Partnership models top concern for telecoms execs

6 Dec 2007

An IBM survey has revealed that collaboration with external partners is the top priority for the majority of telecommunications executives over the next five years.

The survey found that 69pc of telecoms service providers expect business model transformation to be the primary source of value over the coming five years, compared with 34pc in the preceding five years.

Some 72pc of executives said collaboration with external partners will be critical as they structure these new business models.

The survey, conducted by the Economist Intelligence Unit on behalf of IBM’s Institute for Business Value, polled 252 global telecom executives.

The new opportunities around data, content, video, advertising and IT services are causing service providers to take a fresh look at business models to once again drive growth, IBM said. For nearly a decade the industry has been characterised by cost containment and efficiency.

This growth imperative is reinforced by the continued decline in voice revenues and the rapid convergence of new media, online and telecoms players.

Despite the apparent willingness to embrace business model change found in the survey, respondents also placed emphasis on traditional competitive differentiators such as network coverage (52pc) and customer reach (45pc).

“Service providers demonstrated a new recognition that business model innovation is paramount, yet many of our survey respondents still pointed to traditional strengths as their differentiators,” said Noel Taylor, general manager and global communications sector leader, IBM Global Business Services. “Ease of use, customer knowledge and device management are all central to the delivery of new content and advertising-based services – and all potentially offer key sources of competitive advantage – but they are not yet key priorities for many service providers.”

Converged content is expected to be a big driver of economic growth over the next five years, the survey found. Some 44pc of global telecom executives are bullish about securing major-to-moderate revenues from video-related services, either in the form of subscription-based revenue or through advertising.

Over half the executives (68pc in Asia Pacific and 56pc in North America) expect non-video content services like ringtones, text voting and music downloads to make major-to-moderate revenue contributions.

“While many operators expect advertising to make a significant contribution to overall revenues, they have yet to find a systematic way to exploit this new market opportunity,” said Bill Battino, communications sector managing partner, IBM Global Business Services.

“Many expect to partner with established online players such as Google, Yahoo! and AOL for advertising-based services but just how service providers will monetise customer information and access remains to be seen. Telecom operators have a fundamental choice to make: whether to create rich customer databases with advanced analytics to serve ads directly via mobile and broadband platforms or to work through ad agencies and online aggregators in a more passive fashion.”

By Niall Byrne