In recent years, the need for the telecommunications industry to adapt new business models has been voiced by many.
A business model describes the rationale of how an organization creates, delivers, and captures value - economic, social, or other forms of value. The term business model is thus used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies.
As a consequence of IP evolving as the main transporter of any data whether audio, video or text, as well as being the common transport denominator across any physical network, most traditional telecommunication services are being re-engineered and offered as applications i.e. Skype and WEBex.
Applications tend to be offered and/or sold in the form of licenses or hosted (outsourced, facility management or managed service) – all business models different to a subscriber model.
As we know, applications integrate and synergies can be achieved more easily than with Telco network elements. As such, with applications, platforms can be formed. This we see both in Apple’s App Store platform, and Vodafone 360 aimed at the consumer market. Also, Unified Communication, aimed at businesses, sets out to build a platform unifying all communication including instant messaging, calendar, conference and collaboration, all fixed and all mobile.
With regards to the consumer market, I have some questions and concerns. I may be limited in my knowledge, hence welcome comments. However, while Apple is eating the operator’s lunch with their App Store – based on a business model that has a well defined revenue model as an integral part – it seems to me that operator’s counter attack is to build platform as a service and not as a business. They do this by piggy-backing on social networking, hoping for advertising revenue as a result of uptake. Also, as a result of uptake, the hope is to be attractive to apps developers. My thinking is this: as applications are offered and sold differently to traffic, the traditional revenue share model will not work, also due to flat access pricing.
How easy will it be to implement sound revenue models, almost as an afterthought, without creating vertical stove pipes all over again? (Advertising revenue systems dis-integrated with apps revenue systems, dis-integrated with fast moving consumer goods i.e. phones, modems revenue systems etc).
There is a jockeying for position providing Unified Communications to the business market. While up until a year or so ago the term Unified Communications was mostly hooked on fixed, mobile is now enabled and is becoming an important part of the whole Unified Communications.
Also here we see it being driven by companies outside the telecommunications industry, such as IBM, Microsoft and Cisco, to mention some.
But, there are huge opportunities for the operators, as recognized by Vodafone, O2 and others. Again my knowledge may be limited, hence comments are welcomed.
Unified communication offerings are dependent on physical networks; hence the opportunity exists to initialize the networks by building a Unified Communication platform offering over the networks. Typically Unified Communication consists of, but is not limited to: PBXs, private wires, routers, Pico or Femto cells, fixed terminal phones, mobile phones, common pricing model, instant messaging, calendar sync, phone book sync etc.
My point is not to define all the components in Unified Communications, but to point to the fact there will be many components making up Unified Communication, each having to be priced to secure margins. Offering unified communication as a platform, and making it an integrated solution, requires bid management.
My view of the issues that need to be addressed to secure a sound revenue model are: securing margins, avoiding price negotiating on a component of the solution, and whether the solution is offered as a managed service or license.
As a conclusion, while we all agree the need for new business models, we need to view this from multi-dimensions and, above all, not forget the revenue model. I think it will be harder to address revenue models as an afterthought than it has been to address billing as an afterthought – and we all know that story.