Wednesday, June 14, 2006

Current Analysis: Enter the 'Total Communications Providers'

Emma Mohr-McClune at Current Analysis offers up a good read at the Mobility Water Cooler about how in Europe the "biggest and best service providers metamorph from service specialists into 'Total Communications Providers’, with a one-stop-shop of solutions, fixed, mobile and Internet. As brands, portfolios and support lines diverge, the sales prerogative of tomorrow will be all about maximising contract value with multiple services, and just about everyone, from France Telecom to Vodafone, is going down that path."

She states that "the recent O-Day re-branding of France Telecom’s various business-facing units, mobile, fixed and Internet, to ‘Orange Business Services’ is telling. The resulting unit bares a mobile brand profile: Orange. France Telecom’s decision to promote the ‘Orange’ brand over its own tells us quite a lot about the provider’s approach to its service convergence strategy in which mobility, clearly, is a key message."

Mohr-McClune believes that:

the arrival of ‘Total Communications Providers’ essentially sweeps away two or more decades of established competitive response mechanisms, based on compare and contrast analysis of distinct services and solutions. That will all become less transparent, and relevant, as Total Communications Providers push the implicit value and cost-saving of single-sourced bundles of solutions, integrated, ‘converged’ or otherwise. Worse, those on the end of a support call will be challenged to provide a timely, satisfactory response to a far wider set of potential problems, from the SLA conditions regarding IP network performance all the way down to handset configuration for MMS – the education that has to go on at the integrated operator’s support level is daunting.
She then discusses the current state of the industry and wirtes:
In the case of incumbents such as France Telecom and Telecom Italia, building up an integrated portfolio of services is merely an exercise in fixed and mobile division integration, with a shared sales and support line. For others, such as BT and AT&T, but also aggregators such as iPass and Fiberlink, achieving billable cellular access has become a sticking point. iPass, for example, has been gunning hard for a MVNO relationship in Europe of any kind, to no avail. BT has worked out a relationship with Vodafone for the UK only, with additional reseller agreements in other European markets, but Verizon Business and AT&T are still deciding how to approach this difficult set of negotiations. European wireless operators are extremely wary of allowing large enterprise-targeted service providers from leasing wireless capacity, and Enterprise MVNO relationships to this end have been few and far between. Perhaps that’s understandable. The effects of consumer-centric MVNO activity in Europe has been devastating in terms of price erosion, churn and price sensitivity. But is this MNO position justifiable?
Mohr-McClune then goes into detail about a new test case in France involving Afone and France’s number 2 operator, SFR, that seeks "to strike at the root of discriminatory MVNO practices, and the outcome could provide regulatory clarity on one murky issue: To what extent should mobile operators be allowed to cherry pick among MVNO candidates?" She concludes that:
The conflict comes at a key moment in the history of European service provision, and regulation. After years of relative neglect, mobile operators are starting to taste the wrath of NRAs and competition bodies. Last December, France’s own Competition Authority created an industry sensation by imposing a collective fine of EUR 534 million on all three French incumbents for alleged market share fixing, and the European Commissioner Viviane Reding is now playing hard ball on international roaming. Mobile regulation, or so it seems, has arrived just in time to witness a flood of fixed and Internet providers realise their destinies as ‘Total Communications Providers’.