Gartner Says Telecom Carriers Must Transform Their IT and Service Technologies to Support New Services in the Digital Age

By 2012, Leading Carriers in Developed Markets Will Be Able to Derive at Least 15 Per Cent of Their Revenue from Nontraditional Sources

STAMFORD, Conn., August 2008 —

Fixed and mobile telecom carriers in mature economies must start transforming their IT and service technologies into “IT and network factories” to support new services in the digital age, according to Gartner Inc. Gartner predicts that by 2012, half of the 20 largest carriers will offer new services only minimally related to telecommunications, and leading carriers in developed markets will be able to derive at least 15 per cent of their revenue from nontraditional sources.

“The evolution of networking and IT technologies toward online IT and the digital age creates significant opportunities for communications service providers (CSPs) but also poses huge challenges,” said Jean-Claude Delcroix, research vice president at Gartner. “Opportunities for new digital services range from extended transmission services to content services and IT services. The main challenges will be a much more competitive environment and a much more intense use of IT in the delivery of services by CSPs.”

Mr Delcroix said that fixed-network operators will need to move relatively fast to offer new content, video and advertising services and application services if they are to offset the decline in their voice revenues. These carriers have less than five years to come up with a new IT and network infrastructure and applications that will support the new digital services. Otherwise they will be relegated to the status of utility bandwidth providers.

Mobile operators will have a little more time than fixed operators, according to Gartner. The next mobile technologies — long-term evolution (LTE) and fourth-generation (4G) technologies in general — will affect the market progressively from 2010 to 2015, the precise timing depending on the region and the operator.

“The price of mobile data services and devices is too high for mass usage today, so through 2012, carriers need to devise a better road map, with new mobile digital services that require less bandwidth but offer users good value for money,” said Mr Delcroix. “In other words, carriers need to focus on services with functions and features that users are willing to pay for. Download and streaming services for music files, small-payment mechanisms and ticket-ordering services are examples of services that carriers need to offer.”

To compensate for declining voice revenues and to find new growth, CSPs will need to develop a wide range of new digital services. Competition will increase, and in particular, carriers will need to compete with internet companies, large and small, as well as equipment companies. Furthermore, carriers will not have exclusive control of the customer data used to support new personalised digital services.

However, CPSs’ competitive advantage in new digital services will come from three main business aspects: digital-age market intelligence to push services and build market share; deep integration of systems and data to respond to complex customer needs, sometimes across companies; and synergies between services to get cost advantages.