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Understanding Today’s Telecommunications Industry

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Reference Architecture for the Telecommunications Industry

Part of the book series: Progress in IS ((PROIS))

Abstract

Understanding today’s telecommunications industry is a prerequisite for a successful architectural transformation. The tremendous changes of the industry during the last decades have completely altered their rules and structures. In the past, traditional—mainly government-owned—telecommunications operators were responsible for the technical realization of fixed-line and mobile radio communications. Their business model was based on long-term infrastructure investments that were financed through usage-based connection fees. Today, competitors of traditional operators do not necessarily require their own network infrastructure—such as, for example, Over-The-Top (OTT) providers. Increasingly, the technical connection is becoming a commodity. Innovative applications, convergent services, and dedicated customer orientation are today’s success factors. However, increasing data volumes and mobile usage still requires ongoing modernization of network technologies. A major challenge for telecommunications operators is the combination of continuous innovation requirements with a stagnating market and changing value chains. Section 2.1 explains the market conditions and ecosystem with respect to price decrease and cost pressure, competition through Over-the-Top providers, new opportunities in vertical markets, and challenges for regulators. The interrelation between commercial and technical products as well as changed customer demands and usage behavior are discussed in Sect. 2.2. The value chain reacts to the changed market conditions through increased fragmentation of the value creation and new partnering, which are topics of Sect. 2.3.

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Notes

  1. 1.

    In this book the term telecommunications operator is used for all firms offering, providing, and operating telecommunication products and services. It can be seen as synonym for telecommunication company or telecommunication firm. It is understood as a generic term including, e.g., telephone company or communication service provider. A telecommunications operator might offer different telecommunications services (e.g., voice or data) to different customer segments (e.g., residential or wholesale).

  2. 2.

    Translated and revised version of the illustration published in Czarnecki (2013, p. 52).

  3. 3.

    Bloomberg offers an online tool called Bloomberg Industry Market Leaders (Visual Data) that provides key metrics of 49 industries and 580 leading companies (please see www.bloomberg.com/visual-data/industries/). The figure cited here was accessed in Dec. 2015.

  4. 4.

    From the macroeconomic perspective the access to modern telecommunication infrastructure is a critical success factor for economic growth and wealth. Please see, e.g., Hanna (2010), Laudon and Traver (2015), and OECD (2014) for further information. This book focuses on the microeconomic perspective—i.e., the impact of the changed conditions for telecommunications operators.

  5. 5.

    The mobile-broadband technology started with 4G in 2006 (Plunkett 2014, p. 495). Therefore, ITU provides figures for mobile-broadband subscriptions from 2007 onwards. (Plunkett 2014, p. 495).

  6. 6.

    The competition with cable providers works both-ways. Telecommunications operators are addressing customers of cable providers by offering IPTV services. Cable providers are addressing the customers of telecommunications operators by offering broadband internet services.

  7. 7.

    Based on results of Detecon’s OTT knowledge development team. Please see also the reports listed in Table 2.1 for further details.

  8. 8.

    Based on results of Detecon’s OTT knowledge development team.

  9. 9.

    In this figure the interrelation between the number of initiatives and the average readiness score is based on Velasco-Castillo and Rendesse (2014, p. 12). A strategic target window is added in the top right corner of the figure to highlight the strategic goal for all initiatives. Based on own project experience, M2M and cloud-based initiatives are highlighted to achieve the strategic goals in the first place.

  10. 10.

    Most of the information provided in this section is based on results from Detecon through project work in the international telecommunications industry.

  11. 11.

    Please see www.telekom-healthcare.com for further details.

  12. 12.

    The comparison is based on project work conducted by Detecon.

  13. 13.

    Network neutrality and two opposing positions based on project work from Detecon.

  14. 14.

    This section is a translated and slightly revised version of the content published in Czarnecki (2013, pp. 39–41).

  15. 15.

    Translated version of the illustration published in Czarnecki (2013, p. 39).

  16. 16.

    Translated version of the illustration published in Czarnecki (2013, p. 41).

  17. 17.

    Approach developed by Detecon in cooperation with a leading European telecommunications operator.

  18. 18.

    Own illustration based on the reports shown in Table 2.2.

  19. 19.

    The information provided in the section is mainly based on project work conducted by Detecon.

  20. 20.

    Please see http://www.buyin.pro for further details.

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  1. Düsseldorf, Germany

    Christian Czarnecki

  2. Abu Dhabi, United Arab Emirates

    Christian Dietze

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Czarnecki, C., Dietze, C. (2017). Understanding Today’s Telecommunications Industry. In: Reference Architecture for the Telecommunications Industry. Progress in IS. Springer, Cham. https://doi.org/10.1007/978-3-319-46757-3_2

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