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Time for service providers to embrace change

Companies such as Google and Slingbox are "devaluing" core products offered by carriers, which must focus beyond access services to survive, says Frost & Sullivan analyst.
Written by Jeanne Lim, Contributor

SINGAPORE--Telecoms service providers need to go on a transformation journey that focuses more strongly on operating and business support services (OSS/BSS), as they face the inevitable decline of traditional services revenues, said an industry observer at a next-generation networks (NGN) services forum Monday.

OSS/BSS is a telecoms industry-specific term that refers to areas such as fulfillment, service assurance, customer care and billing.

According to Manoj Menon, a partner at consulting company Frost & Sullivan, the whole communications industry is shifting as companies such as Google and Slingbox, and community Internet sites such as mySpace, Friendster and Wikipedia, innovate at a frantic pace and redefine the way people communicate.

These Net-generation companies provide services that are far more valuable than the actual cost of delivering the services, Menon said, pointing out that Internet communities drive actual revenues through ad sales, e-commerce and service upgrades.

In addition, companies such as Google and Slingbox, which he considers "x-factor" companies, are devaluing a service provider's core products and establishing strong relationships with customers.

He warned that the telecoms industry could go the way of the music industry, if it does not figure out how to participate in this new era. Menon noted that in 2002, more than 800 million CDs were sold worldwide. However, this figure plunged to just over 300 million in 2005 because of MP3s and peer-to-peer networking.

Pointing out that the changes have resulted in the "service provider dilemma", he posed: "Providing access--that is increasingly becoming commoditized. How [should service providers] derive sustainable growth?"

There is an upside for service providers though, he noted, which can continue to thrive by transforming themselves to enhance current needs or offer new services.

Menon said that service providers need to move from merely providing communications networks, to creating business domains and the expertise to deliver the business more effectively. For instance, they can look for new business opportunities by providing service delivery platforms needed to support integrated and entertainment services, media and content, and financial and commercial services.

During the journey, service providers should first look at their current network capabilities, examine business cases for fulfilling new services, and then define the NGN blueprint, said Menon. The NGN should include things such as access-agnostic call control and service delivery, standards-based architecture, open and standards-based service creation environment, and converged voice and data technology, he explained.

By the end of the journey, the Frost & Sullivan analyst said service providers should be able execute all of the above, and be prepared to change their organizational structure.

"A high degree of focus on OSS/BSS can create the necessary differentiation," Menon said. A service provider which does that can derive operational benefits such as a higher degree of automation, have a low-cost operating model, and build integrated CRM (customer relationship management) and real-time billing systems.

In addition, he said, the operator can also look forward to having increased flexibility with their new business models, reduced time-to-market and better partner-relationship management.

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