Emerging Markets Leaving the West Behind

Nice, France — The options are few for telecom service providers in the Western world who hold fast to the sole proprietorship of their voice-centric networks: oblivion or oblivion. So said Sanjiv Ahuja, chairman of Augere, in his keynote address at Management World Wednesday.

“We’ve made a terrific living in voice, but we have to plan for a world where voice is free,” Ahuja said. “Telcos around the globe are being challenged. In the Western world, they are still living in a world that is passing us by.”

Ahuja said telcos in the west should look to emerging markets to see how new business models are actually working. “Telcos that don’t change will see themselves going into oblivion,” he said.

He said some telcos will become dumb pipe providers, but will excel at it and that’s OK.

As for BSS and OSS providers, he said a massive evolution is required. He said they should stop focusing on automation, QoS and customer relationship management, saying those have been done or should be. Instead, they should focus on business intelligence, segmentation and micro-segmentation.

“We have come a long way, but we have failed to truly turn that into business insight and transform it into services our customers demand,” he said. The challenge is that it will require a complete transformation of the telecom business model, which he said is very hard for successful businesses to go through. And at least for today, telcos are successful.

The type of service customers are demanding needs to be relevant in the moment. However, as leading edge as companies such as Google are, even the information they provide isn’t actually current. “Today is too old. Customers demand services that are relevant now,” Ahuja said. This presents an opportunity for service providers, but they have to develop the infrastructure to provide these kinds of services. Currently, he said, they don’t have the wherewithal to do so.

But emerging service providers do. Operators from Mumbai and Slovakia are showing the kinds of aggressive business models that service providers might wish to emulate, like it or not. We will see more aggressiveness, newer business models and more service innovation in emerging markets largely because they aren’t encumbered by the legacy baggage of western ILECs.

Part of the new business models is sharing ownership or at least cooperating with other service providers as we prepare for the post voice world. ‘We love to own the infrastructure, but need to get more aggressive about sharing it,” Ahuja said.

On the upside, Ahuja went out on a limb and said he feels we are beginning to see signs that the downturn is bottoming out and that things will begin to improve in the fourth quarter or the first quarter of 2010. BSS and OSS vendors should use this time to figure out how to support temporal services that come and go quickly.