Thursday, September 24, 2015

Telco Fundamental Strategic imperatives Remain, Tactical Focus Changes Over 5 Years

“Telcos are an endangered species; their traditional business model has come undone, and many operators face a downward revenue/earnings/investment spiral,” Forrester Research analysts argued in 2011.

Revenue shrinkage in triple digit billions was predicted by analysts at Telco 2.0, over a span of perhaps a decade, beginning about 2006.
Whether you agree or disagree with the characterization, not much has fundamentally changed, though the specific tactical recommendations might be different.
Now, as then, competition from alternative connectivity providers, IT services firms, and over-the-top providers, all enabled by open regulatory environments, is a fundamental reality.
Some of the 2011 recommendations still make sense. Service providers need to “adjust” cost structures from higher to lower. But where earlier efforts focused on headcount or other relatively obvious operating areas, attention now is turning to methods of revamping core network operations and capital spending.
That is why one hears so much about network functions virtualization or software defined networks. 
Some of the issues are largely resolved, or will soon be solved. The transition from legacy to Internet Protocol environments continues. But few executives spend much time talking about that change, since the path is largely understood and underway.
Finding new, sustainable revenue opportunities remains as crucial now as it was in 2011. But the opportunities are not necessarily the same.
Forrester emphasized “wholesale and cloud computing” as new revenue streams in 2011. Service providers largely already have responded, where possible.
Telcos have moved into video entertainment, while some are investing in various digital enabling platforms and services, ranging from mobile payments to mobile advertising.
The attention now is on the next generation of services, or perhaps next several generations, based on Internet of Things and services not sold directly to end users.

That is why fifth generation networks, and specialied narrowband IoT networks, now loom large.

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