Thursday, May 29, 2008

Big Telco’s mindset change, embracing the unknown

There is a big change in the way operators are looking at the business model these days. With the existing voice revenues taking a nose dive, I guess its time for some introspection. With voice and messaging platform’s threatening to erode the ARPU even further, Big telcos are realizing that its time to embrace the unknown territory (webification,open network platform for thirdparty access). This should be good news to some of the platform providers. I’m sure telcos would partner with some of these existing platform providers like jajah, ribbit, ifbyphone, broadsoft, metaswitch rather than re-invent the whole wheel again. The focus of web telephony is slowly moving towards platform play. I can see a lot of enthusiasm in the blogosphere and the media about the voice and messaging platform play.

In order to prove their vision about voice and messaging platform, jajah has done some research talking to CTIA delegates and C-level telecom executives in Europe and North America. Here are some snippets of the research finding.

• Landline churn: The biggest fear amongst fixed line telecommunications companies is the loss of landline connections. Four out of five companies put landline replacement revenue at the top of their agenda.
• Value Added Services the savior? The majority of carriers rank the addition of Value Added Services to their portfolio as a higher priority than their network. Two-thirds of chief-level executives state Value Added Services are the single most important factor for increasing customer loyalty and revenue.
• Talkifying the Web: It is unclear how to deal with the perceived threat from “new-style” competitors, with two-thirds more concerned about Google than new triple-play competitors.
• IP telephony strategy gap: Many companies identify significant room for advancement in IP telephony strategy. Two-thirds stated IP telephony represented the future of telecommunications and are looking to carrier-friendly companies like JAJAH to partner with to quickly advance its IP offering and IP backbone.
• The future is international: International markets hold enormous potential; Ninety percent expect significant revenue growth abroad, rather than in domestic markets in the next five years.
• Infrastructure investment black hole: With a lack of funding for infrastructure investment, more than 60 percent of the executives questioned believe they will outsource a greater proportion of infrastructure development by 2009.
• Triple play boom: Service expansion by telcos will lead to an increase in triple play offerings in the U.S. and Europe in the next twelve months. More than one-third of single and dual play companies plan to launch a triple play offering within the next 24 months. Of those companies looking to expand into IPTV, more than half will do so via acquisition.

Alec Saunders has penned a great article talking about how the Big Telcos are realizing the potential of Value Added Service. The big shift I see in many of the big operators is the acceptance of web voice and message convergence. Checkout these two slides, courtesy, saunders blog

What caught my attention were these two slides that give and interesting analogy of how the Long tail conversation can be milked by the operator. In one of my very old article, I had talked about how web can be used as a voice platform. Looking at the carrier 2.0 slide, it reminds me IMS, which was created exactly for the same reason. Break the silo model and bring the transparency to build plug and play applications. We can build most of the applications promised by IMS using the existing platform and technology, don’t know what the compelling business case is for IMS. IMS to me is a pregnant pause.

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