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Less than 40% of Operators Have a Strong Strategy for Telco 2.0 World

We have started analysing the 561 responses to the survey, What does Telco 2.0 mean for Operators? It will take a couple of weeks to do the basic analysis and participants should have the summary results in their inbox during the week of 18th Dec (for perusal over the Christmas festivities).

Even at this early stage of the analysis several revealing (and somewhat disconcerting) findings are emerging. As a teaser, I’ll outline a couple of the quantitative responses below. However, much of the value of the survey is contained in the answers people gave to the open qualitative questions. We are poring over reams of news, views and comment and figuring the big ‘So What?’ take-aways from the survey. Those interested in the full survey results (where we look at individual operators and do all the cuts by geography, company type, job function etc.) and our analysis of this and other Telco 2.0 topics, should consider our quarterly publication, Telco 2.0 Insider. Each edition builds on much of the analysis we carried out for our (now updated) 270 page market study, How to Make Money in an IP-based World, and contains in-depth and up-to-the-minute analysis of how Telcos are (and should) be developing new:

1. Business Models
2. Service Portfolios and
3. NGN architecture

to serve the four customer segments we are focusing on in our March Telco 2.0 brainstorm:

  • Digital Youth - Comms, Entertainment, Social Networking, Self-Expression
  • Digital Home - IPTV, FMC, Home Hub
  • Digital Town - FTTX, Muni-nets, WiMAX, OPLANS
  • Digital Worker - Flexible working, mobility, collaboration

So what news from the survey so far?

Over 60% of Operators Barking up the Wrong Tree…

In our survey, we asked respondents to review 5 generic strategies:

  1. Protection - Retain Network Control: ‘Network-based’ innovator, Shut out new competition
  2. Platform A - Enabler + Service Provider: Co-opetition - partner & compete for services: Open up network, Leverage network capabilities for own services
  3. Platform B - Enabler only: Cooperation - partner for services, Open up network, Lock partners in with unique network-based assets
  4. Pipe: Provide bandwidth - intelligence at the edge: Provide network access, Price leadership
  5. Mix of all of these - Combine elements depending on competition, market maturity etc.

We also gave respondents the option of defining an alternative strategy of their choice. 99% of the time these were combinations of one of the above: Protection + Platform A was one example.

We asked respondents to choose an operator and select which strategy:
A. It is currently pursuing
B. Would be the best choice for it for the future

We collected sufficient data to do detailed analysis on around 20 operators in Europe and North America. However, below is a chart which explores the proportion of operators pursuing the strategy (Y axis, bar height) versus the long-term attractiveness of the strategy (X axis, position of bar).
Strategy%20Appraisal.jpg One surprising result is that so many felt that a ‘Mix’ strategy was not particularly attractive. With many operators having presence in a wide variety of markets, we had expected respondents to believe this is a sensible approach. It could be, of course, that several people were looking at a specific market (or an operator that only operates in one market) and felt that a ‘Mix’ strategy was just that: mixed up and lacking clarity. This is where we will have to see what comes out of the qualitative responses where people have explained the rationale for their evaluation.

…And More Gloom in Mature Markets with Sophisticated Customers…

We have also taken a look at whether there is more confidence in the future for Operators in different geographies. Here we found a very clear correlation between confidence levels and market maturity. Overall, noone is exactly cock-a-hoop about Telco prospects but there is clearly less confidence in more mature markets.
Confidence%20by%20Region.jpg This suggests a belief that operator business models are well suited to providing basic voice and messaging services but are less appropriate for delivering advanced services in an IP-based world.

Why are operators less well suited to delivering advanced services - more competition, internal shortcomings, etc? What should operators do to address this situation?

Again, you’ll have to wait until we’ve done the detailed analysis and then buy Telco 2.0 Insider or the updated Telco 2.0 Market Study!

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I am a bit surprised you would rank strategy 'pipe' as a weak strategy. Unless of course you see it as a defensive move. But rather it could be used as an offensive mood, moreover it is the area where most Telco's (esp the incumbents) are the 800-pound gorillas.

There is no way currently of avoiding that pipe. But if it is the only stratgy than it would mean a complete rehaul of the internal organisation of Telco's to slim down. But even then I believe, if executed well, this could be a very attractive strategy by itself.

However, I suspect that is not wat most Telco's would like themselves to be. And persue 'services'. Now that is requiring a giant leap of faith in one on abilities. Some will do well, but I fear for most.

Just to clarify, the strategy ranking is NOT our assessment it is based on the responses of survey participants when asked to rank the strategies for their ability to deliver success in an IP-based world.

I agree with you 100%, for some telcos (not all) a Pipe option will be the best but it is a difficult pill for telco execs to swallow!

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