GENEVA, October 15, 2003 - A new study by Yankee Group commissioned by Cisco Systems shows the significant extent to which today's European telecoms operators have re-evaluated their market strategies and focused their business planning from traditional voice services and circuit-switched networks to the delivery of converged services over more efficient packet-based networks.
The research, which encompasses 25 incumbent and alternate operators across 16 European countries1, aimed to assess the motivation and perceptions surrounding converged voice, data and video. Findings include:
Revenue and services
- Growing revenues (55%) and reducing costs (32%) were unifying concerns
- Two thirds of operators (67%) say traditional voice will be less than 50% of their revenue by 2006
- New services development is considered the key to future growth (45%)
- Broadband (DSL) is viewed as a major launch pad for service development (24%). For many operators, converged services are linked to broadband DSL, which respondents identify as a means to resolve major strategic concerns regarding boosting profit margins and revenues
- Respondents are already offering or plan to offer an IP telephony service over the next 3 years (83%), reflecting what operators say is growing end-user demand for converged services.
- 21% of respondents said that the technology they employed to support traditional voice services is now at the end of its lifespan
- 60% of operators already employ some form of packet-based infrastructure
- 42% of the incumbent operators interviewed were planning wide scale migration within the next 24 months.
The primary drivers behind the migration to packet based infrastructure are lower operating costs (39%) and new service deployment (33%). Lesser scores for tighter CAPEX and OPEX control and further staff reduction as major priorities suggest that operators have already significantly scaled down their expenses and are now focused on increasing profitable revenue generation by broadening their portfolio of sustainable and in-demand services.
The survey indicated that, operators are primarily targeting the high end of the business market for new converged services today. Yankee Group recommends extending this strategy to the sizeable small and medium-sized business customer segment, pointing to the fact that these customers have fewer in-house resources to develop feature-rich services or manage converged voice/data networks.
"This survey shows that telecoms operators are placing their bets on converged services and packet infrastructures and that the much talked about transformation in telecoms is fully underway," said Mark de Simone, vice-president of marketing, channels and alliances at Cisco, EMEA.
De Simone continued, "The current market dynamic plays to Cisco's technology, customer and financial strengths. Service providers are looking to their vendors not just for their technology but also as a means to help generate and tap into demand for their services."
The survey also points to a major power shift in the telecoms market as customer-facing departments wield growing influence. "The change in telecoms is happening from the street up. This means that operators are increasingly looking first at customer needs and then building a business case to launch a service. This is a major change for the industry that traditionally developed services that the market then followed ' said Chris Lewis, vice president, EMEA for the Yankee Group.
For a full copy of the report 'European Telcos Voice their Faith in Convergence" go to http://newsroom.cisco.com/dlls/European_Telcos_Convergence.pdf.
About Yankee Group
The Yankee Group is the global leader in communications and networking research and consulting. The company helps businesses understand the opportunities, risks, and competitive pressures of developing, deploying, and consuming products and services that drive communication or information exchange. Now in its fourth decade, the Yankee Group is based in Boston with offices throughout North America, Europe, Latin America, and the Pacific Rim. For more information, go to www.yankeegroup.com