Like a Sack Full of Fleas
Mobile operators must maintain control of the value chain, despite its fragmentation
Mobile operators have differentiated their business models and fragmented their value chains. But a simple split into those services which are better provided internally and those which can be supplied by a partner is short-sighted. Active vendor management can be used to ensure that control is maintained over the outsourced activities.
The competitive environment in which the mobile operators work has become much tougher in recent years. Regulatory and technical developments have made it possible for new providers to compete more efficiently. Alternative providers such as SumTel in Russia are supplying WiMAX services, MVNOs are serving specific market segments. As in the case of Blyk, this is taking place using completely new business models. At the same time Internet Players like Yahoo!, Google and Youtube are entering the mobile market both by setting up partnerships with the operators, but also on their own, in order to get a piece of the cake.
Market saturation in combination with the entry of new competitors automatically leads to intensive competition accompanied by strong cost pressure and the need for continuous innovation and shorter time-to-market cycles. In the core business of mobile voice falling prices cannot be compensated for by increases in traffic volumes. Mobile operators are trying to put a brake on these revenue losses by offering diversified services such as broadband.
The customer is putting much more emphasis on simple, robust and cheap services. The successes of HSPDA-Dongles and the iPhone in particular show that there really is demand for data services. It just has to be addressed correctly. The producer margins in the traditional network supplier’s market have been cut dramatically by the reduction in the operators’ margins and the increase in competition from China. The suppliers are now trying to compensate for their losses through the offer of diversification in the form of professional services and outsourcing.
The old roles are no longer valid
The traditional mobile operators’ value chains stretched from the implementation and operation of the network infrastructure and services, through the provisioning and distribution of content and on to billing, customer care, marketing and customer management. There were only partnerships with resellers in the area of sales and distribution. The operators thus covered all the areas NetCo, ServCo and SalesCo in combination (refer to DMR article „Telco 2.0“, Dr. K.-M. Henneking in DMR 02/2007).
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