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Webscale Telcos?

Moving “up the stack” will be necessary and possible for the webscale global giants. Beyond some limited scenarios, smaller providers will lack the scale to create viable new application or services.

That implies rather significant consolidation. It might also mean significant service provider http://howtomonetizeeverything.blogspot.com /2016/08/spectrum-fees-high-incremental-capex.html?q=nationalization&view=classic" style="text-decoration: none;">failures.

Few tier-one service providers http://howtomonetizeeverything.blogspot.com /2016/09/tier-one-telcos-do-not-recover-their.html?q=cost+of+capital" style="text-decoration: none;">recover cost of capital, studies have found. That is one way of suggesting that capital borrowed to provide telecom services actually does not make enough money to repay the loans.

That has clear strategy implications. Only a handful of firms will credibly have a shot at remaining among the 10 or so global providers. For as many as 100 other firms, strategy will consist in remaining the best-possible local partner.

Industry or firm strategy in a new or growing market is fundamentally different from strategy in a declining market. You can draw your own conclusions about which fundamental paradigm is most relevant.

But some conclusions are simple enough. In a young, growing industry, a firm or industry wants to grab new customers as fast as possible. In a declining industry, a firm or industry wants to limit the rate of decline.

Firms in young industries need to focus on growth within the new business. Firms in declining industries must harvest revenue while they search for new businesses to create.

Beyond those key frameworks, the range of potential strategies has increased, compared to options 100 years ago, when telecom was universally a regulated monopoly.

One clear outcome of a massive global wave of asset privatization, deregulation and the shift to Internet as the framework for applications is that service providers are becoming more different from each other, as firms are free to pursue a nearly unlimited number of paths.

So there now likely is no universal “best” strategy for any telco, tier-one, regional or local. Nor, it might appear, will most service providers emerge as major suppliers of new apps and services.

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