Telcos need to shift focus: Budde

Telecomms analyst Paul Budde delivered a stern warning to Australian telco players yesterday, to shift their focus from technology to markets and customer service.

Speaking at the launch of his 1999 Telecommunications Reports, Budde said telcos who offer specialised services, such as value add applications, and focus on niche markets will be the survivors as the industry evolves over the next three to five years.

Meanwhile, competitive pressures will force Australian telcos to move to new technologies, such as Code Division Multiple Access (CDMA), and cut call costs, he said, which will dent their financials thus making them vulnerable to acquisition.

"There is no room in the world for national operators the size of Telstra," Budde said, predicting global mergers in Australia and New Zealand within three to five years.

The top 12 telcos will merge into six within two to three years, possibly sooner, he said.

In the mobile telecomms arena, Budde said market growth was below expectations due to high call charges, with seven million subscribers expected by year end.

He said mobile charges will drop as competition hots up by the end of this year.

Budde said he expected to see One.Tel and Hutchison Telecommunications repeat strategies in Australia that have seen them offer call charges as low as 10 cents a minute in Finland, Germany, USA and Denmark.

He said he did not expect third generation (3G) wireless technology to take off, but rather to see emerge cell broadcasting, General Packet Radio Service (GPRS), Wireless Application Protocol (WAP), integrated messaging, and short messaging system (SMS) services.

By 2001 mobile communications will carry 60 to 70 per cent of voice traffic, Budde said, while 95 per cent of traffic on fixed networks will be data driven by 2003.

IP will carry 35 per cent of long-distance core-network traffic by 2003, driving development of innovative value add applications, he said.

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