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Operators: Are you a Smart Pipe or an Efficient Pipe? Or something else?

Amdocs (on the back of winning the Leadership Award at the TMForum Excellence Awards last night) have announced the results of an Economist Intelligence Unit Report entitled: Service Providers Adopt New Strategies to Address the Competitive Climate.

Denis McCauley of the Economics Intelligence Unit (EIU) points out that, after their research, ‘the risk of service providers becoming a ‘dumb pipe’ is vastly overstated’.

Which is good news if you’ve been sitting holding on to the table, panicking about what to do next.

The EIU report outlines five strategy options for operators to consider, namely:

Smart Pipe: Partnering, instead of competing with “over-the-top” players (Internet companies that deliver their own video and content over the service providers’ networks), will enable service providers to deliver a compelling customer experience for their subscribers and attract new customers. According to the report, a leading UK service provider has realized a 20 percent increase to its profit margin through partnering with an Internet company and attracting more profitable customers.

Efficient Pipe: Greater automation of business processes will boost service providers’ profitability. Careful monitoring of competition and the demand for services will help service providers control the pace of expensive next-generation network deployment. Business process modernization, closer integration of fixed and mobile units, sharing of network components and using advanced technologies in high-demand areas can all help improve efficiency. Recent data suggests vast cost reductions from moving to new networks, including a 50 percent reduction in the cost-per-megabyte when moving from 3G to HSPA (high-speed packet access), and another 50 percent reduction in going from HSPA to LTE (long-term evolution).

Pricing Pioneer: Adoption of new pricing models that better reflect actual network usage, such as pricing models based on time-of-day usage and speed, will safeguard profitability. The report notes that fair-usage policies that target “bandwidth hogs” may prove effective in some markets, and raises the opportunity of “traffic shaping” where service providers base tariffs on speed or charge more for usage during busy periods.

Defender of the Realm: Embracing rather than resisting competing technologies such as voice-over Internet Protocol (VoIP) will retain and attract customers, and generate more revenue from data services. Blocking VoIP, says the report, is a short-term approach, as it will likely meet with a customer backlash.

Transformer: Expanding into industries such as energy and healthcare, using cloud computing, intelligent networks and machine-to-machine communications, will generate new revenue opportunities.

The EIU research was conducted in the spring of 2010, based on interviews with senior service provider executives and independent industry experts, as well as on desk research. Sponsored by Amdocs, the EIU bears sole responsibility for the content of the paper. The research report is available at .

I’d like to see operators get stuck into these approaches… I don’t want to hold my breath though…


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