Restoring Growth: Moving Voice from Commodity to Convenience

Carriers are fighting declining voice revenues in two ways: service bundling by wireline carriers, and a transition by wireless carriers to data services. Bundling is a positive, but defensive, play to delay revenue erosion. More open carrier business models could restore voice revenue growth.

• Bundling alone, while accretive to ARPU, will not restore growth in the core voice franchise
• Avoiding the failures of the past in “enhanced services” is now possible with cheaper, simpler technologies, “convenience” features and a marketplace model which levers existing carrier assets at low cost
• For a typical wireline carrier, convenience services could add as much as $500M annually in high-margin revenue.

1 November 02

Transformation Interrupted - Beyond the 'Usual Suspects'

The “usual suspects” in the telecom bubble are regulation and excess capital, but we focus on a third, more important cause – flawed business models and strategies. “More important” because we do not believe a shrunken, recapitalized industry, following essentially the same playbook is the basis for restoring growth.

Using three telecom-based case study examples, we define a new model for potential services growth potentially involving not one or two “killer apps” but hundreds of modest growth, revenue-generating services, both voice, internet, and hybrid combinations. This model, “Telco as Marketplace” is defined as one in which transport and services business models are separated and complementary, and in which capital efficiency is at a premium.

11 July 02

Transformation Interrupted - Part I: Surveying the Wreckage

The incumbents, having successfully defended their local service monopolies from competitive incursion, now too appear dead in the water, drifting strategically and earning less than their cost capital. Investors who have seen a quarter of a trillion dollars of cash disappear in this sector can be expected to think long and hard before committing more.

11 July 02

Transformation Interrupted - Part II: What Went Wrong?

The two most common views are that the pre-Worldcom meltdown was caused by deeply-flawed market deregulation, and a capital markets bubble which paralleled the dotcom universe.

There is no question that some of the former (bad regulation), and a good deal of the latter (money like water) played large roles in getting us to where we are today. We will discuss each of them – regulation quite briefly – but also introduce what we believe to be a more important causal element: business strategies which made the problem much, much worse. More important because fixing business strategy is well within the control of surviving businesses

11 July 02

Transformation Interrupted - Part III: Restoring Growth

At the outset, we said the promise of industry transformation involved new networks, new services, and new business models. So far, we are still only one for three – more networks. It is only by separating transport networks and services (i.e. applications) that there is a genuine possibility of service innovation beyond “me too, but cheaper”, and hence the possibility of new business models as well.

11 July 02

Transformation Interrupted - Part IV: Sharing Value to Create Value

The goal of the Telco as Marketplace is to interconnect infrastructure owners and their network with service providers and their innovations in a new economic model. These services may range the spectrum from PSTN-centric, to hybrid internet and PSTN services, to highly internet-centric communications services.

11 July 02

Transformation Interrupted - Part V: Jump-Starting Alternative Business Models

The Telco as Marketplace model’s emphasis on low-cost services innovation is potentially part of a new round of more productive growth strategies which, when combined with greatly increased capital productivity and operating leverage from process efficiencies, can position communications service providers for growth.

11 July 02