A Challenging Economy Creates Opportunities

Wed, 07/22/2009 - 8:00pm
Gene Reznik

Over the past decade, much of the revenue growth in the telecommunications industry has come from the explosive global adoption of wireless communications. However, this boom has shown signs of slowing. In most of the developed world, the first stage of wireless industry growth – focused on attracting mobile subscribers – is nearly over. In many countries, penetration of mobile phones is approaching, and often exceeding, 100 percent of the population. And with a sluggish economy, many companies have cut back on wireless services applications.

Gene Reznik

Shrinking ambitions in the wireless industry, however, may prove to be a grave mistake. Providers that choose to pull back on innovation in an attempt to wait out the economic storm risk losing share in an increasingly competitive marketplace.

Options in a Changing Landscape

Almost from the beginning, the strategy in the wireless business has been simple – sign up the greatest number of subscribers as quickly as possible. As a result, this segment of the telecommunications industry is more consumer-focused and less engineering-driven than the wireline business.


Also, the wireless industry always has been receptive to outsourced solutions. In a tightening capital environment, a new wave of outsourcing of networks, systems and select business operations will become increasingly commonplace. This will free up mobile operators to focus their limited capital on developing new services and competing for market share. With handsets rapidly evolving into general purpose computers, there is also a large opportunity in the data side of the wireless businesses, which we see through double-digit growth in data revenue.

Even though the growth of data services will probably slow somewhat in the near future, it will still be substantial and outweigh other opportunities within the telecommunications industry. This growth should be carefully managed to assure that scarce resources will produce high returns.

Mobile operators are not the only ones targeting this market. They are also competing with a fast-moving set of software companies, Internet businesses and handset manufacturers that are targeting the same customers with their own branded services.

Partnering, rather than head-to-head competition, may be the wisest course in dealing with competitors in the market. However, partnerships must not be entered into blindly. Marginalization is a risk in these partnerships. Wireless operators can quickly be reduced to connectivity providers while the big money flows directly to the firms that develop, brand and market the services. The strengths and weaknesses of partners must be carefully assessed, staking out those links in the value chain that assure relevance through both bull and bear markets.

Promising Avenues for Growth

Enablement and customer service are two areas that appear promising for establishing an operator-owned distribution channel in the current market environment.

An enablement strategy uses a platform that facilitates the development and deployment of new services – both internal and third-party. It masks the complexity of the telecommunications infrastructure and provides well-documented “hooks” into common OSS/BSS functions such as billing, presence, location and quality of service. Its foundation is grounded on Service Delivery Platforms (SDPs) that many mobile operators are building and evolving. Operators have learned that these platforms must now be extended to better support the application ecosystem, which enables them to support external as well as internal developers.

Operators have to consider building a bridge that links the regional structure of mobile operators with the global aspirations of service providers and device makers. This new platform – Open SDP – may provide a single face to developers that will span the deployment environments of individual operators. The telecommunications value proposition to third-party developers then becomes “deploy once, deploy everywhere,” which creates an accessible, flexible environment.

Customer service is often one of the first places to experience cost cuts during any belt-tightening exercise. But these cuts often have unintended consequences that ultimately reduce rather than enhance profitability. Cutbacks may bring immediate cost savings, but they may cost companies customers in the long run.

Certain elements, such as customer support, lend themselves to outsourced solutions, where vendors can deliver operational efficiencies. But managing the end-to-end customer lifecycle remains a critical dimension of the customer experience and an area that operators need to carefully manage.

These are indeed challenging times, but the prospects around wireless remain bright.  Enablement and customer service are keys to fueling growth and competitive differentiation in this environment. Companies that master these elements will achieve market leadership and be positioned for future high performance.   

Reznik is global managing director-communications industry at Accenture.


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