Digging Out Of The Hole: Re-Initializing Telecom
... from the April 2003 issue of Business Communications Review, pp. 14–15
By Bart Stuck and Michael Weingarten
bcr.com
To help define the problem, the authors came up with what they call a doom loop:
Excerpts:
Getting There From Here
This is not a trivial task. It calls for a fundamental restructuring of supply-side-oriented processes by which telecom industry executives have run their businesses for years. What may help make demand-side strategies viable?
1. Create an organization to think about demand stimulation. If you want to promote demand, a good way to start is by focusing attention on new services. Leading consumer goods companies, like Procter & Gamble and Frito Lay, have development groups that do nothing but think about new products. In telecom, what passes for marketing is segmenting existing products to existing customers with tailored pricing schemes. There is minimal thinking about new products. That needs to change.
<snip>
This pessimism creates a self-fulfilling doom loop:
-- Because everyone believes that things won’t get better soon, there’s limited carrier willingness to invest in next-generation technology.
-- As a result, there aren’t exciting new service offerings for customers—just complex price-discounting schemes for existing services like mobile and long distance, along with bundling discounts for entrusting your communications life to a single service provider. For cable TV, we don’t even get discounted offers—just bills that grow faster than inflation.
-- Because there aren’t exciting service offers, demand doesn’t grow much. The new pricing results mostly in market-share changes, not primary demand stimulation.
-- Slow demand growth and unwillingness to invest in next-generation equipment force a substantial cutback in new product development at major equipment vendors and venture-funded startups.
-- Reduced new product development further retards the ability to offer new products.
-- And so on…
BCR Editor’s Note: This is the first of what we hope will be many analyses of how the industry can turn itself around (hopefully, the turn-around will begin soon!). A follow-up piece from Stuck and Weingarten will appear next month and we invite readers’ manuscripts, comments and critiques. —FSK
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Comments on this article would be welcome.
FAC |
