Market Strategies: New alliances key to operator plans [Loral Orion news]
By David Molony
06 September 1999
Operators' strategic decision-makers have seen their future, and it is in alliances.
A new survey of 90 telecoms companies worldwide showed decision-makers expect
revenues from alliances to increase from 18% today to as much as 42% in 2010. And among
25 senior executives in those companies, alliances were consistently rated the most
effective way to get the strategic advantages those executives wanted for their companies
in a number of key activities, including speed to market and access to expertise.
In fact, according to the report from New York-based Economist Intelligence Unit (EIU) and
Andersen Consulting, Chicago, alliances were rated as more important in achieving
business objectives than organic growth, outsourcing, joint ventures or acquisitions.
However, these are not the traditional network coverage alliances that telecoms companies
have made in the past. They are more like the partner relationships prominent in the IT
sector.
"These are different types of alliances that these [telecoms] guys are now talking about,"
said David Fitzgerald, managing partner at Andersen Consulting. "We will see a lot more in
the way of alliances across or outside of the communications industry."
Multiple operator alliances such as AT&T-Unisource NV may have folded, and the Global
One alliance may be under strain, but other operators are persisting and believe they have
found out how to make alliances work.
Some operators say they already are developing a new model of flexible partnering to
succeed the alliance model based on network sharing within the telecoms sector.
"It all depends what kind of alliance you mean," said David Sexton, chief executive, global
markets, at Cable and Wireless plc in London. "We are not expert in [Web] hosting
technology and services [for example] ... so we will make vertical alliances with companies
who are."
New "go to market" alliances such as Cisco Systems Inc.'s joint venture with KPMG
recognize that the telecoms service provider or equipment provider does not have all the
core competencies needed to engineer end-to-end customer systems, according to
Andersen's Fitzgerald.
Moreover, two important things have changed. The first is that operators think they have
found out how to make alliances work better, by more clearly establishing where ownership
of operations lies.
"Building a worldwide company might be easier than building a worldwide consortium,"
admitted Michel Huet, executive vice president of Global One Communications SA,
Brussels, a joint venture of Deutsche Telekom, France Telecom and Sprint Corp.
AT&T-BT's joint venture, for example, is being set up as a separate network company.
Global One has recently been emphasizing that it is an independent operating company. It
cannot change its shareholder structure, but in the last year it has converted its network
from predominantly annualized bandwidth leases to wholly-owned IRUs (indefeasible rights
of use), which give it more direct control of networking costs.
And, rather than buy or build satellite infrastructure to meet demands of corporate
customers for digital video broadcast (DVB) networking, Global One has made an informal
marketing arrangement with Loral Orion Europe Inc., of London, which recently added such
capability when its parent company acquired Global Access Services from Williams
Communications Inc., of Tulsa, Oklahoma.
The second change is the need to form partnerships with non-operator companies, such as
applications vendors and systems integrators. This will also force telecoms companies to
rethink the way they manage alliances.
"We are going to see a fundamental change ... away from the concept of
customer-supplier," said Andersen's Fitzgerald. "[Operators will move] to the concept of
getting mutual gain from doing this together and putting together deals to help to do that."
Operators already have started outsourcing network procurement to vendors on terms that
give those vendors a bigger role than they would have as own-product contractors. For
example, BT's Ocean managed IP network for businesses in Ireland will be built by Lucent
Technologies Inc., Murray Hill, New Jersey, under a novel revenue-sharing contract, details
of which have not been made public.
Last month, Cable & Wireless appointed Nortel Networks as its network integrator for
global network development, starting with the London-based operator's European IP carrier
network. Brampton, Canada-based Nortel will manage procurement, installation and
integration of the entire infrastructure.
"We will see a lot more outsourcing in network management," concluded Andersen's
Fitzgerald, "and we will see a lot more in the way of alliances as we move towards
next-generation networks."
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URL : totaltele.com
¸ EMAP Media 1999 |
