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Leader: 'Virtual' reality hits telecoms

Forget the jockeying for position - there are wider issues out there for telcos with sunk assets
Written by silicon.com staff, Contributor

Forget the jockeying for position - there are wider issues out there for telcos with sunk assets

It is tempting to think that the telecoms world is now on the up and up, certainly after the dark days of the bubble bursting after the late 1990s. But it is not quite that simple.

Trying to leave aside the world of cellular operators for a moment - which isn't easy - if we look at carriers in the fixed-line space there are interesting developments afoot.

The broadband market and all that entails to consumers - fat pipes on the rise, IPTV and so on - is interesting and network overhauls by many telcos, perhaps most famously BT, garner plenty of headlines.

But the rather more prosaic world of winning business from user organisations has another interesting development that has been gathering pace.

Today we report that virtual network operator (VNO) Sirocom has won a hefty chunk of business from Reed Managed Services, one of the Reed group of recruitment businesses that was taken private.

Our headline and others might mention that fellow VNO - a better-known VNO - Vanco had held the contract for the past three years. (Though we should also point out it wasn't a straight swap - there were some different requirements on the table.)

But the important point is that the VNO market in itself is growing strongly. There is room for the both of them and arguably a few others, analysts say.

They tend to focus on price, good customer service and immunity to downtime as they simply pass traffic around different facilities-based telcos.

So back to the first line of this article, back to the typical, facilities-based telco. The bursting of the bubble and various chapter 11s helped thin the market but there is still overcapacity out there; conditions are ripe for the VNO.

And while plenty of telco execs that silicon.com meets turn up their noses at the VNO model, many users appreciate its simplicity and cost.

VNOs will have to do more than resell capacity and win business on price alone but the nature of deals being struck by the Sirocoms and Vancos of the world (there aren't many others in the UK) shows that this is happening.

Speak to the CTO at one of these companies and you'll find they know their stuff. Look at what they can do - it's increasingly competitive.

In short, here's another way that telecoms is getting more competitive.

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