The Business Case for 'Two-Sided' Telecoms Business Models

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Summary: Many industry corporate strategists buy into the two-sided telecoms business model and now want to prove the quantifiable benefits to drive action. Here’s an update on Telco 2.0’s current data and plans.

“Show me the money!”

The 'Two-Sided' Telecoms Business Model

The 'Two-Sided' Telecoms Market Model

The theory behind 'two-sided' telecos business models is becoming increasingly well known and accepted (see Vodafone's CEO's recent presentation). The focus of the Industry strategy and decision-making community is therefore turning to the development of the detailed business cases that will enable the transition from theory to practice.

Many of Telco 2.0's recent client interactions have also focused on the development of the business case, so here we summarise what has been done to date, what is currently available, and what is coming next. This article covers:

  • Strategic Context: How IP and Maturing Core Markets are changing the game
  • Market Size: The Overall Market Opportunity - Methodology
  • The Detailed Model: by Sector and Geography
  • Adding Further Granularity: Use Cases and Case Studies
  • Tracking Global Developments: The Telco 2.0 Database
  • From Theory to Practice: The New Industry 'How To' Guide and Roadmap 

Strategic Context: How IP and maturing markets are changing the game

The initial Telco 2.0TM Market Study "How do we make money in an IP-based world?” articulates the changing market and technical landscape for the Telecoms Industry. It identifies the broad opportunity for telcos to evolve from purely vertically integrated service providers to a more open configuration and structure allowing increasing levels of horizontal integration and creative use of internal assets.


The Pressures on the Core Voice and Broadband Business Models

The subsequent Broadband Business Models Report “Beyond Bundling – winning the new $250Bn content distribution game” takes this analysis further, and identifies top level ‘two-sided’ business models and technical architectures to deliver against this new opportunity. It also articulates the growing pressure on the core voice and broadband business models in maturing markets, as penetration and revenue growth slows although usage and competition intensifies cost pressures.

Market Size: The Overall Market Opportunity - Methodology

The full theory and analytical background of the 'Two-Sided' Telecoms Market Opportunity is articulated in the seminal Telco 2.0 study, "The 2-Sided Telecoms Market Opportunity; Sizing the new $125Bn platform services Opportunity".

As well as articulating the rationale, precedents and priority areas, the report uses a detailed analytical methodology to identify economic opportunities or "pain points" that Telcos could address across 117 market sectors against the 7 functions identified. The brief five slide presentation below shows the methodology and example analysis from the Report (NB you may wish to view this at "Full" screensize, 'Esc' returns you to this screen).

Telco 2.0 Platforms Research Methodology 18 Sep 09
View more presentations from simontorrance.

In summary, Telco 2.0 Analysts reviewed assumptions of what proportion of the opportunities are addressable using Telco assets applied via 'two-sided' business models across U.S. and European markets and used this to formulate the top-level analysis. Individual assumptions were benchmarked where possible against individual examples of the costs of industry transaction "pain".

The Detailed Model: by Sector and Geography

The model (117 sectors, 7 applications) can also be applied to national or regional geographies. Some Telco 2.0 Workshop and Consulting clients have already worked with Telco 2.0 Analysts to create their own private and bespoke market analyses and projections.

Adding Further Granularity: Use Cases and Case Studies

Telco 2.0 'Use Cases' are detailed "business level" descriptions of illustrative commercial models for new Telco 2.0 B2B platform services that help to help bring the theory to life, and provide the next level of detail.

The Telco 2.0 Use Case Project is developing practical examples of the implementation of new business models from three sources:

  • 5 x new 'Use Cases' - realistic examples of potential new Telco 2.0 business models
  • 5 x Case Studies from inside the Telecoms Industry
  • 5 x detailed Adjacent Market Case Studies embodying important multi-sided business model lessons.

Each of the ‘Use Cases’ will have a next level market estimate relating to the potential opportunity. These Use Cases and Case Studies will be documented in a new 100+ page Telco 2.0 Strategy Report "The 'Two-Sided' Business Model Case Directory" and presented and discussed at our forthcoming Telco 2.0 Executive Brainstorm Events.

Tracking Global Developments: The Telco 2.0TM Database

In 2009 the Telco 2.0 Initiative established a database for clients and partners that documents global developments in ‘two sided’ Business Model Innovation on a project-by-project basis. This will be updated continually and be an invaluable research source for strategists and innovators to track and compare projects and activities.

From Theory to Practice: The Industry 'How To' Guide and Roadmap

A new Strategy Report “Two-Sided Business Models: from Theory to Practice”, compiling the lessons and updates from the market, and drawing up the new Industry roadmap to the future Telco 2.0 world is planned for early 2010. This will include updates on market estimates and the very latest on business model innovation in practice, and options for corporate re-structure, infrastructure investment, and cross-industry collaboration.

For further information on any of these activities, please email or call +44 207 247 5003.