Already under pressure to squeeze margins on traditional revenues to maintain market share, they now face challenges of a different kind. They are recognising the need to meet the massive consumer demand for more innovative, converged communications products and confront the competition from converged communications suppliers and are contemplating the need to evolve and move from pure network provision to offering intelligent networks and information and communications technology (ICT) services.
Tremors in the carrier market
The communications industry is one of the most volatile and competitive in the world. The advent of convergence – both of fixed and mobile technologies - and of voice, data and video has accentuated competition within the market like never before. Indeed convergence of technology has led to the convergence of industries. Mobile operators now compete with fixed and cable operators and internet service providers for share of the voice and data – and multimedia - market. The distinction between fixed and mobile worlds has blurred and the division between IT and the network is rapidly eroding. Not only that, but traditional barriers of geography have begun to fade away. Open standards and international networks have lead to increased competition from both local markets and global players. The race is on to win market share – and to keep hold of it.
As a consequence carriers now face heightened competition from all angles and yet still remain obliged to continue to reduce margins on network provision in order to stay afloat. Regulatory and competitive pressures are forcing operators around the world to make significant margin and revenue reductions.
Whilst the pressure is on to achieve significant revenue growth or massive cost reductions to stay in the market, pressure is also being placed on carriers to offer broadband services and IP networks that will support advanced, next-generation communications. These ‘new wave' services have smaller margins than traditional business and more importantly, necessitate large-scale investment in new infrastructure and present significant financial, technical and operational challenges to implement. So how can carriers, in the current climate, afford to embrace this new emerging market?
Standing still is not an option
But the question should be how can they afford not to find a way to embrace the potential that this new era of communications promises? Global telecoms providers are faced with two options: either they strip back investments and focus on gaining revenues purely through ‘pipe supply', a strategy that prohibits long term growth, or they choose to innovate and change their business models. We believe that it is essential for providers to continue to drive change in our business both for our own companies' interests and for the benefit of the industry. Standing still is not an option.
The very real demand for new communications platforms
The fact is that despite these challenges, there are real and very significant growth opportunities in the industry, which need to be tapped in to and driven by carriers. Broadband, IT networked services, mobility and convergence are all core technologies that new services and products depend upon and which are all supported by the network. Convergence is gaining momentum, and customers are looking for products that can send communications from any device to any device.
Take the example of Instant Messenger, BlackBerry handsets and the interest in new location-based services. There is a very real demand from end-users for new services that will improve quality of life, services that will make their professional and personal lives easier and more productive.
Society and indeed the economy is becoming more connected and irreversibly dependent upon the network. Global carriers are in a unique position to supply the infrastructure that will support and deliver these new services – and to offer application and service providers the means to deliver their products.
New players are entering the communications market everyday with niche network centric services such as Skype and iTunes which depend upon flexible IP platforms. While it is true that carriers and network providers face greater competition that ever before, they also have a greater and more diverse array of potential customers than ever before .
The brave new world of next generation communications
Global carriers must accept the fact that the industry they once entered has metamorphosized. They now have two choices – to ignore the burgeoning customer demand for new converged and ICT technologies and run the risk of simply providing commoditised transport services, or to face these threats together with the very real and exciting opportunities the new world of communications offers them.
How individual players react to the new economic and technical realities that have befallen them today will create the foundations for the industry for decades to come – and will help shape who succeeds and who fails in the future.
