Telecoms is a 'broken sector' – can new business models fix it?
A piece of equity research published by analysts at a leading European bank last month described telecoms as “a broken sector”. What about the telecoms industry itself? Does it truly believe it can deliver?
Mark Newman, TM Forum25 Jul 2019
Telecoms is a 'broken sector' – can new business models fix it?
I’ve been writing about telecoms operator business models and delivering presentations and workshops on this subject for ten years or so. It’s been a big theme for the industry ever since mobile markets started to mature and operators started trying sell new services to consumers and businesses to keep growing their revenues.
When I first started out, the focus was very much the consumer market. Given that consumer revenues account for roughly 70% of telecoms operator revenues (and in many cases over 90%), this seemed like the obvious approach. But the smartphone and the emergence of two dominant app stores put paid to any advantages that operators may have had in getting their services into the hands of consumers. (The pay-TV market has proved an attractive new market for some operators, although high cost of sports rights is now undermining the business case).
Now operators are targeting enterprises. There is a widely-held view that businesses have lagged when it comes to leveraging digital technologies and capabilities. A bonanza in digitizing businesses is now expected and telecoms operators believe they can leverage cloud and 5G to deliver new ICT services.
Financial markets don’t seem to share such optimism. A piece of equity research published by analysts at a leading European bank last month described telecoms as “a broken sector”. It questioned (and doubted) whether operators would be able to cover their cost of capital. And it made no reference to 5G’s halo effect (although it did talk about the damage caused by high 5G spectrum prices).
What about the telecoms industry itself? Does it truly believe it can deliver? In September, TM Forum will be publishing my latest piece on operator business models. It’s going to have a 5G flavour (the report is to be titled 5G Future; Business Models for Monetization) although many of the topics will not be specific to 5G. The report will be available to anyone who registers on the Inform website:
I’m still working on a table of contents for the research but some of the issues that I will be looking at include:
I’m running an operator and a vendor survey to feed into the report and would love to get your inputs and insights if you have a strong opinion on the matter. But please hurry. The survey will close at the end of this month.
Operator Survey
Vendor Survey
When I first started out, the focus was very much the consumer market. Given that consumer revenues account for roughly 70% of telecoms operator revenues (and in many cases over 90%), this seemed like the obvious approach. But the smartphone and the emergence of two dominant app stores put paid to any advantages that operators may have had in getting their services into the hands of consumers. (The pay-TV market has proved an attractive new market for some operators, although high cost of sports rights is now undermining the business case).
Now operators are targeting enterprises. There is a widely-held view that businesses have lagged when it comes to leveraging digital technologies and capabilities. A bonanza in digitizing businesses is now expected and telecoms operators believe they can leverage cloud and 5G to deliver new ICT services.
Financial markets don’t seem to share such optimism. A piece of equity research published by analysts at a leading European bank last month described telecoms as “a broken sector”. It questioned (and doubted) whether operators would be able to cover their cost of capital. And it made no reference to 5G’s halo effect (although it did talk about the damage caused by high 5G spectrum prices).
What about the telecoms industry itself? Does it truly believe it can deliver? In September, TM Forum will be publishing my latest piece on operator business models. It’s going to have a 5G flavour (the report is to be titled 5G Future; Business Models for Monetization) although many of the topics will not be specific to 5G. The report will be available to anyone who registers on the Inform website:
I’m still working on a table of contents for the research but some of the issues that I will be looking at include:
- Do operators need to choose between being a low-cost operator or a digital service provider? Or is it, rather, the case that operators need to lower their costs and drive automation in order to be able to enter new markets?
- Is connectivity a commodity? Or can operators add value and new business models around connectivity by delivering on connectivity variables such as throughput, latency, quality of service, time and place?
- If operators are to develop new capabilities and deliver new revenue streams, where do they need to invest? And what sort of partnership approaches do they need to adopt?
- What about operators’ own vendors? What role can they play? Should operators be seeking new terms of engagement with them to help change their business models?
- To what extent are new digital services and bundling strategies adding new value rather than just protecting legacy revenues?
- The role of cloud and the relationship between CSPs and public cloud vendors such as AWS and Microsoft Azure.
I’m running an operator and a vendor survey to feed into the report and would love to get your inputs and insights if you have a strong opinion on the matter. But please hurry. The survey will close at the end of this month.
Operator Survey
Vendor Survey
