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Friday, November 28, 2008
Inside Telecommunications
Expert’s View: Rory Altman on telecom
By James M. Connolly
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What’s hot in telecom? Where to find revenue growth in the next two years, how to market better against key competitors, and, as in other sectors, how to manage the business in the economic downturn. Rory Altman, director of Boston consultancy Altman Vilandrie & Co., advises clients such as carrier companies on these and other strategic issues. He shared his thoughts on where the telecom sector is heading.
“All of our largest clients are focusing on two, actually three, areas right now. One is where growth will come from in the next two years, and issues such as, ‘What does green mean to the company?’ and ‘What value-added services can they provide?’ Second is a highly tactical one: ‘How do I go to market better against my competitor?’ Third is, ‘How do I manage this downturn?’ ” said Altman. Of the latter, Altman notes that some companies have experienced a “slight increase” in non-paying customers, but that the underlying economic issue is the unknown.
“For the most part, you are living more in fear of what is going to happen in the long term,” he said.
Communications companies are making noise about being environmentally friendly, but Altman warns that telecom is one sector where efforts to “go green” are likely to have minimal effect. Carriers are “reasonable but not massive energy users.”
One area where telephone companies can have an environmental impact, and recognize future revenue, is home automation, but the firms would need to prove the value of home automation to the consumer. “There is potentially a way to take home automation and turn it into some sort of energy management, but that business model isn’t clear right now,” he said.
One unexploited opportunity that Altman does see for the telecom sector is “broadband to the automobile,” an initiative that would also be targeted by auto manufacturers, providers such as Google Inc., and hardware makers who develop technologies such as GPS. Opportunities include making entertainment for backseat passengers more interactive than today’s DVD-based video, and building on today’s “push” navigation services by giving drivers “pull” services by better integrating communications with GPS navigation.
On the marketing side, cable versus telco has provided “good fun” for several years. But, over time, that fun will go away and marketing will become more focused.
“We had a situation where, for the most part, both companies had a relationship with most consumers. When the consumer made a choice, the other side lost that customer. Going forward companies will principally battle it out when you move,” said Altman. “It’s much easier to spend a little money to find out when someone is going to move, rather than spending a lot of money after they move.”
Watch for new players — including MetroPCS Wireless Inc. and Leap Wireless International Inc. — to hit the market, particularly low-income consumers.
That’s the consumer side. For businesses, competition is a mixed bag. Cable companies targeting small businesses with Internet and phone services mean competition among carriers, which is good news for the customer, and in the midrange, the number of competitors is down, but customers can still get good deals. However, for the enterprise customer, consolidation has cut down on competition.
Whatever the market, Altman said that what differentiates a provider isn’t the buzz that they create or new technologies, it’s the functionality, the application of the technology that “really captures people’s interest.”
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