Will telecom suffer the fate of other industries or make it through the economic downturn in one piece?
I’m not one for predicting the future, but I don’t mind attempting to influence it, within my reasonable means. Every new year we seem to be overwhelmed with what some people believe will occur in the coming 12 months, some of it so obvious ‘blind Freddy’ would see it coming, and others so way out we discard them immediately as the ravings of a mad prophet.
This year, most predictions are downright depressing. They all revolve around the ‘economic downturn’ we apparently had to have. It seems TM Forum Chairman Keith Willetts and I have been the only voices playing up the positives of the telecommunications industry and its potential to sustain strong revenues even in times of financial uncertainty against most other sectors. Telcos took a big hit around 2001 after committing to major CapEx projects such as convergent billing, network build-out and spectrum acquisition. The industry learned very quickly how to become more efficient, and it continues to do so today with network rationalization, transformation and BSS/OSS integration as we move to an all-IP world.
The difference today is that these projects are well planned, done in conjunction with ‘partners’ rather than ‘vendors’ and often without major borrowing. Outsourcing has become an art form of sorts, with some network operators transforming into pure marketing and management companies. Of course it’s not all rosy, and in some saturated markets competition is forcing prices down and there will be casualties where there is over-supply.
Thanks to wireless networks, communications is now in reach of most of the world’s population, and thanks to pre-paid technologies it’s affordable for most of that population. Communications is no longer a desired commodity but more like a utility. We have become so dependent on it that we now forsake life’s other luxuries in favor of the ability to communicate. We’ve all heard the stories of farmers in developing countries being able to check their crop prices when selling to regional traders, the fishermen in India able to call ahead of arrival in port with details of their catch to garner commitments from waiting buyers, the tradesmen who can take calls on the job and move straight on to the next without having to return to base, etc. Try telling these people to stop using their mobiles!
It’s become fashionable for corporations to dramatically reduce international travel in bad times. Face-to-face meetings are replaced by conference calls and videoconferencing that are heavy users of telecommunications infrastructure. Can you imagine bosses telling staff to reduce email usage and revert to traditional mail during hard times? And what can’t you research, buy or trade on the Internet these days, and what business could run without it?
Let the Prognosticating Begin
So my first dalliance in New Year predictions is that telecommunications revenues will not recede but are likely to increase and quite dramatically. That means that service providers will have cash in the bank, something many other industries won’t have, including banks! How novel is that, telcos with more cash than banks. I wonder what the stock market will favor: a financial sector that has failed itself or a communications sector that is run efficiently and keeps generating revenue.
When you add the specter of mobile operators that are holding massive cash reserves on behalf of pre-paid customers, we add another dimension to just how clever our industry is. Can you think of any other, apart from transportation, that has adopted stored value and proximity NFC cards, that has all its service paid for in advance (and in many cases gets to keep that money if the service is not used up within a certain time frame)? Who would have thought that possible even 10 years ago? That would have been a great prediction with headlines like, “Crazy industry spokesman predicts that people will pay for phone calls in advance and will be happy to have phone companies hold their money on their behalf”!!
So, my next prediction is that other industries will take a closer look at what we are doing and want to emulate it, but we are so good at it they will come and ask us to either provide them with the technology or do it for them. Nobody does it better when it comes to billing than us. We invented micro-billing, micro-payments, extensive retail networks to collect money for pre-paid services and all working in real time. I’d be surprised if some service providers don’t open up their massive billing systems to third parties and that others do not partner with their billing vendors to provide outsourced services or technologies to other industries.
Lastly, there will definitely be more emphasis on the whole revenue management operation within service providers. There will be no scope or latitude for incorrect or incomplete billing processes. Every cent will need to be charged, rated, billed, collected and accounted for. While some clever CEO/CFOs may choose to make large numbers of staff redundant to appease shareholders and take advantage of the climate, those really in tune with their business will allocate resources to tightening up all the revenue process and enhancing their revenue assurance activities. This being the most effective means of increasing revenues and adding dollars directly to the bottom line.