In an interview with Tim McElligott of Telephony magazine, Keith Willetts of the TeleManagement Forum (TMF) shares his thoughts about common challenges of the incumbent big telecom and media companies -- as they face the realities of managing the 'graceful decline' of their traditional revenue streams.
I have always respected Mr. Willetts for his candor in tackling the apparent and systematic denial that often handicaps the communications service provider's leadership -- as he frequently dares to address the obvious elephant in the room that everyone else clearly sees, but simply chooses to ignore.
I have always respected Mr. Willetts for his candor in tackling the apparent and systematic denial that often handicaps the communications service provider's leadership -- as he frequently dares to address the obvious elephant in the room that everyone else clearly sees, but simply chooses to ignore.
"Well, we've had times in the TMF when every operator on the planet thought they were competitors with each other. Then it settled down when they realized they could collaborate. We've had times when software suppliers were intensely competitive over certain things and in the end they too realized there were places they could collaborate.
I fully expect to see that here. But there will be a lot of jockeying for position before we get there. Telecom can't play at all points of the value chain like it used to.
But it's not all a bed of roses in the media industry either. The media industry is a trillion dollar industry like telecom, and it is losing its core revenue at about the same rate as telecom. Core advertising is about a half-trillion of that revenue and is declining about 10 percent per annum, like the telco's PSTN. So it isn't like telecom is in this big hole and everyone is circling around to kill it off.
The only guys in ascendancy are the Web companies, but in revenue terms, they still don't make the revenue that the phone companies and media companies make. But their market caps are enormous, so they can go out and buy things like a Skype and not even worry about it. They have enormous power because of that market cap.
In the U.S., the two big carriers left (AT&T & Verizon) have tremendous market power, but significant market power does not stop major industries from sliding beneath the waves at significant inflection points in the past. There is a real turning point happening soon, so it will be interesting to see if Tier 1 IPTV plays can really cut it.
One European operator's trial service is bleeding 30 percent churn a month. Customers are trying it and leaving because the service is so poor. The technology and commercial challenges are greater than anything a telecom company has ever tried to put together."