Business Model Transformation Coming? It Came

ITU Telecom Chairman Dr A Reza Jafari says the global telecom industry is in the midst of a fundamental business model transformation whose most-obvious element is mobility.

According to the Federal Communications Commission data on end-user revenues earned by telephone companies, that certainly is the case.

In 1997 about 16 percent of revenues came from mobility services. In 2007, more than 49 percent of end user revenue came from mobility services.

Likewise, in 1997 more than 47 percent of revenue came from long distance services. In 2007 just 18 percent of end user revenues came from long distance.

In 1997 about 37 percent of total revenues came from local service, while in 2007 about 33 percent was provided by local services.

One way of looking at matters is that the global industry already has lived through two major shifts in revenue: first the collapse of long distance and second the rise of wireless. If you want to know why legacy AT&T and MCI ceased to be dominant independent companies, the collapse of long distance revenues from 47 percent to just 18 percent explains it.

And if you want some idea of where things have gone, wireless has replaced long distance as the provider of nearly half of all revenues. Local services have dipped a bit from 37 percent to 33 percent.

In all likelihood, the next change will involve revenues not even captured by the 1997 and 2007 data, and go beyond wireless. Telco moves into multi-channel video entertainment are but one example.