In the past few years, the telco industry has undergone dramatic changes. These changes include not only advancements in technology, but also increased competition and fundamental changes to the telco service delivery model. Many telco players view service delivery as a high-growth opportunity in the coming years, but they are still not certain how to align their portfolios to take advantage of this opportunity. Telco players are also uncertain how competition will affect their strategies.

As telco players continue to focus their portfolio on services, they face stiff competition driven by four clear trends:

1. Consumers demand new communication services including many easy-to-use applications delivered on diverse devices and networks. As consumers demand new and different services, many companies enter the market looking to fill these niches.


2. Network convergence has enabled previously non-competing networks to suddenly become direct competitors.


3. IP centricity brings the well-known packet-based Internet Protocol (IP) to the core network layer. This allows Internet players to compete with telco players in the service market.


4. Software substitution for hardware which replaces typical hardware solutions with extensible and easily-modified software components. This brings more software players into the telco space.


These trends all bring new competition into the telco space and cause existing telco players to rethink and reposition their portfolios in order to take advantage of future high-growth opportunities.


Permanent reinvention of the service portfolio

The current telco market is characterized by widespread consumer service diversification and a destruction of the old market roles. The classic roles of operators and suppliers are still apparent, but they are now just two roles in the market filled with various newly emerging roles. In addition to the classic players (e.g., carriers) we can observe cross-industry penetration (e.g., software vendors with communication offerings) and completely new entrants (e.g., VoIP vendors) in the market. Moreover some companies in the classic roles are reinventing their roles to take advantage of new market opportunities. These shifts are forcing all market participants to reinvent their service portfolios in order to maintain revenue streams and ensure profitable growth.
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