The 2013 ACC kicked off on Tuesday morning with an acknowledgement by Philippine Long Distance Telecommunications (PLDT) CEO Napolean L. Nazareno that “we’re going through a profound and painful transformation to digital technologies.” He continued to explain that in addition to making the move to a digital corporate culture and architecture that for traditional telcos to succeed they will need to “master new skills, including new partnership skills.”
That direction drives a line straight down the middle of attendees at the conference. Surprisingly, many companies attending and advertising their products still focus on “minutes termination,” and traditional voice-centric relationships with other carriers and “voice” wholesalers.
Matthew Howett, Regulation and Policy Practice Leader for Ovum Research noted ”while fixed and mobile minutes are continuing to grow, traditional voice revenue is on the decline.” He backed the statement up with figures including “Over the Top/OTT” services, which are when a service provider sends all types of communications, including video, voice, and other connections, over an Internet protocol network – most commonly over the public Internet.
Howett informed the ACC’s plenary session attendees that Ovum Research believes up to US$52 billion will be lost in traditional voice revenues to OTT providers by 2016, and an additional US$32.6 billion to instant messaging providers in the same period.
The message was simple to traditional communications carriers – adapt or become irrelevant. National carriers may try to work with government regulators to try and adopt legal barriers to prevent the emergence of OTTs operating in that country, however that is only a temporary step to stem the flow of “technology-enabled” competition and retain revenues.
As noted by Nazareno, the carriers must wake up to the reality we are in a global technology refresh cycle and business visions, expectations, and construct business plans that will not only allow the company to survive, but also meet the needs of their users and national objectives.
Martin Geddes, owner of Martin Geddes Consulting, introduced the idea of “Task Substitution.’” Task Substitution occurs when an individual or organization is able to use a substitute technology or process to accomplish tasks that were previously only available from a single source. One example is the traditional telephone call. In the past you would dial a number, and the telephone company would go through a series of connections, switches, and processes that would both connect two end devices, as well as provide accounting for the call.
The telephone user now has many alternatives to the tradition phone call – all task substitutions. You can use Skype, WebEx, GoToMeeting, instant messaging – any one of a multitude of utilities allowing an individual or group to participate in one to one or many to many communications. When a strong list of alternative methods to complete a task exist, then the original method may become obsolete, or have to rapidly adapt to avoid being discarded by users.
A strong message, which made many attendees visibly uncomfortable.
Ivan Landen, Managing Director at Asia-Pacific Expereo, described the telecom revolution in terms all attendees could easily visualize. “Today around 80% of the world’s population have access to the electrical grid/s, while more than 85% of the population has access to Wifi.”
He also provided an additional bit of information which did not surprise attendees, but also made some of the telecom representatives a bit uneasy. In a survey Geddes conducted he discovered that more than 1/2 of business executives polled admitted their Internet access was better at their homes than in their offices.” This information can be analyzed in several different ways, from having poor IT planning with the company, to poor UT capacity management within the communication provider, to the reality traffic on consumer networks is simply lower during the business day than during other time periods.
However the main message was “there is a huge opportunity for communication companies to fix business communications.”
The conference continues until Friday. Many more sessions, many more perimeter discussions, and a lot of space for the telecom community to come to grips with the reality “we need to come to grips with the digital world.”
