The incompatible requirements for Value Added Service creation and wireless network development will drive the very separation of the wireless brand operation from the network itself. Within three years the U.S. wireless brand landscape will resemble that of the credit card industry-varied brands supported by a small number of independent underlying networks, with big implications for all concerned.
The wireless market is currently in the eye of the storm. We have entered a transition period of calm where the frenetic activity of the dominant voice paradigm begins to make way for the next great wall of activity generated by the emerging value-added services market. The other side of the storm will be quite different from that which went before it. New players, new business models and new market drivers will make their presence felt. The greatest of which will be the fundamental change wrought within the current carrier group itself, supported by two key drivers-value-added service growth and the second driver of impending carrier change will be the radical evolution of existing wireless networks. For all their service benefits, the move to 2.5G and 3G networks will require a new network management operation, new systems and processes. Data networks are more complex and more costly to operate; next-generation network technology requires more capital and greater consumption of company resources for day-to-day operation.
As with the service side of the business, the core competencies required for network success are also different. A new focus on least cost of operation, the capability to offer multi-service level guarantees and the ability to optimize capacity utilization will all become increasingly essential.
Clearly, as the market evolves, we will increasingly see two separate and distinct sets of core competencies required for success-one for the network and one for the service operation. While these market realities are increasingly evident, the current model is that of an integrated carriegly gaining momentum outside of North America. This is already happening in Europe and Asia. British Telecom has announced the spinoff of its wireline network and will ultimately separate the wireless network from BT Wireless, the brand ServCo. Others will follow. The implication: within five years, Sprint PCS and AT&T Wireless will no longer own a wireless network.
As separate entities the ServCo will be free to optimize its operations to focus on the customer. Through development of robust value-added “Life Services,” the former carrier brands will likely evolve to focus on specific segments where they can dominate. The market will see the entry of additional brands as MVNOs, also focused on Life Services creation, dominating a critical mass of customers within specific segments. Through this successful focus on specific segments and associated applications, the market will see the emergence of silos of low churn and multiple revenue streams beyond voice.
Freed from its former parent, the NetCan essential and inevitable market evolutionary step. While inconceivable to many today, within a few years it may indeed be time for U.S. carrier brands to say goodbye to the their parent network.
Andrew Cole heads the Global Wireless Practice at Adventis Corp., a leading strategy consulting firm. He can be reached at (617) 694-6388 or at acole@adventis.com
