Seperating the telco hype from the reality
By DaveLevy on Feb 16, 2006
After lunch, Lars Godsell, one of Forrester's principal analysts shared his views about the telco industry. He promised to "separate the hype from reality".
He started with a dim view on the economic success of the european telcos, by looking at their share price performance, revenue decline and return on capital employed. He then turned to the issue of innovation, and looked at a number of inhibitors. His list included the usual suspects, from CEO commitment, through the organisational model to leveraging cluetrain & Rifkin by having sensible profitable partnering stratgies and balancing internal and external innovation investments. Companies now play multiple roles in a supply chain and yesterday's supplier is tomorrows customer, although with today's speed of business these roles do not change on daily basis, but much more frequently. (The previous speaker, Xavier Kirchner's four collaboration models also took notice of the fact that a telco can play multiple roles in the technology-to-service supply chain.)
Lars argued that Forrester see telcos as being in three businesses, Retail, Innovation and Network, and that the telco's should organise around these three factors, since they require different core competencies and face different challanges and constraints.
He looked at the role of regulation on the speed of change and profitability of the industry, being mainly critical of the European regulators and specifically the UK regulator (OFCOM), arguing that they inhibit innovation, either economically, by destroying margin, or by diversion. i.e. demanding they do stuff that is an alleged public good such as the European Data Retention directive.