Peak telco

When it comes to the industry of CSP (Communication Service Provision), success has always followed the organisations that enabled small business (and residential, corporate, government, etc too for that matter) to harness the power of the network effect.

The invention of telephony, followed shortly thereafter by telephone networks, enabled telcos to ride the network effect to profitability, because telephony provided enormous business value that organisations were willing to pay for. It helped too that most of the original telcos held monopolies for what became a (nearly) essential service.

But no product prospers forever, as shown in the product life cycle diagram below*.
Product life cycle.
A telco’s product mix sees different products at various stages in the life-cycle, with customers switching to technologies that better serve their needs. For example, fax machines were nearly ubiquitous only a few years ago, but as less people use them, they become less relevant (the network effect in reverse). By contrast other services, particularly in the mobility space for example, remain highly relevant as business enablers.

But looking at the product mix of the industry in its entirety, I wonder whether we have already seen peak telco (to borrow from M. King Hubbert’s peak oil theory). If we have seen peak telco, then it implies that it is an industry in decline, dragging profits down and in turn, projects (including OSS projects) decline, salaries decline, etc.

Whilst telcos undoubtedly still add business value, they are faced with a new type of ecosystem. Facebook enables small business in many ways. Google enables small business in many ways. They don’t have same asset burden to carry like telcos do. Telcos still enable small business, but doesn’t tend to have the ability to evolve to business needs as quickly or provide business insights as quickly. In many cases, they’re also hamstrung by universal service obligations imposed by regulators.

This is where OSS has a big part to play. They CAN allow a CSP to be more nimble. They CAN allow a CSP to deliver business insights to customers in real-time. They CAN add significant value to a CSP’s customers. But for any number of reasons, the OSS that most telcos implement AREN’T nimble, insightful or small-business enablers.

Complexity is the root cause in most cases. Brutal simplification is required. Across all levels. In OSS, but in the product development stages prior to reaching OSS.

* One interesting note for telco in the decline stage of the product life-cycle diagram. Sales are actually increasing (ie more data, more services, more devices), which implies more costs, but commoditisation in deregulated markets means that revenues (and profits) are on the decline.

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