By
Chun-Ling Woon
As we move forward into 2010, we are one year further along the Moore’s Law curve – that rule that says that the cost per unit of processor technology halves every two years. In telecommunications, we have built on this computing power to knock down the limitations of the past one by one. In particular: though bricks-and-mortar companies have traditionally needed to incur a high cost for “concierge” services, new technologies in telecommunications mean that we can offer increasingly more sophisticated services without a required cost increase.
Take my recent experience at Nordstrom’s, by way of comparison. On a business trip last summer to California, I realized that I was missing the appropriate shirt for an important meeting. I stopped by the local Nordstrom’s department store, and was guided by my personal sales associate in just a few moments to the right garment, in the right size. When she learned that my meeting was in two hours, she then offered to have the shirt professionally pressed for me as well!
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offer these high-value services at a lower cost; second, pass those savings along to our customers; third, reap the rewards of the expanded customer base that exists at this new price point.
The High-Volume, Low-Cost, SMB Opportunity
“Every time that a CSP lowers the cost of its infrastructure—whether by leveraging standards-based approaches or engaging in a transformation project—its business
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Of course, not every department store can afford to offer such “concierge” services: this is too expensive to consider offering to the mass market. While I waited for my shirt to be finished, however, I thought about how the same scenario plays out for my CSP customer, most importantly those enterprise customers that many CSPs hope will replace revenues lost from fixed local and long-distance services.
CSP’s enterprise customers certainly receive a high level of personalized attention. But—as at Nordstrom’s—this comes at a price. My epiphany: it doesn’t have to: Because of Moore’s law and its ripple effect within telecommunications, we can offer very sophisticated services at K-Mart prices, thus tapping a much larger market. The secret: first: transform our operations so that we can
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opportunities expand,” Rob Rich, Managing Director of the TMForum Transformation and Insights Research Center, explains. “Telecoms have been spending years searching for the ‘holy grail’ of revenue-based margin growth, whether from content, advertising, or enterprise services. For many, those
opportunities have failed to materialize, as competition has created continual downward price pressure. While back office transformation has been ongoing for many years, in 2010 this focus on the cost side of the margin equation is changing to CSPs’ primary mechanism for expanding margins. Especially in today’s financial environment, enterprise customers have no appetite for high prices.”
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