TSIC helps avoid capacity commoditization

Paris Burstyn/Ovum
12 Jun 2015
00:00

TeliaSonera International Carrier (TSIC) can deliver 100Gbps services to its North and South American customers within a few weeks and sometimes within a few days, considerably sooner than many of its competitors.

In circumstances where carrier and content provider customers must respond quickly to their clients’ requirements, they value faster time-to-market more than lower prices.

In our Wholesale Customer Surveys, respondents frequently site time-to-deliver as a key criterion when choosing a wholesale carrier. In our last survey (2013), we found that 20% of respondents rated their suppliers’ delivery lead times as “Poor” or “Inadequate.” A number of respondents also said that provisioning times can be as long as 90 days.

Recognizing its customer needs, TSIC has invested in fiber and super-channel technology throughout its entire North American and pan-European optical transport network footprints since March 2014.

In America, the current focus of its fast delivery efforts, the wholesaler can deliver 100Gbps to customers within six weeks; it aims to reduce that interval to as few as four weeks. It says it delivered the service in four days to one of its social network customers. If a customer has a particularly urgent requirement, it can marshal its forces to deliver within 10 business days.

Driven by rapidly evolving and dynamic end-user demands, wholesale customers (e.g. carriers, resellers, social networks, and content providers) must react quickly and cost-effectively to win business. Wholesale customers need short delivery intervals because the faster a service is deployed, the sooner it can carry traffic and drive revenue for all parties in the value chain.

TSIC’s network-wide investment strategy appears to have paid off not just in the technology sense, but also by allowing it to maintain its prices and avoid commoditization. This capability differentiates it on a time-to-deploy basis and enables more stable pricing. TSIC states that its fast delivery times contributed to its selling more total capacity during the first six months of 2015 than it did during all of 2014.

TSIC’s approach confirms our research conclusion that many wholesale customers are willing to pay higher prices for better performance. Low prices are often associated with poor or unpredictable delivery and performance. However, differentiating on factors other than price can maintain revenues and margins for all parties in the value chain. Wholesalers that do not take this message to heart risk a race to the bottom.

Paris Burstyn is a senior analyst for wholesale at Ovum. For more information, visit www.ovum.com/

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