Threats to existing wireless telecom business models

To start off the discussion I thought I’d do a quick run down of the threats to existing operator business models. By “existing business models” I mean a model whereby revenues come mainly from selling voice calls, texts and (for a small additional charge) Internet access. I’ll do a similar post shortly looking at the opportunities operators have.  Once we’ve set down the current business “landscape” we can start to have a discussion about the various ways forward.  Feel free to jump in with comments. 

• Mobile broadband and WiFi coverage combined with smartphones enable substitution to 3^rd party voice and messaging services.  Often these voice and messaging services (e.g. Skype) offer “free” calls or messages between users of the same client.  Smartphone manufacturers / mobile OS leaders (Apple, RIM, Google) have also started to introduce their own communication apps (e.g. FaceTime / iMessage, BBM, Google Voice). 
• Competing services offer richer experience for end users – often for free:  Most of the new services offered by internet players or device manufacturers offer a richer experience compared to plain old voice and text messaging.  For example instant messaging linked to dialogs, user “presence” and location and video calling.  As end users move to new services their perception of the value offered by their mobile phone operator will decrease. Savvy consumers will start to question why they are paying for calls and minutes they do not use and will seek ways to decrease their outgoings.
• Loss of control of relationship with end user:  Not only because most of the services or “apps” the user uses are downloaded from the internet or via the device makers’ app store – but also because users themselves are increasingly opting to buy SIM unlocked devices that are free from operator designed software – look at the success of the iPhone – spot any operator branding on it (apart from the signal strength indicator)?
• Loss of control of relationship with device manufacturers: Operators are less likely to get their preferred changes onto devices by coercing manufacturers.  This has implications for any network driven initiative or service that relies on widespread adoption by device manufacturers.  Will operators themselves have to compete on the same playing field as the 3^rd party voice/messaging providers?
• Industry structure does not match new competitors:  The new players – e.g. Skype, Google, and Facebook – are global companies with global reach.  Telecom operators, by contrast, are fragmented into regional/country operating companies with separate decision making processes, finance and organizational structures.  Although network operators also run an infrastructure that provides mobile broadband / internet access (in addition to voice/messaging) it is not clear that their costs for the voice/messaging business are in line with those of new competitors.
• Restricted technology choices versus rapid innovation: Operator model – years of discussions between infrastructure partners and competing operators to develop standards for services (voice and messaging). New competition:  Proprietary servers + clients and proprietary technology (e.g. Skype Peer to peer). Interwork to other networks when demand drives interworking. 

Let me know what your thoughts are.  Agree / Disagree? Have I missed any?

Welcome to my new blog

After many years of discussing the future of the telecoms industry and of advising on telecom product development roadmaps and related industry standards I've finally decided to take the plunge and open my discussions to a wider audience.  Through this blog I hope to have insightful discussions with the wider world on the future of the telecom industry.  The issues I will explore have been simmering away for a number of years yet have only recently come to the front of the popular press and to the attention of major analysts as a result of some of the technologies (e.g. smartphones and mobile broadband) having finally entered the mass market. Furthermore, the last 10 years has also been characterised by the emergence of many new players such as Google, Facebook and Skype offering services over the internet that represent a new front in competition to the services offered by traditional network operators.  


I'm going to explore this exciting new world.  I'll ask what will these changes mean for traditional network operators, their infrastructure partners and the device manufacturers.  What is the scope and size of the potential impact on traditional telcos' services businesses of users switching their voice and messaging services to new players?  What technologies and standards are available and should telcos deploy them to help compete with the new players?   I'm also going to evaluate how any proposed strategy could actually be deployed - what changes are needed within the industry in terms of cost structure, people/culture and organisation.  It should be an interesting journey.  I hope you will join me.  


Chris.