The utility factor: are telecom operators in a low-margin utility business, or can they command the returns of value-added service providers?

Telecommunications International,  Jan, 2005  by Ouida Taaffe

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Caught in the network?

"The business model [in an IP world] is to continue to keep value in the network by adding services either at the customer premises, or on platforms connected to the IP network that offer a service to users either within the company or outside the company," argues Temime. He believes that the increasing use of critical applications will require much more, and much more detailed, prioritisation of traffic, which is a network management function.

There are also more radical notions of what owning a network can bring and where such network tuning could go. "If the operators would allow companies to access their signalling networks and to embed into these networks the business processes that they use to do business, such as ERP processes, or marketing campaigns, operators could offer much greater quality of service and open up a new revenue stream," argues Pau, who sees this access to the signalling network as the best way to optimise network function for companies who do not, after all, work in isolation. Among incentives for operators, Pau believes, would be getting a set of customers locked onto their physical assets and the opportunity to vertically integrate. They could, in his view, charge such inter-linked customers a premium for network management, OSS and security management functions.

There is, of course, an argument that a network is not a prerequisite to providing managed services. Vanco, for example, works on this premise and recently announced a deal with Lloyds TSB for the provision of voice and data services including connectivity to the banks cash-point machines. (The underlying capacity is being provided by Vtesse). Temime is sceptical about the ability of virtual providers to really support critical business applications. "When you have real-time transactional applications, you need complete control of the network," he says. Green is also in favour of network ownership. "As people really start to exploit [IP] technology, having a network just makes you more responsive. If you need to make changes it is more straightforward to do that if you own the network," she says."

Ouida Taaffe, features editor

(otaaffe@horizonhouse.co.uk)

written by Ouida Taaffe

COPYRIGHT 2005 Horizon House Publications, Inc.
COPYRIGHT 2005 Gale Group