By Orlaith Finn
Wholesale carriers are facing a growing number of challenges, including considerable changes in their revenue mix, an ongoing shift from voice to data, increasing focus on mobility, and a dent in revenue due to OTT services. Despite the many challenges in the market, wholesale carriers still have an opportunity to generate revenue for their company.
For many years, the wholesale voice business model focused on offering a set of generalized products and connecting customers from one person to the other. Today, this way of doing business will no longer suffice. User experience is growing in importance across all industries. Like other industries, wholesale carriers can adopt a new business model to meet demand.
The traditional business of wholesale voice is in consistent decline. This is primarily due to the exponential rise of OTT services and VoIP services such as Facebook Messenger, WhatsApp and Skype. Wholesale carriers are forced to evolve, in line with the growth in next generation network services and particularly the adoption of VoIP, which has surpassed traditional traffic volumes for the first time. According to Telegeography, OTTs delivered 40% more international voice traffic in 2017 than all the global telecoms companies combined.
However, this does not mean that revenue no longer exists in voice. In fact, it is an opportunity for wholesale carriers to offer capacity and manage international communications, serving the needs of retailers, mobile network operators and global enterprises. For industry survivors, there is a significant amount of revenue to be earned. However, like other industries, this will only be the case for those who are willing to embrace the disruption caused by the digital transformation.
Furthermore, wholesale carriers can find many other ways to grow revenue. There is an increasing demand for data, cloud and digital services. An influx of data in the network essentially means that there is a market for new fiber routes, more subsea or terrestrial cables, and better networking to cope with the increased demand. Similarly, more data flowing through the network means a more significant risk and impact in the event of network outages. Wholesale carriers are expected to plan for diversity, resilience and high availability to build more robust network infrastructure.
Wholesale carriers are at a point where they must diversify to offer a range of managed datacenter services, co-location space and global internet connections. These capabilities are being further enhanced with support for cloud, network function virtualization (NFV) and software defined networking (SDN). If they do not evolve with the digital transformation, they will eventually become obsolete.
In this respect, providing wholesale services involves supporting a combination of physical and virtualized infrastructure, along with the management of a range of processes. The customer of a wholesale carrier expects to use a variety of services, including access to datacenters and co-location facilities, in addition to a globally available wholesale network. This also means there is a reduced need for CAPEX investment due to infrastructure sharing.
This is not to say the future is entirely clear for wholesale providers. In any case, it is challenging as there is a need to invest more to cope with traffic growth, all while experiencing revenue decline. Similarly, more data does not necessarily mean more revenue or higher profitability. However, it offers an opportunity to rebuild market positions, reimagine business systems, and reinvent network and service capabilities for those in a position to do so.
The adoption of new technologies such as SDN or NFV is critical in streamlining CAPEX and OPEX, which helps to remain competitive in the market today. These technologies can enable wholesale carriers to overcome architecture-related issues and keep up with the rising demand for connectivity. The rest of the telecoms industry is disrupted by the coming era of digital and cloud services. Wholesale players are not immune to this. Taking advantage of those new wholesale opportunities requires changes in traditional business models.
Moreover, customer experience is another crucial element in the success of any business. Wholesale carriers need agile, innovative solutions to transform customer experience and implement efficiency. Customer expectations have grown tremendously in recent years. Wholesale carriers should be helping communications service providers to deliver a seamless customer experience, to increase service awareness and to promote loyalty.
The prospects for telecoms are not necessarily gloomy, but there is undoubtedly a sense that businesses are repositioning themselves in the market. There will always be a need for global players to build and run global networks, provide capacity and manage international communications, serving the needs of retail communications service providers and multinational enterprises. Amid shifts in technology and customer behavior, the future remains uncertain. However, there are lots of opportunities for the industry players willing to reinvent their network and service capabilities and to ultimately drive growth.
