CARLSBAD, Calif.-Telecommunications executives convened in California last month to discuss the challenges facing the industry, including competition, regulation and technological change, as part of the 21st Century Telecoms Company Global Executive Symposium hosted by The Economist Intelligence Unit, Deloitte & Touche and Deloitte Consulting.
Research based on more than 50 in-depth interviews with industry leaders formed the foundation of a comprehensive study on the future of the telecom industry, which was presented and discussed at the conference. The outcome of the research is a framework that provides guidance for carriers that need to decide in what technologies and areas to invest time and money.
Instead of pinpointing one area companies should focus on, the group instead said carriers need to be flexible enough to take advantage of a variety of opportunities that could become available.
“One example is the array of possible alternatives to the incumbents’ copper wire `last-mile’ connection to customers,” said the report. “The wireless candidates alone include a variety of fixed, mobile, stratospheric and space-based alternatives, and questions about their commercial feasibility could be resolved any time from next year to 10 years from now.
“Clearly, new approaches are needed for decoding current events, validating long-term trends and defining corporate strategies,” said the report.
The group identified five sources of turmoil that drive change: customers, technology, capital markets, government policy and providers. Then the group spelled out the four phases of any industry’s life cycle, including formulation (the new technology develops), consolidation (key corporations expand and small companies are absorbed), disaggregation (specialization becomes widespread) and reconsolidation (mega-specialists form).
Using that data, the group identified four evolutionary scenarios that could occur: incumbency counts, mass matters, pinpointing prevails and revolution.
Under the incumbency-counts scenario, customers remain loyal to incumbents and less receptive to new services. Essentially the status quo continues.
The mass-matters scenario predicts the formation of “megacarriers” through mergers and acquisitions. Some incumbents will manage to become megacarriers, and specialists only will survive as niche players.
According to the pinpointing-prevails scenario, customers begin demanding services designed to meet their specific needs, and megacarriers are too unwieldy and unresponsive to meet those demands. This sets the disaggregation phase of the industry life cycle into motion, and widespread specialization occurs.
Finally, the revolutionary scenario contains three possible areas that could set off a revolution in the industry by 2005: A data revolution, a cable revolution and a wireless revolution.
“The wireless-revolution scenario assumes that a new economic paradigm enables wireless technology to achieve tremendous advantages over wireline in areas such as infrastructure costs, deployment times, per-minute prices and functionality,” said the report.
In the end, carriers need to be able to plan for any of the potential scenarios. “Strategies that depend on one particular future are less robust than strategies that are viable across several scenarios because the latter leave more options for dealing with the surprises a volatile environment is bound to produce,” said the report.
