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Telco 2.0

Telco 2.0. INFS 5053 Case Study 1 Group E1. Introduction - Why Telco 2.0?. We all need telecom services. POTS, mobiles, data, video… How will telcos grow revenue in saturated markets?. Falling revenue per User means Telcos have to change their operating model. From Docter et al. (2007).

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Telco 2.0

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  1. Telco 2.0 INFS 5053 Case Study 1 Group E1 INFS 5053 Assignment 2 – Case Study 1 - Group E1

  2. Introduction - Why Telco 2.0? • We all need telecom services. • POTS, mobiles, data, video… • How will telcos grow revenue in saturated markets? Falling revenue per User means Telcos have to change their operating model. From Docter et al. (2007). INFS 5053 Assignment 2 - Tutorial 1 - Group E1

  3. Introduction (Cont.) • 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? INFS 5053 Assignment 2 - Tutorial 1 - Group E1

  4. What is Telco 2.0? 1 • It 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? INFS 5053 Assignment 2 - Tutorial 1 - Group E1

  5. What is Telco 2.0? 2 • Selling services and obtaining revenue from both upstream and downstream customers. • Requires good customer intelligence, experience and billing systems. From STL Partners 2009b. INFS 5053 Assignment 2 - Tutorial 1 - Group E1

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

  7. How does T2.0 Differ (continued) $ $ Strategy / APIs / Technology / Operational Agility INFS 5053 Assignment 2 - Tutorial 1 - Group E1 7

  8. What does the two-sided model really offer corporate/institutional/government users of voice and data communications? Requires service sales and interaction with downstream customers. Requires voice, data and other value-added services. From STL Partners 2009b. Corporate/institutional/ government users can be both upstream and downstream customers INFS 5053 Assignment 2 - Tutorial 1 - Group E1 8

  9. 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 communications • More 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 options • A new form of relationship between Telco and its customers INFS 5053 Assignment 2 - Tutorial 1 - Group E1 9

  10. 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 opportunities • Allow cooperation between upstream customers. INFS 5053 Assignment 2 - Tutorial 1 - Group E1 10

  11. “Wait just a minute there,” says the Devil’s Advocate. “Just how likely is this, anyway?”

  12. Telcos historically :- • Large monopolists or ex-monopolists • Used to having captive customer bases • Used to the profits gained from the above • Have entrenched corporate structures and culture that have grown up around this • Not friendly to customers or employees • Whereas 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

  13. After privatisation: Focused on share price political shenanigans Service deterioration Infrastructure degrading Bandwidth caps on dialup! Deliberately limiting ADSL speeds to well below capability Cable tv rollout failure Low bandwidth limits Anti-competitive behaviour Refusal to upgrade to 21stc (e.g. fibre optic) From a customer point of view: Large line rental increases Charging people to pay bills by credit card Charging people to pay bills on the internet Charging people to pay in person Doing away with itemised bills Exorbitant landline-mobile rates Telstra, an Australian example

  14. Conclusion • Traditional Telco revenues are falling • Telco 2.0 suggests the provision of services both upstream and downstream • However, 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. INFS 5053 Assignment 2 - Tutorial 1 - Group E1 14

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