Teletimes April 2011.pdf

More documents

Recommendations

Info

Telecom operators around the world are striving to reach market share, revenue and EBITDA target in an increasingly competitive environment. This impels companies to cut costs while differentiating in key areas and to move away from noncore activities that allow little or no differentiation and do not impact bottom-line KPIs in a direct and tangible way. This strategy has supported the outsourcing option in most levels of the telecom value chain such as network infrastructure, customer service and management of own or branded shops. In this way, operators are focused on the core drivers of their business while leveraging on external specialists to deliver in non-core areas. The branded channel is critical for any operator as it is the main point of contact with customers and has significant weightage on opex (1-3% of an operator’s revenues) and capex (a shop can cost around $100,000). Outsourcing of the branded channel gained momentum with the realisation from operators that the required know-how to manage shops successfully around HR, stock optimisation and trade promotions, was not present in their organisations. For example, annual staff turnover levels in telecom operators are around 10-15% while in technology retailers these figures can go up to 50-60%, which poses a completely different challenge on staff selection and recruiting. At the same time, salary schemes in operators usually account for 10-20% of variable compensation while best practices in the retail industry suggest levels of 70-80% to ensure proper motivation of the front-end personnel. Although the two businesses – telecom service provider and telecom retail – are linked on the product side, they differ in the key drivers. As soon as telecom operators realised this, new players emerged as “sales partners” in the branded channel. In an outsourced model, sales partners are responsible for managing and operating the branded channel (commonly known as operators’ stores or “own” stores) on behalf of the operator. Capturing the benefits In addition to allowing operators to focus on key areas of their business, outsourcing the management of the shops often facilitate roll-out of the branded channel since part of the responsibilities in the roll-out program are transferred to external partners. On top of that, the roll-out can be achieved at relatively low expense when some of the rollout costs are also transferred to the partners (for example, through franchise fees or by charging civil work costs), which reduces investment in new outlets often by more than 50%. As a result, telecom operators manage to finance expansions of the branded channel and even reduce roll-out timelines quite significantly. For instance, Orange and O2 in developed markets or MTN and Etisalat in emerging markets have all Josep Que Talking shop Many operators outsource their retail presence to cut opex, but the strategy can pose significant risks added stores managed by external partners to their established network of company-owned outlets in a way to support expansion. External partners also typically have know-how related to the local market which not only streamlines the process of identifying and securing a new location but also allows managing shop operations in alignment with local dynamics. In many diverse countries like South Africa, Jordan, Spain or Belgium, operators have even opted for regionally focused partners to manage branded shops due to the different characteristics of each region. The benefits of the outsource option are evident and tangible but there is no such thing as free lunch and one has to bear in mind the threats that lie behind. Threat 1: Potential hostage situation with strong sales partner With such clear advantages why would operators still opt to control the branded channel directly? MTN South Africa is one of the operators that can probably illustrate this well. When, in January 2009, MTN made the decision to acquire the remaining 59% of iTalk, a distributor that managed more than 100 of MTN exclusive stores, it knew the importance of gaining control and security over such a critical channel. Among other reasons, MTN wanted to avoid decisions regarding its premium channel that were not aligned with the company’s best interests. The early stages of the various outsourced models have often disguised its potential risks. South Africa is one of the countries where outsourcing models in branded channel are more mature and so also the early benefits were already captured and the effective risks are now taking place. Any external partner is profitdriven and can easily deviate from the initial strategy and engage in actions that go against the operators’ goals and therefore, compromise the branded shops, which represent the premium channel of any company and where one wrong action can have the most negative impact. For example, if a certain shop is not performing well, the company (or partner) managing it might prefer to shift its traffic to another shop and therefore push the operator to close it, while the latter is concerned about customer service, positioning and brand visibility. Often the operator will even agree on closing it in order to prevent disruptive actions that might harm the channel deeper. In some situations, operators see themselves in the hands of their “partners”, completely vulnerable to “their” will due to their weight and dominance of the sales channel. That is why many operators, especially in emerging markets, limit the share that a single partner can have and impose effective covenants to prevent “super-dealers” in the branded channel. T 42 www.teletimesinternational.com 15Apr - 14May 2011
