skip to main content
Close Icon We use cookies to improve your website experience.  To learn about our use of cookies and how you can manage your cookie settings, please see our Cookie Policy.  By continuing to use the website, you consent to our use of cookies.
Global Search Configuration

Ovum view

Summary

While exploring the relationship between wholesale strategy and infrastructure investment, we found that some carriers do not factor in wholesale requirements when making infrastructure investment decisions. In these cases, retail requirements (i.e. for consumer and business customers) determine where, when, and what the carrier will build. These carriers can then turn to wholesale as a low- or even no-cost vehicle to drive additional revenue and improve overall return on investment. As a result, wholesale units gain the financial freedom to leverage the infrastructure to meet their customer needs in creative ways.

Wholesale drives network utilization and adds revenue

Some telcos that operate retail and wholesale groups within the same organization use wholesale as an additional channel that can drive extra traffic and revenue over infrastructure completely cost-justified by consumer and business customer requirements. Executives running the wholesale division can take advantage of this by exploiting the carrier’s service portfolio and core infrastructure to address their customer needs quickly and without the burden of investment justifications.

To maximize their opportunity, wholesale carriers must have access to highly reliable and flexible access and long-distance network resources to provide consistent and efficient services as well as guaranteed SLAs. If this is in place, using existing end-to-end resources without regard for their cost basis can enable wholesale executives to become creative with pricing models to reduce potential margin stacking. They can minimize the prices of legacy transport services while building higher margins into their value-added services (e.g. CDN, TDM-to-IP transition, billing, and professional services).

This model can help reinforce wholesale customer loyalty and foster long-term relationships. Wholesale customers can take advantage of the supplier’s ability to speed their time to market and guarantee SLAs based on existing levels of service delivered to retail customers.

Overall, the carrier benefits from wholesale activities to decrease the amount of unused capacity and improve network efficiency. When retail bears the responsibility for network cost justification, wholesale becomes an engine for incremental revenue generation.

This analysis is based on primary research completed while preparing the forthcoming Ovum Wholesale Telecoms report, The Importance of Owning Wholesale Infrastructure.

Appendix

Further reading

Migrating Wholesale Services, TE0012-000529 (January 2015)

Carrier Services Units Come of Age, TE0012-000516 (August 2014)

Wholesale Service Structure for 2013 and Beyond, TE012-000464 (July 2013)

Author

H. Paris Burstyn, Senior Analyst, Wholesale Telecoms

paris.burstyn@ovum.com

Recommended Articles

  • Service Provider Markets, Consumer & Entertainment Services,...

    MWC 2018 Highlights

    By Ronan De Renesse 27 Feb 2018

    Over 20 of our senior Ovum analysts and consultants attended this year’s Mobile World Congress in Barcelona at the end of February. In between meetings, briefings and presentations, our analyst team were blogging and tweeting about key developments, trends and rumors. Have a look through our daily MWC 2018 Highlights to find out what happened.

    Topics 5G AI IoT Cloud Payments SDN/NFV Smart home

  • Internet of Things

    IoT Viewpoints 2018

    IoT Viewpoints explore the IoT opportunity in 2018 and beyond. Download our latest e-book to get our newest collection of thought leadership articles on the emerging IoT trends, technologies and opportunities.

    Topics IoT

  • Consumer & Entertainment Services

    US pay TV: Is it facing an existential threat?

    By Adam Thomas 28 Mar 2018

    With US pay TV having endured the worst year in its history, thoughts have inevitably turned to the future. The likelihood remains that the immediate future will remain highly uncomfortable for everyone except the scaled multinational digital platforms.

;

Have any questions? Speak to a Specialist

Europe, Middle East & Africa team - +44 (0) 207 017 7700


Asia-Pacific team - +61 (0)3 960 16700

US team - +1 646 957 8878

Email us at ClientServices@ovum.com

You can also contact your named/allocated Client Services Executive using their direct dial.
PR enquiries - Call us at +44 788 597 5160 or email us at pr@ovum.com

Contact marketing - 
marketingdepartment@ovum.com

Already an Ovum client? Login to the Knowledge Center now