Skip to main navigation

Top 10 risks in telecommunications 2012 - Failure to shift the business model from minutes to bytes - EY - Global

Top 10 risks in telecommunications 2012

Risk 1: Failure to shift the business model from minutes to bytes

  • Share
The risk of failing to shift from minutes to bytes reflects the new challenges now facing operators around the world.

As a result of aggressive moves by competitors entering from other sectors and rapid change in telecoms' established value chains, operators need to respond to these changes with the migration of value from charging for minutes of usage to carrying rising volumes of data across networks.

Focusing on retention stifles value

Operators need to move away from legacy strategies that have focused on retaining customers' loyalty rather than monetizing demand.

The direct impact of the commoditization of the value of minutes is clear in offerings such as free upgrades for fixed broadband, flat-rate mobile data services and discounted multi-play packages. User-loyalty considerations are now actually stifling value creation.

Instead of concentrating on fighting churn, we believe that operators should now raise their sights to target revenues from new services that tap into rising demand.

Adapting to a wider ecosystem …

In response, operators need to adapt their business models to a wider ecosystem and make firm decisions about which revenue sources they are going to target within that broader environment. As the graph shows, the current split of revenues is roughly 50% in the consumer segment, with the rest divided between business and wholesale.

Operator revenue mixes — 2020 scenarios1


Operator revenue mixes — 2020 scenarios

Depending on the chosen strategy, this split could evolve by 2020 into a "smart" operator with revenues dominated by customers or a "lean" model rebalanced toward wholesale service provision.

… while seizing the enterprise opportunity

In light of developments such as the rapidly intensifying competition for consumers' spending, the revenue growth potential in the enterprise segment remains high in comparison to the consumer market. To exploit this potential, business models for enterprise customers have to embrace new approaches to provisioning alongside collaborative approaches to service development and delivery.



<< Previous | Next >>



1Ovum, "Telecoms in 2020: Executive Summary," December 2009.

Back to top