INFS 5053 Case Study 1Group E1

INFS 5053 Assignment 2 – Case Study 1 - Group E1 1

Introduction - Why Telco 2.0?We all need telecom services.

POTS, mobiles, data, video…How will telcos grow revenue in saturated

markets?

INFS 5053 Assignment 2 - Tutorial 1 - Group E1

2

From Docter et al. (2007).

Falling revenue perUser means Telcos have to change their operating model.

Introduction (Cont.)

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Service bundling is not the answer.Bundled revenue often at a discount (1 + 1 + 1

< 3).Does not address content.

The ‘Telco 2.0’ model has been suggested as the way to grow revenues.

So what is Telco 2.0?

What is Telco 2.0? 1It is a fundamentally different model for the

Telco’s business.A move from a supplier-retail model to a 2-sided

model.A move from supplying a pipe to supplying a

pipe of stuff the customer wants.The telco becomes involved in more interactions

between its customers……using the infrastructure and systems the Telco

already has.But is it really all that new?

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What is Telco 2.0? 2Selling services and obtaining revenue from

both upstream and downstream customers.

Requires good customer intelligence, experience and billing systems.

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From STL Partners 2009b.

How does T2.0 Differ from Previous Approaches to the Telco market – Previous Approach

$

$

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$

$

Strategy / APIs / Technology / Operational Agility

How does T2.0 Differ (continued)

What does the two-sided model really offer corporate/institutional/government users of voice and data communications?Corporate/institutional/ government users can be

both upstream and downstream customers

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From STL Partners 2009b.

Requires voice, data and other value-added services.

Requires service sales and

interaction with downstream

customers.

What does the two-sided model really offer corporate/institutional/government users of voice and data communications? (Cont.)For downstream customer

Better price for voice and data communicationsMore value-added services (STL Partners Ltd, 2009)

Identity, Authentication & Security Advertising, Marketing Services & Business Intelligence E-Commerce Sales Order Fulfilment – Off-line Order Fulfilment – On-line Billing & Payments Customer Care

Flexibility on service optionsA new form of relationship between Telco and its

customersINFS 5053 Assignment 2 - Tutorial 1 - Group E1 9

What does the two-sided model really offer corporate/institutional/government users of voice and data communications? (Cont.)For Upstream customer

Allow interaction with downstream customers through Telco’s platform

Provide business opportunitiesAllow cooperation between upstream

customers.

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“Just how likely is this, anyway?”

“Wait just a minute there,” says the Devil’s Advocate.

Telcos historically :-Large monopolists or ex-monopolistsUsed to having captive customer basesUsed to the profits gained from the aboveHave entrenched corporate structures and

culture that have grown up around thisNot friendly to customers or employeesWhereas Web 2.0 companies are seen as

agile, fast-moving and innovative, and good to deal with

Telcos aren’t wanting change as innovators, but defensively, out of necessity

Telstra, an Australian exampleAfter privatisation:Focused on share price

political shenanigansService deterioration Infrastructure degradingBandwidth caps on dialup!Deliberately limiting ADSL

speeds to well below capability

Cable tv rollout failureLow bandwidth limitsAnti-competitive behaviourRefusal to upgrade to 21stc

(e.g. fibre optic)

From a customer point of view:

Large line rental increasesCharging people to pay

bills by credit cardCharging people to pay

bills on the internetCharging people to pay in

personDoing away with itemised

billsExorbitant landline-mobile

rates

Traditional Telco revenues are fallingTelco 2.0 suggests the provision of services both

upstream and downstreamHowever, the Telcos will have to improve in a

forward-looking manner, which will require pain now.

If achieved, a number of advantages will accrue in both B2B and B2C areas

Whether 2.0 adaptations can be achieved is somewhat doubtful, given past history. Even then, they may not keep the Telcos at their current financial levels.

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Conclusion