Wholesale innovation: leading by necessity

03 July 2013 | David James

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David James

Blog Author | Ovum;Principal analyst of wholesale telecoms


Innovation is not the first topic that springs to mind when thinking about wholesale but international and domestic carriers are showing their retail counterparts how to target innovation where it matters most.

Innovation is not the first topic that springs to mind when thinking about wholesale but international and domestic carriers are showing their retail counterparts how to target innovation where it matters most.

Wholesalers are realists. They have to be as their businesses feel the pain of market changes quickly. The innovations we have seen over the last couple of years are closely aligned with strategies to make telecoms services cheaper, faster, and more cost effective. Wholesalers accept the fundamental changes that come with all-IP networks, not just technically but in the accompanying commercial structures and business models. So wholesalers are not wasting time trying to find the ‘killer app’ for telcos; they are rolling up their sleeves and finding innovative ways to structure service delivery and reset the cost base. They have also recognised the importance of enterprise services in securing revenue for telecoms providers.

Every year Ovum analyses developments in wholesale that demonstrate real innovation. These are not just new services, nor are they necessarily the biggest announcements. They are instead, examples of new business models, go-to-market approaches, strategies, technology, and services that represent a change in thinking. An innovations doesn’t have to be big, but it must be well targeted.
2012 was more a year of consolidation of the previous year’s IPX- and Ethernet-based innovations, but it still elicited a number of innovations that illustrate that wholesalers understand and are addressing the big issues with mature and targeted innovative thinking.

In particular they targeted go-to-market solutions that provide “open” structures to bridge divisions between proprietary services with innovations such as Tata Communications’ Global Meeting Alliance and Akamai’s Aura Networks Solutions. Service delivery islands need to become a thing of the past. Global interoperability of telecoms-based services is essential to compete with the ubiquity of the Internet. Furthermore, ubiquity has to be delivered quickly and cheaply, meaning international carriers have an essential role to provide interworking and interoperability where standards would take too long to develop. This is an increasing area of focus of international carriers and we expect 2013 to bring more innovations designed around this opportunity.

Another key innovation trend for international wholesalers in 2013 is that of productising telecoms capabilities. In 2012, Orange dipped a toe in the water with its @first anti-fraud solution, while Tata Communications took this a stage further with its Voice Business Apps. There is clear value for carriers in productising their core capabilities, but flexibility and choice will be key to monetising these opportunities.

Finally, there is an increasing interest in wholesaling enterprise-based capabilities that offer a more reliable service-based revenue stream in the long term. Colt’s Franchise Partner Channel and Akamai’s Terra Cloud Catalyst both target fast-growing enterprise-orientated opportunities. They have potential to impact the market as the companies have built offers around being part of the solution not the whole. Wholesalers are used to working with the same company as competitor and customer and with this mature approach the companies have opened up new opportunities in the SME and Cloud markets respectively. We hope to see more enterprise orientated innovations in the year ahead but see a reticence among many enterprise divisions to open their minds fully to the potential of wholesale.