Multiven, Network Maintenance, Non classé, Telcos

Telcos : A Strategic SWOT Analysis

Telecommunication and Internet Service Providers’ (« Telcos ») network infrastructure is analogous to roads that consumers and businesses commute upon in order to get to the city (« Internet »). Today, Telcos charge ‘tolls’ for the use of these roads as well as bundled communication and entertainment services e.g. voice, SMS, IPTV etc.

However, it is clear that several new disruptive technologies and applications are riding over-the-top of these roads to provide customers and businesses with free voice, video streaming, messaging etc. content leaving Telcos with only tolls as their remaining source of revenue and even this is currently in jeopardy with the advent of free Internet access services like Google Fiber, Sony So-net, etc.

Unlike McKinsey and others proposing unsustainable stop-gaps to help Telcos hold onto legacy revenue streams, Multiven’s SWOT concludes that the future lies in services that enhance consumer experience when they get to the « city ». For example, Google maps is helping consumers find their way around the city, Pattle helps them discover places in the city, Netflix brings cinemas to them etc.

Telcos should come to terms with the fact that their roads and legacy voice, SMS, MMS, IPTV etc. services are now commodities that are freely available to consumers via Over-The-Top Content and any attempt to charge tolls from these new providers would breach net neutrality laws. The Telcos that embrace this transition and evolve, should look to creating next-generation services that enhances, manages and simplifies consumer experiences in a vastly bigger Internet of things where cars ask other cars for directions and smart solar-powered homes sell excess energy to neighbouring houses, all independent of human intervention. Telcos that resist this inevitable technology-driven market transition will very likely perish.

Furthermore, as enterprises continue the transition from owning and operating their Internet networks to consuming it as-a-service like other utilities, it is clear that Telcos will ultimately own and operate all networks. This means that all commercial Internet network will belong to Telcos.

This key shift in the industry means that Telcos are now the end-customers, rather than mere resellers to network equipment manufacturers. As customers, Telcos are no longer subservient to equipment manufacturers and are now free – unlike before, when they were resellers and bound to manufacturer constraints like hardware discount levels, partnership certifications, service attach rate quotas, threats of bug fix refusals etc. – to procure products and service independently and competitively.

Put differently, equipment manufacturers are now mere suppliers to Telcos who should leverage their buying power to multi-source products and services independently and competitively with a focus on their stakeholder value.

Below are descriptions of some of the terms in this SWOT along with some potential opportunities (Source).

Term Description Opportunity
Bundled Service Products Selling bundled services eg TV channel packages Unbundle and sell services a la carte so that consumers can purchase individual TV channels and watch them anytime, anywhere via any media.
Inefficient Service Contracts Management Telcos have too many service contracts for their production networks which are managed by teams of employees Streamline into a single organization-based service contract rather than device-based service contracts
Incomplete Network Asset Visibility Multiven research confirms that there is not one single Telco in the world today with complete and accurate data of their install-base devices and IT assets. Since networks are in a constant state of fluidity with daily device configurations, implementations and replacements, legacy tools like spreadsheets are inadequate for this purpose. Cloud-based IT and network device management tools like Multiven Oyster, that enables real-time collaboration across an organization so that all stakeholders from finance to procurement to engineering to NOC and operations all have the same view and all participate in updating this one org-wide data.
Sole-Sourcing Maintenance Services Purchasing network maintenance services exclusively from equipment manufacturers It is common knowledge that dual or multi-sourcing services is a sure way to reduce costs, improve efficiencies, enjoy a better service and keep suppliers on their toes.
Over-the-Top Content Over-The-Top Content (OTT) describes the delivery of video and audio via a Telco’s infrastructure, without the Telco’s involvement in the control nor distribution of the content itself. This is in contrast to purchase or rental of video or audio content from an Internet provider, such as cable television Video on demand or an IPTV service. OTT in particular refers to content that arrives from a third party, such as Netflix or LoveFilm and is delivered to an end user device, leaving the Telco responsible only for transporting the IP packets. Innovate and evolve to next-generation services outlined in the Opportunities section of this SWOT
Commodity Smartphones and Tablets Cheap mass-market white-box smartphones and tablets running open source software with OTT apps for voice, text and video. Innovate and evolve to next-generation services outlined in the Opportunities section of this SWOT
Internet of Things IPv6 provides the world with 300 Trillion Trillion Internet Protocol addresses (« IP »), more than enough to assign a unique IP address to every object on Earth and thus create an expanded Internet, of things. Create innovative next-generation services to address new consumer needs in sectors such as connected home automation, intelligent shopping, continuous healthcare, smart cities etc. An example of Telco that is embracing this market is AT&T with its digitallife home security and automation services.
M2M Machine to machine (M2M) refers to technologies that enables machines, devices and applications to communicate and act upon processed data without human intervention, over wired or wireless networks. The basic architecture of M2M involves a device (such as a sensor or meter) capturing an event (such as temperature, speed, pressure etc.), which is relayed through a network (wireless, wired or hybrid) to an software application that translates the captured event into meaningful information (for example, reduce your speed, increase your temperature, low inventory etc.) Create M2M services that enables the connection, communication and management of M2M devices for various vertical markets. Vodafone M2M or Audi partnering with T-mobile to create ‘Audi Connect’ which enables Audi owners to access news, weather, and fuel prices on-the-go while turning the vehicle into a secure mobile Wi-Fi hotspot.
Shared Infrastructure This is when Telcos leverages each others network infrastructure to dramatically reduce costs and increase customer satisfaction Reduce costs and increase customer retention by sharing infrastructure with Telcos in countries where your customers ‘roam’ the most so your customers save on roaming charges. The Telefonica-Vodafone infrastructure sharing is a good example of this.
Shared Experience This is sharing engineering expertise and resources with other Telcos rather than hiring in-house. Telcos offer similar services hence they share the same network profiles, with similar production hardware, software and technologies. Why waste time, money and effort hiring an engineer when another telco has the same resource in-house, under-utilized?
Carrier of Carriers A telco offering its network infrastructure to other telcos as a service. Network infrastructure is now a commodity. Therefore, it is, by itself, no longer a differentiator. Why build a network when you can rent one?
Software Defined Networking Software-Defined Networking (SDN) is an open-source and vendor-neutral architecture that decouples the control and forwarding functionalities within a network and enables the network control to become directly programmable via a centralised controller and the underlying hardware infrastructure completely abstracted. Prior to SDN, making changes to a network involved manual device-by-device configurations. With SDN, the entire network is controlled via a single logical switch. Since SDN abstracts the data plane irrespective of whether the underlying hardware is name-brand or commodity, it is inevitable that operators will dramatically lower their CapEx by growing their SDN infrastructure with commodity hardware. Other SDN opportunities for Telcos include, but not limited to: offering Infrastructure-as-a-Service & Network-as-a-Service, Consolidating Spare Data Center Capacity, Active Networking etc.
Cloud Vault Cloud-based storage services for consumers. Everything we do is now online. Create a simple and safe storage box in the cloud which consumers can access globally.
Bring Your Own Application – BYOA Bring-Your-Own-Application This is a post company provided and Bring-Your-Own-Device era where Internet connectivity is available persistently via human embedded chipsets and everybody takes their cloud-based applications with them whereever they go.
Technology Venture Investing Venture Investing in technology startups This is an opportunity to align with future disruptive technologies and reap the benefits of successful liquidity events
Content « a la Carte » Selling content one-by-one Like the iTunes store, offer content individually and consumers will buy more.
Consumption Based Billing Charging consumers for what they use Rather than billing for services over fixed terms eg $100 package per month, bill consumers only for what they consume and watch loyalty go through the roof

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