Players in the diverse telecommunications wholesale market are evolving, facing the reality of rapidly commoditizing data and voice. But the approach they are taking varies depending on their background, market conditions and corporate strategy. This blog describes the landscape for wholesalers and characterizes challenges, opportunities and steps many are taking to progress.
Types of Wholesale Providers
Incumbent or PTT – wholesale groups within or spun off from traditional telcos: i.e. BT Wholesale, Telstra Wholesale, TI Sparkle, and Verizon Global Wholesale.
Infrastructure Providers - Undersea cable providers: ie MENA in Egypt, Southern Cross Cable, Seacom (African Submarine Cable company), then the undersea cable groups of major operators: i.e. Tata Communications (who bought Tyco and Teleglobe). This group also includesSatellite Providers such as: Pactel, Cyngus Satellite, Gateway communications and backbone providers including Level 3, and Interoute.
New Entrants can be characterized as facilities or non-facilities based depending on whether they actually own telecommunications infrastructure or are more like brokers. Examples of facilities based providers include: iBasis (now KPN), NobelTel, and Global Telecom Services; while some non-facilities based players are: Bandwidth Wholesalers (the company), and Arween International (International VoIP).
In each area there are opportunities more appropriate for each group’s current market position. Incumbent telcos are usually already full service providers (having a retail and wholesale operation, covering consumer and business and often combining fixed and mobile). Their wholesale groups have often been created by regulatory order rather than business need. However working within their regulatory framework they have many opportunities to expand into adjacent markets by expanding current services, targeting larger end customers directly, launching new IT based services such as data center co-location, and video delivery – Content Delivery Network.
Pure play infrastructure providers have less options as they are often highly focused on their core business (long haul cable, undersea, satellite), however they can certainly look to be acquired or expand into other wholesale or non-wholesale areas. For example Level 3 started as a backbone provider and now offers all range of services. Interoute has launched a broad set of cloud services. Tata Communications acquired Tyco and Teleglobe to become a global undersea cable player as well as a corporate communications supplier.
New entrants can expand in many ways and often have less regulatory constraints. NobelTel is a company that started out in prepaid calling cards and now has telecom wholesale and call distribution services. Global Telecom Services has a twenty five year history and continues to build services that carriers want to buy from them.
New entrant voice players can expand into VoIP bulk services and mobile data bandwidth. Bandwidth players can expand into collocation and facilities management.
The area of Data center capacity wholesaling represents a new opportunity for all segments, as cloud readiness makes such offers much more feasible (IT workloads are beginning to be much more easily transferred between virtual machines).
Many challenges exist for Wholesale players. Regulation remains a key challenge for the incumbents who may be limited in what they can do by their country’s framework. Meanwhile new competition is coming from all corners as larger telcos come into new regions and large multinational groups are formed (ie Bharti, MTN, Verizon, Grupo Carso).
The threat of the over the top players building their own backbone or cable infrastructure is high. Google has now launched “Google Fiber”, but in very limited markets. Meanwhile, state owned broadband networks are disruptive in New Zealand, Australia, Malaysia and Singapore. These as well as municipal networks such as in the US and can form a significant threat.
Both infrastructure and new entrants (in fact all the players) face the constantly declining value of a bit of data or voice minute transferred.
Looking inside the business, wholesalers sometimes lag in terms of online customer experience. Each wholesaler needs to evaluate how automated their front and back office systems are and as themselves questions like: How quickly can new connections and services be set up/changed/torn down? How easy is it to declare problems and escalate them? Can customer interactions with customer be done via a portal or automated interface?
Preparing for the Opportunities
To prepare for the opportunities Wholesalers must:
1 Consider their market position, their customers and their services in their region
2 Define where they want to go, possibly expanding into some of the areas noted above
3 Ensure or build a strong online presence to present a consistent face to their customers, encourage self-service/self-help, and to speed delivery of service to customers
4 Streamline and automate front and back office: BSS and OSS, CRM systems should all be interconnected and automated where possible. Silos between business units (ie wholesale voice vs. data) need to be minimized to encourage cross-sell and good customer experience, while also controlling costs.
5 Processes and platforms for service development and launch need to be available and need to be consistent across the business and need to encourage bundling and cross-sell.
Wholesale market players are evolving today, with many going after new areas such as VoIP wholesale and cloud and datacenter services. Addressing their internal systems and customer facing systems will prepare them for competition from all directions, as well as building a base for new services, delivered more efficiently.
HP offers a broad spectrum of services for Wholesale CSPs, from consulting to implementation to financing services to address their systems as well as their strategic business planning and enterprise architecture. Our product for CSPs span from network signaling, media gateway and HLR/HSS through OSS and BSS, through to cloud enablement, and app store plus enterprise mobility. Find out more at www.hp.com/go/csp.