The airline industry is comprised of many regional carriers. There is no global carrier (although there are alliances). Each continent has multiple airlines. There are also local / regional airlines. Airlines of different sizes, business models and target customers. Different service offerings and different look & feel in terms of the customer experience (CX).
This shares quite a few similarities with the telco industry, where there are many different variants of business model, categories (T1, T2, ISP, etc) and differentiators.
However it’s the differences in the supplier markets for each that we’ll discuss today.
The airline supplier market is dominated by behemoths like Boeing and Airbus, but also has many smaller niche plane builders.
Airlines buy pre-defined models of planes where the structure, aeronautical systems, etc are already designed, locked in and thoroughly tested. Airlines mostly just change the livery and configurations such as seating, cargo, flying range, etc.
Telcos tend to do the same with their network equipment, taking pre-defined models and configuring the network to suit their needs. Telcos work within the constraints of what the supplier market provides (although the supplier market does work closely with telcos to support feature requests made by the telcos).
But what about their OSS and BSS? Telcos, especially the T1s, tend to design their own and ask suppliers to build to their specs.
This means there’s limited structural consistency, economies of scale, test maturity, etc etc between carriers. Can you imagine airlines around the world designing their own planes and asking suppliers to build each one from scratch?
This results in the telco software supplier market being highly fragmented. The downstream impact of this is that integration is a pain and duplicated efforts are rife.
By comparison, the airline model still facilitates a vibrant supplier ecosystem, with the big builders like Boeing utilising many parts suppliers to build their planes. There are also smaller aircraft builders like General Dynamics / Gulfstream, Textron / Cessna and Bombadier, all the way down to build-your-own kit planes.
This supplier ecosystem provides diversity of choice for the smaller, regional airlines but still ensures a level of standardisation.
Unfortunately, unlike the airline industry, our mid-market (T2, super-ISP, etc) doesn’t have a ready-made, whole of OSS/BSS functionality solution. Everyone has to assemble their own, which means they must take on the responsibility for systems integration, not just be the CSPs they probably prefer to be in most cases.
It seems to me that there’s a big opportunity for more of the smaller OSS and BSS players to become “parts suppliers” to a bigger OSS/BSS aggregator to better support the under-served mid-market telcos – giving them better economies of scale and standardisation – and reducing the integration tax (in time, money and other resources). The big OSS/BSS suppliers tend to service the T1s and typically try to build most features themselves. There’s a gap for a big player bringing the right set of solutions together to support the mid-market telcos more effectively.
I’m seeing quite a bit of acquisition and consolidation happening in the telco software market lately, so perhaps this is where the consolidation might come from?
What do you think? Does this comparison hold true? Are there better analogies we could use? What trends are you seeing that support or contradict the observations above?
