Collaborate or die

31 Jan 2011

Telcos have been waxing on about the need to partner for years, if not decades. It's a reoccurring theme at most conferences these days -- almost as common as being "customer centric". But most the talk has been just that.

But judging from a couple of presentations at last week's TM Forum Management World in Singapore, there is finally some action behind the talk.

Axiata group CTO Don Price said the group has forged network sharing deals with 17 rival operators in five markets over the past 12 months. He sees infrastructure sharing as the biggest lever of cost optimization for telcos.

Stating the obvious, he noted that telcos haven't been historically good at sharing. "If you think back a few years, we wouldn't even share RF design -- that was top secret -- let alone an infrastructure."

But he said carrier collaboration, or more specifically network sharing, has picked up significant momentum -- and not just passive sharing (which cuts costs just 10-12% compared to up to 30% for active or holistic sharing).

As an example, he sighted the analogy of building a common tollway and allowing the different businesses to compete on the cars -- color, style, etc. "Let's not build multiple tollways and compete on the infrastructure. If you take a country like Cambodia, with roughly 16 million people, it has nine operators and nine networks. The only people making money are the people in the vendor ecosystem and the subcontractors."

The idea of shifting the model from owing the network assets and moving into a more collaborative environment, he said is a sustainable way to move forward. He said the deals can typically take six to 12 months to get the C-level buy in.

In another business model shift, Universal Music is now partnering with telcos to combine the power of its brand and music library with a telco's marketing muscle to expand its music sales and the operator's revenue.

The model is simple, said Sandy Monteiro, president of South East Asia, "for every subscriber who comes onboard, we get a share of the revenue. So the more subscribers we get attracted to this, the more subscribers the telco gets and the more revenue we get. Our objective is to make the telco more successful."

Monteiro said Universal has taken in a different tack from the standard business model. "I think we're always arguing over small change, whether you get 70 cents and I get 30 cents or I get 40 cents and you get 60 cents. It's time to stop arguing over cents and figure out how to use the power of our assets to generate a bigger brand and how to make a telco sexier."

He said it's a bit of a paradigm shift for a lot of the telcos because they're still used to selling ring tones or whatever. "So it takes a bit of time, but when an individual gets it, it becomes infectious within the telco, and when the telco gets behind then the results are phenomenal."

With deals with 23 telcos around the world, including SingTel, the new approach certainly appears to be a win-win for both parties.

RELATED VIDEOS ON: Management World Asia, Sandy Monteiro, Universal Music

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