused on business change rather than on technology, convergence was felt to be the means by which service providers can eff ectively respond. Converged services were also felt to be a critical way for the Telcos to manage the decline in their traditional revenue cash cow, voice services. However, converged services need to be clearly thought through. As one participant put it “the ability to get a single bill is neither convergence nor is it market disruptive.” Gaining more of the revenue associated with new services was also felt to be vital to the survival of the “traditional” Telco – as one Silicon Valley CEO put it “Th ere’s a big party going on and the Telcos are supplying the alcohol and food but are stuck in the kitchen trying to fi gure out how to run the microwave.” Providing simple compelling services for both businesses and consumers was felt to be essential for future success.
The group acknowledged that Telcos had brought many of their woes on themselves. Commenting on the collapse in telecom pricing, one attendee stated that the industry had to bare responsibility for this in off ering “all you can eat” price plans and “letting the genie out of the bottle” with unviable business models. Reconsidering the business model is now as important as it had been for the major airlines when confronted with the realities of a RyanAir/Southwestern low cost model.
The group was warned that while the discussion had focused on fi xed line players, there was no reason why the collapse in value will not impact the wireless world similarly. The challenge thrown to the wireless members of the group was to disrupt your current business model before some one does it for you.
THE INTEROPERABILITY IMPERATIVE
A key challenge facing Telcos is the decline of traditionally high barriers to market entry. As the telecom ecosystem moves toward open standards based on IP and modular architectures, vertically integrated business models may fi nally become a legacy. With the emergence of three distinct horizontal delivery platforms, the service layer, the control layer and the network layer, the group felt that the critical layer for service providers to have a presence in was the service layer. Th is allows service providers to provide VoIP and is the glue vital to link together disparate networks.
CUSTOMERS ARE SEEKING VALUE,
FLEXIBILITY AND SIMPLICITY – SERVICE CHARACTERISTICS THAT CAN BE DELIVERED THROUGH A CONVERGED SERVICE PLATFORM.
TELCOS OF THE FUTURE
All delegates agreed that the shift to IP was creating an entirely new competitive landscape with players from the IT world entering the network layer. The key to success was felt to lie not just in technical superiority but also by positioning against the new opportunities with viable business models. However it was acknowledged that technology would remain an aspect of competition with WiMax and “naked wire” DSL serving as the fi nal battering ram to the PSTNs last mile monopoly of access to the home. There was clear consensus amongst the group that change needed to take place – what shape these changes might take was the subject of the afternoon’s debate.
NEW BUSINESS MODELS
The group addressed the benefi ts and shortcomings of business model options including:
Play Out the Status Quo – Remain vertically-integrated, seizing most customer segments with a full service line
Focus on a Segment or Sub –Segment with a full service line
Redesign the Delivery Model –
Shift the underlying economics and exit from low value-adding activities Seize the High Ground –
Focus on the most attractive segments and participate selectively in critical value chain activities While the group did not come to consensus as to optimal business models, all agreed that all major players were going to have to make diffi cult choices in terms of business model, segment focus, product scope and delivery platforms.
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