Why do Telcos settle for less?
What makes a Telco settle for less? Is it the budget, fear of survival in a highly competitive market or knowledge and skill issues?
Bangladesh recently opened up the Interconnect landscape with 21 new ICX and 22 new IGW licensees entering the fray. This, without doubt, has fragmented the entire Interconnect market and has put significant pressure on the incumbents (to fight emerging competition) and for the new telcos (to have a viable business case for break even and eventually survive).
In a recently concluded InterConnect Conference at Bangladesh hosted by Subex, I had the opportunity to interact with a wide range of audience – CXOs, consultants & IT personnel. While it was acknowledged that a billing system is important to start the operations and convert “usage” to “cash”, it was evident from the discussions, that price was the driving factor in deciding a billing platform and to that end operators were scouting for “low cost” billing systems or looking at developing it in-house. Severe cash-flow issues, as the roll-out along with statutory payments to the regulator for obtaining and maintaining the license, was proving to be very costly. Hence cash-flow and total cost of ownership (TCO) were the main contributing factors to look at a low-cost billing option. The new telcos, in addition, were also exposed to the following risks:
- Survival : Accurate and prompt billing will be a significant differentiating factor in the highly competitive market
- Agility : As competition intensifies they need to be flexible to adapt to market needs and offer innovative products and services at the shortest possible time
- Revenue leakages : Bangladesh as a market is highly prone to fraud and as per the regulator more than 10% of the revenue is lost due to illegal bypass
So, how are the telcos going to remain agile, competitive and eventually break-even at the shortest possible time? Do they have to settle for less and allow the forces of the market to dictate the future?
Subex unveiled a cloud offering for the Interconnect operators in the roadshow. It gives the best of both the worlds – low cost and superior technology, and help the telcos be ready for the future. The cloud model mitigates the business risks and provides the following benefits to the ICX and IGW:
- Low cost of deployment & operations : With a TCO less than 30% of a licensed/in-house model and completely managed by experts, and CapEx requirement lesser by 50-60%
- Low commitment : Volume based pricing to fit the business needs and scale as the business grows
- Minimal risks : Easy sign-on and sign-off to the cloud model
- Ready to launch: Pre-configured application requiring minimal customization (about 20%) to suit telco specific needs
- Minimal domain knowledge: With service provider completely managing the core activities, knowledge and resource requirements from Telco are minimal. They are already constrained with resources and those can be used for growing their business
- Flexibility : The cloud model can very easily extend into Revenue assurance, Fraud Management, Analytics for future
Naturally the excitement was evident when such an option was presented to the telco representatives. The only objection was around security (which was expected) and security is very easily addressable with the right technology and stringent processes.The “best-in-class” solution is available on a “best-in-class” service model which suits the pocket and addresses the business risks. It was time for the operators to go back and “relook” at their business case.
After all, when they have a great option, why do they have to settle for less?