By Gemma Simpson, 12 January 2007 16:00
NEWS
Telecoms players are taking a major risk when expanding services to counter declining revenues, according to one analyst.
As revenue streams for seasoned services such as broadband and mobile decline, telcos are investing in new markets such as media or IT to compensate.
But more than half of new ventures are expected to flop because telcos do not fully understand the business areas they are moving into and what customers want, says Gartner.
Good call...
Check out some of silicon.com's telecoms Cheat Sheets
♦ Fixed-mobile convergence
♦ BT's 21CN
♦ Wireless mesh networking
Martin Gutberlet, Gartner VP, told silicon.com pouring money into new services isn't the only way forward.
He said: "Cost cutting, exploiting your customer base better, investing in customer service and thinking about better services - especially for the business segment - would definitely lead to more and better revenues."
But telecoms companies have already begun to expand into new realms. Once a mere cableco, NTL is now a quad-play provider - offering data, video, fixed and mobile phone service - following its merger with Telewest. BT has also expanded its services from phone to broadband and recently launched IPTV.
Total telecoms service revenues will only rise modestly over the next four years, from $1.3tr in 2006 to $1.5tr in 2010, according to Gartner.
Comments
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1. Alvin Ernest
I agree with Gartner about the need for new services; but not that Service Providers (SPs) should focus on cost cutting...
Cost cutting should be achieved as a natural part of market maturity and decline - SG&A cost should reduce as markets mature and decline... this is fundmental... I believe is the old 80:20 rule - 80% of success is derived from the fundamentals, while the remaining 20% offers marginal profit contribution...
SPs should manage the fundamentals e.g. "voice" is tending towards a free service - so it is fundamental that the NGN model recognises that (the peer-to-peer model from Skype, Google, Yahoo! MSN etc will deliver this). The NGN should therefore be focused on revenue generating opportunities.
Revenue generating opportunities can only be understood by understanding opportunities for consumption... i.e. don't collaborate for "creation" collaborate for "consumption"... If you want to create the next "you tube" you will need "garage development" cost levels as these are high risk developments - however, if you focus on improving the quantity and quality of life for consumers i.e. a focus "consumption" then you can invest with more confidence...