Business Case Telecom "Converge or Diversify"

General Description

The telecom world is changing rapidly. In the 80’s the market was dominated mainly by telephone companies, in the 90’s became ISP’s delivering internet connectivity and mobile phone services. In the first years of the new century they have become so called triple play suppliers delivering Telephone, Internet access and TV.

The major players have even invested in content, which implies that the telecom industry dreams of a position where they do more than just distribute the message which was their main goal since the beginning of postal distribution.

Recent initiatives incorporate the acquisition of TV rights, Disclosure of historical archives etc. This will slowly move towards dedicated channels based on common interest subjects. A trend that is already evident in the satellite TV channels, but will extend towards normal TV distribution as well. Music, Sports, Fashion, Nature, Science.

Telco’s are stepping into a media battlefield that is traditionally occupied by Cable companies and TV broadcasters on one side and newly introduced VOD-services and personal TV-production and cast services.

At the same time the value of the fixed network with which they distribute seems to be coming to and end with the introduction of wireless broadband technologies like WIMAX (although WIMAX is just first generation technology).

So were will the telecom’s business model move?
1. Distribution of information (main driver is the network dominance). Income is network usage.
2. Distribution of content (must own content and programming). Income is advertising and content usage
3. In portal distribution (must have in context pushing capabilities). Main income is service delivery.

Facts and figures

Programmed moving images (TV channels) are still very dominant. Customer behaviour still fancies this type of broadcasting. The content profile has changed dramatically over the last decade or two. Production cost per minute of TV has been cut in half due to diminishing advertising income.

The rapid introduction and market penetration of YouTube shows that infotainment, entertainment and news gathering can work without expensive editorial staff and distributions system.

New introductions like “tribler”, “Kyte.tv” and “Joost” spell a totally new future. Anyone can produce at any time. Smart programmers like the early internet structure sites will out smart traditional distributions systems. Will they win the battle for the living room?

Since customer behaviour is moving towards individual consumption of media the role of the “social” family screen is fading, is it? Other uses of large living room screen will be found. They will be social and interactive. Passive horizontal programming is out.

Strategic challenges

1. Enhance ROI time for the fixed networks
2. Roll out of wireless networks at arms length control
3. Start influencing / facilitating individual customers in creating own productions, but in traditional distribution models

Probable solutions

1. Buy new initiatives and control technology replacement
2. Innovate distribution models and create multi label small span publishing units
3. Market new introductions to come top of mind with all customers.

Implementation

Innovate outside standing organisation and buy. A simple external growth and strategy department will do.