FTTH Council Europe will further address the urgent need for FTTH with new initiatives Chris Holden, re-elected President of the FTTH Council Europe, will lead the Council’s new initiatives supporting “Why fibre?” and “How fibre?” for the European consumers Chris Holden Nadia Babaali Hartwig Tauber At the General Assembly of the FTTH Council Europe the members have reaffirmed their commitment to continue the mission of the FTTH Council Europe to urge Europe to move to FTTH. With more detailed “Why Fibre & How Fibre” initiatives, the organisation will provide the necessary arguments and data to the broadband stakeholders to build Fibre to the Home networks. With Chris Holden as re-elected president and four newly elected board members, the FTTH Council Europe is ready to specifically focus on the main questions raised about fibre networks in Europe. The “WHY fibre?” initiative includes end user benefits of fibre connections, including new content and applications. The “HOW fibre?” proposal looks at both public and private financing options, and aims at better understanding the regulatory and policy frameworks. “During the past years the Council has become an accepted industry body on FTTH topics in Europe,” said Holden. “With our well established network to the European Commission, the regulators and the operators organisations, the FTTH Council Europe is in a perfect position to provide supporting data that will accelerate FTTH adoption in Europe.” The General Assembly was also the occasion to announce the renewed mandate of the contracted executive team, Hartwig Tauber, Director General, and Nadia Babaali, Communications Director, for the next two years. “A strong board of directors, a broad support from our 150 industry members and continuity in the person of the President will enable the FTTH Council Europe to implement a compelling working plan in 2011”, adds Hartwig Tauber, Director General, “and we can already promise that the FTTH Conference in Munich on 14-16 February 2012 will include the presentation of several studies with high impact on the fibre market.” The new Board of Directors consists of the following 9 members: • Chris Holden, Corning Ltd, UK – President of the Board • Karin Ahl, Rala Infratech, Sweden - Treasurer • Eric Festraets, Alcatel-Lucent, Belgium • Pastora Valero, Cisco Systems, Belgium • Rolf Johansson, Ericsson, Sweden • Paul Schwartz, ICOTERA, Denmark • Sophie Pautonnier, Mitsubishi Electric, France • Jouni Heinonen, Plumettaz, Switzerland • Albert Grooten, Prysmian Cables and Systems, The Netherlands The new Working Committee Chairs are: • Paolo Sebben, Switzerland, Chair of the Business Committee • Wolfgang Fischer, Germany, Chair of the Content and Applications Committee • Cristina Deac, Romania, Chair of the Deployment & Operations Committee • Jan Schindler, The Netherlands, Chair of the Market Intelligence Committee • Hartwig Tauber, Austria, Chair of the Policy & Regulation Experts Group Companies and organisations that develop FTTH-enabled services and applications for businesses and end users, such as eHealth, online gaming, interactive TV etc. are welcome to participate in the work of the Content and Applications Committee, even if they are not members of the FTTH Council Europe. 15Apr - 14May 2011 www.teletimesinternational.com 43
Page 1 and 2: The only tri-regional magazine focu
Page 3 and 4: Interviews 16 “We have a national
Page 5 and 6: Letter to readers Khalid Athar Chie
Page 7 and 8: years. Today, worldwide Internet us
Page 9 and 10: 1972). “Treat them (children) as
Page 11 and 12: minimize the online risks faced by
Page 13 and 14: and establishing processes. He is a
Page 15 and 16: more tech-savvy methods and more us
Page 17 and 18: Oman’s biggest IT, Telecom & Tech
Page 19 and 20: Tom‘s Corner Cross Connect recent
Page 21 and 22: Report - Mohammad Hijab SAMENA’s
Page 23 and 24: SAMENA’s Broadband Summit key not
Page 25 and 26: Interview: Gulraiz Khalid “We inv
Page 27 and 28: generation in Pakistan along with t
Page 29 and 30: RK - In addition to what I have des
Page 31 and 32: This would translate to diesel cons
Page 33: Etisalat infrastructure enables the
Page 37 and 38: Du launches 42 Mbps internet key Le
Page 39 and 40: Amman is unlikely hotspot for techn
Page 41 and 42: Content distribution and IP agreeme
Page 43 and 44: Barbara Ghini New Era, New Brand: C
Page 45 and 46: Jaffer Brothers and Acision partner
Page 47 and 48: Dr. Karim Taga Capturing value in t
Page 49 and 50: unning a telemedicine program with
Page 51 and 52: PAKSAT set to launch new satellite
Page 53 and 54: Qatar government sets up broadband
Page 55 and 56: April Global Telecom event 2011 May

Teletimes April 2011.pdf

Create successful ePaper yourself

Delete template?

Save as template?