Pipeline Publishing, Volume 3, Issue 10
This Month's Issue: 
Beyond Quad Play: XoIP 
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Buying Telecom Futures?

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because the future results from many decisions being made in a big game.

The future will be altered by the decisions of executives in allocating capital and in consumers in their choice among products. Strategic planers and marketing research groups should be providing information on the value of outcomes so that executives can best choose.

Once we planners told Executives to concentrate investment in IP services. They selectively listened, committing to internet associated access and backbones, but not to internet products and management. MCI Internet provided the first internet commerce service as a sub part of 1800MUSICNOW, but the executives killed the project. Once MCI and AT&T respectively held the largest share of web hosting market, but these projects were relatively starved and growth and innovation shifted out of our control.

“A wide array of new Internet-enabled communications services geared to the needs of consumers is expected to generate nearly $265 billion for phone companies and other telecommunications carriers worldwide over the next five years, according to a new market research study from The Insight Research Corporation.” …“"However, the actual revenue contributions made by all of our IP services represent just 0.9 percent of all global wireline and wireless telecommunication service revenues forecasted for 2006 and just 5.7 percent of those forecasted for 2011.” [ibid.]

Insight Research finds so little Internet-related revenue because most of it has already migrated out of our industry and is concentrated in computer, portal and software firms.

Today it seems that most innovation is coming from outside Telecommunications. Relatively, the computer, Portal, and software companies are making great inroads into our traditional product base and these are gaining considerable acceptance by the consumers. And executives can no longer hedge their bets by buying computer, Portal, and Software companied, because today these are valued by the market higher that us. The market is another voting mechanism where investors are trying to predict the future and weight investments according to expected future value. So what should we do? Decide to quit telecommunications?

Playing to your strengths
I argue that we can still survive as a strong and independent industry, if we can provide the strongest product. If we identify and invest in our strengths, than we can shift the probabilities that this outcome will be achieved. There are several current technical focal points, which are also our strengths, where we can gather, band together, and drive forward to succeed. Technically these come down to:

  • UTRAN for wireless
  • Fiber-to-the-home
  • SOA and “software as a service” as a product infrastructure
  • IMS for application integration of all

The price of choosing wrong could be quite high. Again the findings of even the simple Insight Research Report (And for once a study is presenting the consequences of their work in even more dire terms that I usually use):

“…if the network evolving scenario is displaced, then the entrenched carriers and suppliers could see their cash cows shrink dramatically to a level from which they are unable to recover their investments adequately, and continuing depreciation of their assets would lead to bankruptcies. Of course, those that invested in the Internet and wireless scenarios also face the same risk if their approach is not the predominant one.” “…the other two scenarios should be viewed as more likely to win based on price, as long as they don’t have major problems with service quality, service usability, service availability, or service support.”

But here is our successful strategy! The relative strength of our network over computer companies, portals, and software firms is two things:

  • Our experience with networks as ‘complex’ inter-working systems
  • Our commitment to quality, achieved via active management systems

So strategically, our executives should be investing strongly in these – not just as a means of managing the above new technologies, but independently to provide a differentiation from the “stupid network”.

Returning to my original example question, IP or ATM or some mix; of course IP came to dominate and ATM became an edge technology. One dominates but both continue on. Likely the scenario future of networks (mixed telecom based, wireless based, or Internet) answer will also be mixed. One will dominate but all will continue to play roles in what after all is an organically growing industry.

Today most innovation and momentum are now coming from outside service providers and traditional vendors. The best investment play for providers is fiber to the home, IMS and UTRAN. But the best hope for overall success (and maybe even the survival) of service providers is in insuring quality through effective management of networks and services.

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