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Competition, cooperation and collaboration among wholesalers

Fernanda Mello Veiga

Competition, cooperation and collaboration among wholesalers

We attended this year's Carriers World conference in London. For the first time wholesalers unanimously agreed that they need to cooperate and collaborate with each other. The financial crisis and changes in customer needs and behaviour have encouraged wholesalers to rethink their business models. Partnerships are now accepted by carriers as key to their ability to offer complex new services such as content distribution.

Changes in the wholesale rules of co-existence

For a long time, we have been emphasising the importance of cooperation and collaboration among wholesalers, but when talking to the industry we felt that some wholesalers were still reluctant to take the message on board. They were still wary about wholehearted cooperation and collaboration with players that they saw primarily as competitors.

A couple of decades ago, wholesale was limited to sales of capacity and long-distance minutes. Wholesale was simple and life was easy. Now, with a much wider portfolio of services and with customer needs and behaviour changing quickly, it is virtually impossible for wholesalers to provide every service that their customers demand. Telecoms services have become sophisticated, and new players have joined the telecoms supply chain.

In the past, network reach was considered the strongest differentiator among carriers. However, not all carriers have the financial resources to build extensive networks. The scarcity of funds for investment - a consequence of the financial crisis - and the increased complexity of the market have resulted in players rethinking their business strategies and admitting that cooperating and collaborating are vital to their future success. Carriers are coming around to the opinion that the careful selection of the right partners for long-term mutually beneficial relationships is essential to future success.

All carriers are looking at the content world; expect more partnerships

Most of the Western European carriers that spoke at the conference are looking for opportunities in the content delivery network (CDN) arena. Cisco has estimated that more than half of all data will be video in five years' time. Wholesalers are investing in expanding their capacity and offering CDN services (see our report Wholesale content: act now or miss the boat!), so that they can offer not only a good quality of service but also a good quality of experience.

During the Carriers World conference, Telecom Italia Sparkle announced a partnership with CDNetworks, and Telefonica International Wholesale Services announced that it is investing in a new platform so it can also offer CDN services in the near future. The most common approach (and the quickest and cheapest form of implementation) is to partner with a CDN specialist. Whichever approach a carrier follows (partner, build or acquire), the key is to offer an intelligent web portal so that customers can manage and monitor the service.

In contrast, Belgacom ICS and France Telecom are investing in mobile content itself - and not in wholesaling CDN services. They are replicating the hub model, used for SMS hubbing, to provide innovative mobile content services via selective partnerships to their customers on a many-to-many basis.

In order to serve the burgeoning content distribution market, carriers must cooperate and collaborate. It is neither practical nor sufficient simply to compete.

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