5 Nov 2009

In times of changing market conditions, operators turn to Darwin for inspiration

Telecoms markets worldwide, and even more so emerging ones, are going through profound changes. Whether you look at business models, supplier relations or services, all operators need to embrace change in order to compete in a market that is affected not only by tough economic conditions but also going through changes in its ecosystem. It’s no wonder then that Charles Darwin is so often quoted by telecoms executives these days, with his famous words: “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”
It was mentioned a few times at the ‘Convergence in Istanbul’ event organised by the SAMENA Council this week, where people were also talking about “new rules of the game” and “a new paradigm” in the way operators must approach the market. The main change all telecoms players are facing is of course the economic situation. Once again, speakers were keen to point out that the telecoms sectors isn’t as affected as others by the downturn. But operators are experiencing a renewed interest from governments to be involved in the sector, as it is widely seen as an engine for recovery. In a rare show of unity, the CEOs of some of the region’s leading operators, incumbents and challengers alike (Turk Telekom, Etisalat, STC, Mobinil, Alpha, du, and more) voiced their concerns today.
One of the major topics at the event, and a direct link to the economic situation, was how operators improve their efficiency (this was the focus of a pre-event day hosted by Nokia Siemens Networks, and came back in most of the talks at the main conference). Running leaner operations is a key aspect of operators’ efficiency strategies, in particular thanks to outsourcing. But most interestingly the relations between operators and their vendors are being redefined, changing the shape of the telecommunications ecosystem. Indeed, new needs in the market, new technologies and new business models mean that forward thinking operators are building relationships with vendors that are based on partnership rather than a client/supplier basis. One positive consequence is that such partnerships help foster innovation in operations, technologies and services. Another partnership model touches on the financing itself: the ’pay as you grow’ model, where the vendor takes an interest in the operator’s success.
Has this change been brought upon or accelerated by the tough economic climate, or is it a natural evolution of the market? The new, more efficient models are being pioneered in markets such as India and Africa, so it may be that fast-growing emerging markets are breeding grounds for innovation.
The shift in the telecoms ecosystem and business models will be one of the key topics addressed at next week’s AfricaCom congress, the 12th annual pan-African event to be held in Cape Town. Judging by the record registration numbers and interest from companies from around the world, this event should be a great place to share thoughts and encourage innovation in telecoms markets.