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War of the Worlds - Part I: Broadband 2010
Cable telephony… wireless carrier music and video services… iTunes-enabled cellular phones… municipal WiFi … à la carte broadband movie downloads…Telco TV… Google Office…
A ‘War of the Worlds’ over broadband is getting underway. Below, we summarize five scenarios for the year 2010 illustrating a wide range of ways in which a multi-industry collision over broadband’s spoils might play out. Some scenarios exact a heavy price on telecom as it is outflanked by new, unfamiliar competitors. Others illustrate new opportunities, not just for telecom, but for adjacent industries as well.
Each scenario is deliberately exaggerated – a form of caricature – in order to convey a sharp view of one set of market dynamics at a time. Collectively, the scenarios’ purpose is to be a first step, to prime the pump for strategic thinking and analysis not just by telecom strategists, but in the cable, media, advertising, retail and internet equipment industries as well.
Briefly, the five scenarios are:
- Pax Telefonica: a major collision between cable and telcos results in multi-service telecom carriers adopting divergent strategies in the face of a cable attack, from pursuing major cost reductions and further asset divestitures to maintain dividend yield, to redoubling efforts at acquiring market share and making major non-telecom acquisitions
- Utilities Included: Telcos gradually fade to the background, joining water and power companies as general infrastructure suppliers – consumer brands and devices take center stage in the retail communications market
- Viewers’ Choice: Telcos abandon head-to-head video competition in favor of an alternate entertainment delivery model and inflict major damage on cable
- Phone Depot: Device manufacturers and retail after-market services drive growth in telecom value to a business model analogous to SMB (small-medium business) information technology suppliers.
- Google World: a new generation of web-based applications embeds communication as just another feature, diverting large portions of telcos’ retail traffic, and truncating telecom’s broadband growth ambitions
The scenario descriptions omit our quantitative models, but in practice we would expect strategists not only to use scenarios like these (and/or invent a few on their own), but to use them actively – engaging strategy stakeholders in war games or simulations – and supplement them with quantitative “what if” assessments of economic impact on their businesses.
Of all the reasons a business strategy may be unsuccessful, failing to adequately envision what may lie ahead shouldn’t be one of them.
A note on the unconventional format we have employed: the scenarios are presented as simulated “transcripts” of executive panel discussions at imaginary investment banking conferences in the year 2010.
We used this format for several reasons. It seemed like a good deal more fun (and, with any luck, more interesting) than conventional approaches. Also, though presented through a static set of pages, the format is in the spirit of war gaming or strategic simulations, and role-playing seminars which readers may want to conduct for their own enterprises. Finally, we found it to be a good way to pack in a lot of information, including detailed clues about industry players’ culture and thinking, while maintaining an easier-to-digest, conversational format.
Veteran attendees of investment conferences will see we did make one major compromise: our simulated panelists “speak” with a degree of candor unlikely to be found at real events.■
Download this article:: WotW - Broadband Competition.pdf [2.2mb]
12 October 05
