Rejuvenating wholesale telecom

 

July 2017

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Retail Market Context

The wholesale market is driven by the changes taking place in both the B2C and B2B segments of the retail telecom market:

  • Digital disruption is engulfing the telecom sector and all the industries it serves

  • OTT services are eroding traditional voice and messaging, although those remain essential

  • The growth in voice, notably the international traffic, increasingly relies on VoIP, VoWifi and VoLTE, the latter being driven by greater mobility and the avoidance of roaming charges

  • Data usage is exploding due to broadband content and applications, and will continue with the implementation of IoT and 5G solutions, notably in the enterprise market

  • Operators are under regulatory pressure, such as the end of roaming charges in the EU

  • The technology and the market are shifting from circuits and TDM services to packets and IP services

  • Yet end-users are embracing services which require the same quality as traditional voice, including two-way video, unified communications, femtocells, and gaming

 

Challenges

In this context, wholesalers are facing a decline in revenues and profit due to:

Changes in services and impact on costs and prices

  • Traditional voice telephony volumes and termination rates are decreasing, whilst the fixed costs of the legacy business remain expensive 

  • Basic services are being commoditised, prices are declining, and the purchasing power of retail operators is rising as they are merging

  • Whilst reducing costs in an attempt to tackle losses in traditional voice, wholesalers could compromise the quality of their services and accelerate further their sales decline

  • The demise of metered telephony will lead to a change in the market incentive structure

Increased competition

  • New digital service providers are competing in the enterprise market

  • Tech giants are commercialising the large infrastructure and technology they had built to manage the enormous data volume they handle

  • Consolidation is a major risk, especially in voice

 

Solutions

Products

They should innovate and offer value-added and differentiated products in areas such as:

  • Virtualisation

  • Global Ethernet

  • VoIP, mobile services

  • Location based services

  • A2P messaging

  • CDNs and data services

  • UC, telepresence, collaboration

  • Interconnection and roaming hubs

  • Mobile financial services

  • Fraud prevention (in voice, messaging, and IoT)

  • Cloud services and mobility

Wholesalers can also seek outsourcing contracts in voice, as operators are cutting cost and complexity.

Services

Wholesalers should integrate and create synergies between traditional voice and new digital services.

They should also provide better service delivery, including:

  • End-to-end service management

  • Enhanced quality of service and customer experience

  • Superior reporting tools, bestowing greater control to clients

  • Robust security 

  • Real time intelligence and data analytics in order to help operators create new services, notably in roaming and IoT

  • Quality assurance and measurement for data/cloud services as well as voice

In addition, they should create bespoke offerings according to price and quality requirements.

Capabilities

Wholesalers should invest in :

  • Extra capacity in order to deliver higher bandwidth and faster connectivity

  • IP infrastructure

  • New technology for the early 5G deployment

They should also re-imagine their business model, rejuvenate their corporate culture and seek partnerships with digital services providers.

 
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