All telcos need to consider separation: Ovum

Growing commoditisation means telcos will increasingly operate separately from their networks

Separation is a process all telecommunications providers — not just Telstra — will have to come to terms with sooner or later, according to Ovum research director, David Kennedy.

Speaking to Computerworld ahead of the research firm’s executive workshop on convergent telecoms, commercial and regulatory challenges in Melbourne, Kennedy said that increasing competition, the rise of the NBN, and the commoditisation of networks were all contributing to a future in which telcos would become increasingly detached from their own networks.

Telstra’s separation is going with the flow of history.

“What we are increasingly going to see is that these media and marketing capabilities that the telcos are developing will operate more and more separately from their networks,” he said. “So the separation that will emerge fairly naturally is a wholesale network sector with a utility characteristic and, above that, a media and marketing oriented industry focused on customer service at the retail side.”

Kennedy said that in light of the trend, the break up of Telstra is very much aligned with the way the market is naturally evolving; a scenario where the underlying network is commoditised and margin is generated through understanding the customer and providing superior managed services at the retail level.

“[Retail and the network] are two quite different industries requiring quite different skills,” he said. “In our view, in the long run, you’re going to see the separation of these. [Telstra’s] separation is going with the flow of history.”

Kennedy said telcos such as Telstra, Optus and AAPT had already begun responding to this trend through heavily investing in backend IT to support better customer service management and the ability to take a segmented approach to marketing — being able to break down the market according to need and develop servicing and pricing targeted toward those sectors.

“One of the benefits of this, aside from improved sales performance and up-sell rates, is that you can managed the profitability of different segments independently of one another. That’s achieved through directly marketing offers rather than broadcast advertising offers,” he said.

“If the underlying network is commoditised, it is hard to differentiate. So differentiation will happen at the retail level. The simple resale of network capacity is not enough; there has to be additional services, opportunities for bundling and you need to understand and segment your market to do that properly.”

Kennedy said that recent announcement of Telstra’s T-Hub platform for delivering services into the home was a good example of the direction in which telcos were likely to respond to the concept of separation.

“Provide managed end-to-end services to customers that they really value,” he said. “The old approach of providing vanilla services to everyone no longer cuts it in this sort of market. It requires a good understanding of the customer and personalisation.”

View the conference’s agenda.

Email Computerworld or follow @computerworldau on Twitter.

Join the newsletter!

Error: Please check your email address.

Tags the separation of TelstraovumT-Hubtelstra wholesaleTelcoNBN

More about AAPTAPTOptusOvumTelstra Corporation

Show Comments

Market Place