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Summary

Retail communications service providers (CSPs) face increasing pressure on their revenue and profitability. As services become decoupled from access, CSPs experience stiff competition in the access market from each other and from OTTs around services. Wholesale units provide solutions for this double threat – but they can only succeed when recognized and supported at board level.

Wholesale deserves a place at top table

Wholesale units are often viewed as little more than an extension of operational activities, but they are far more than that. In fact they have never been more important. CSP leadership teams must fully leverage wholesale units’ capabilities as revenue-generating and revenue-enabling businesses.

In Japan, NTT has recognized the potential of wholesale to grow the overall fiber access market. Faced with high levels of competition and broadband penetration, NTT created a managed service fiber access product aimed at encouraging non-traditional service providers to bundle access with other services and bring in new connections. In the case study NTT: Selling fiber access as a wholesale managed service to spark growth in mature market, we analyze the early success of an approach that is simultaneously adding new subscribers and cutting costs. However, the introduction of NTT’s complementary business model was only possible following the decision of NTT’s board to make establishing a B2B2x business a strategic priority. We do not believe that similar models can be introduced successfully by wholesale units without such high-level backing.

In IPX Providers Key to New Service Revenue Growth for MNOs, we explain how IPX providers have the ability to boost MNOs in their battle to retain international and roaming revenue in the face of OTT competition. However, IPX providers are often not recognized as a strategic asset by their parent companies. Indeed, the IPX providers most likely to develop their capabilities into commercial products are neutral ones. Retail strategy and marketing teams faced with diminishing international and roaming revenues should look on their IPX providers as new service enablers and not simply a means to reduce costs.

Both national and international wholesale units have valuable capabilities that can and should be used to develop more capable and profitable models for next-generation communications businesses. Without engaging with and leveraging wholesale assets effectively, CSPs will lose out on revenue that lies within their reach.

Appendix

Further reading

IPX Providers Key to New Service Revenue Growth for MNOsTE0012-000558 (November 2015)

NTT: Selling fiber access as a wholesale managed service to spark growth in mature market, TE0012-000557 (November 2015)

Carrier Service Units Come of AgeTE0012-000516 (August 2014)

Author

Catherine Haslam, Senior Analyst, Wholesale Telecoms

catherine.haslam@ovum.com

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