Providers Prepare for Their Future Survival

By Colin Orviss, Senior Vice President, Patni Telecoms Consulting and Deputy Chairman, TM Forum

It’s hardly news that we’re in a recession. The net effect on our industry is that Communications Service Providers (CSP) are planning for an expected reduction in revenues from their Customers (both consumer and enterprise) by revisiting the ROI of capital projects, making OpEx reductions and looking at other ways to remove cost from their business.

I’ve been trying my best to put an upbeat spin on things and although I believe that cost containment is prudent, I’m not that convinced about the projected decline in revenues. The reason for this feeling is that I compare our industry to comfort food. During times of stress and uncertainty – which we seem to have in abundance these days – people tend to turn to food that reminds them of good times. In our case, the comfort comes from talking to and feeling close to loved ones or friends through social networking. Effectively, our industry is the “human interaction and emotional support” facilitator for people who are being challenged by what’s going on in the world.

Communications services are a part of most people’s everyday lives as well as being the engine of the economy – when was the last time you went even half a day without making or receiving a call, looking at e-mail or surfing the Internet? In these times, if you’re a consumer concerned about having enough liquidity, you tend to look out for better deals for things you need, cut down on things like going out for meals and entertainment and generally watch the “pennies”. Our industry enables you to maintain a “reasonable” quality of life by enabling movie downloads and surfing the Internet for deals and, through the likes of video Skype, keep in touch with remotely located family members.

In addition, we’re seeing corporations cut back on travel, but there is still the need for interaction with clients and colleagues. This is where conferencing (both video and voice) will become a far more cost effective meeting enabler than doing it across a table in person. Yet again this becomes our revenue rather than it going to the airlines. Bottom line is that due to the indispensable nature of communications, I believe CSPs are actually going to fair pretty well.

Moving Beyond the Bit Pipe
But to ensure the continued success of the communications industry, CSPs need to structure themselves not only to facilitate the more efficient delivery of their standard services (broadband connectivity, voice, mobility) but also to make e-commerce function better – with the CSP sharing in this new revenue model. We as an industry need to learn how to monetize this, which goes beyond just being an enabler and participating in transactions.

We still very much act as though we’re merely the bit pipes and the facilitators for various transactions. But when there’s a commercial transaction (micro-payment, Internet purchase, etc.) that needs to be charged, why shouldn’t it be done using our payment engine (prepaid or post-paid) – we need to remember that our billing systems are the largest (and probably best) micro-transaction engines in the world! And for this, we should charge a service fee similar to what credit card companies receive.

CSPs are in an excellent position to move well beyond the bit carrier mentality and into one of providing much more value-add. After all, in today’s world, I believe that Customers trust their CSP much more than their financial institutions! So CSPs need to be constantly innovating and offering much more, whether it’s additional services, alternative media, streaming content, and also moving into financial transactions.

But the challenge will be to recognize that these new services are part of a different business model. It’s not just pipes they’re selling anymore but the complete package.

Transformation and Partnerships
Alongside branching out and getting into new lines of businesses, CSPs also need to look inward into their operational model and related business processes. What these companies tend to do is initiate business transformation programs to help with doing things more efficiently, but surprisingly there are still many CSPs around the world that lack the automation necessary to be truly streamlined and efficient even with doing these programs.

While it’s probably not a good time to undertake a radical, massive (and costly) transformation program, CSPs should recognize that now is the time to implement a controlled transformation – not only to meet cost containment goals - but to enable them to capitalize on ways of working differently (and more efficiently). This change covers such things as increasing the amount of self-care, reducing/simplifying the number of market offerings, reducing the plethora of back office applications and automating manual processes where possible, moving more to IP as their preferred delivery enabler but doing it in an intelligent fashion.

This means upgrading existing or buying new COTS solutions, substantially limiting the amount of customization (just because you had it or did it in the old system(s) you probably do not need it in the new system), engaging with partners who will share risk (and paying them against delivery of measured business value rather than a function) and incentivizing your organization to deliver value to your Customers.

As much as transformation has become the buzzword of the day for communications, another key area for CSPs that goes along with transformation is partnerships. CSPs themselves aren’t sure what they are going to look like in five years’ time so being definitive about the end state of their transformation initiative is tough to define to the level necessary to make a program work. They have to change the traditional supplier/purchaser relationship into something more of a partner-based model in order to forge stronger ties with companies that are going to work with them on this important journey – and assist them in adapting to the change that will undoubtedly occur. If they’re the right partner, their global experience should be invaluable.

So whether you’re a mobile provider that wants to move from predominantly voice services to a full services broadband company, a cable provider that’s gunning for the fixed-line guys, or a traditional wireline operator that doesn’t want to become irrelevant, all CSPs need to stop taking their Customers for granted and instead really look at making their business more efficient, automated and nimble in order to succeed.