The actual Telecoms one-sided business model is under pressure: tougher regulation, developing technology, potential new entrants, and advancing customer expectations. The traditional voice business is facing stagnating or even falling revenues and therefore in-creased voice usage is no longer sufficient to compensate for price deflation.
In the current one-sided business model, the telco buys equipment and content from sup-pliers, integrates them, and bills the end user for services. This reflects the traditional value chain in which value moves from left to right. The future business model breaks the traditional value chain. Value is created on the left and on the right side of a telco. This two-sided business model delivers value to and generates revenue from 3rd party service providers as well as end-users by providing an open platform that helps the service providers to interact with end-users in more effective ways. This model enables the genera-tion of new incomes and can be the solution to escape from an environment with decreasing prices and falling revenues. The telecommunication industry promises itself enormous economic potential and tremendous added values for all participants.
The aim of this paper is to show the challenges and opportunities of telecoms’ journey from one-sided to two-sided business models to reach a new era of growth. Both models will be analyzed by the business model canvas of Osterwalder and Pigneur. It will show that the telecommunication industry is able to gain much more power and new revenue streams than they do today.
Chapter 2 will present the theoretical foundations used in this paper for analyzing the un-derlying business models. In chapter 3 the theoretical models are adopted to examine the actual one-sided of the telecommunication industry. This includes the current economic situation, the resulting challenges, the telecoms’ core assets and capabilities and the conse-quential opportunities. Chapter 4 outlines the future two-sided business model as the result of this paper and ends with two examples of already established two-sided business processes.
Table of Contents
1 Introduction
2 Theoretical foundations
2.1 One-sided business model
2.2 Two-sided business model
2.3 Different business models and analysis tools
2.3.1 Porter’s Five Forces
2.3.2 National Diamond
2.3.3 Porter's Four Corners Model
2.3.4 Business Model Canvas
3 The current one-sided telecoms business model
3.1 The telecommunication business model mapped by the business model canvas
3.2 Challenges daring the telecoms
3.3 Customer Data and Identity Management – Telecoms’ core assets and capabilities
3.4 Opportunities opening new ways for the telecoms
4 The future two-sided telecoms business model
4.1 The two-sided business model
4.2 The two-sided telecommunication business model mapped by the business model canvas
4.3 Examples of current two-sided telecommunication business models
4.3.1 Vodafone live!
4.3.2 Jamba – Premium SMS
5 Conclusion
Exhibit
Research Objectives & Key Themes
This paper examines the transition of the telecommunications industry from traditional one-sided business models to two-sided business models as a strategy to overcome stagnation, falling revenues, and price deflation. By applying the Business Model Canvas, the study evaluates how leveraging core assets—specifically customer data and identity management—can facilitate new revenue streams and growth through partnerships with third-party service providers.
- Analysis of traditional one-sided vs. innovative two-sided business models
- Application of the Business Model Canvas for strategic industry assessment
- Evaluation of core assets: customer data and identity management
- Identification of economic and technological growth opportunities
- Exploration of cross-side network effects and pricing strategies
Excerpt from the Book
3.1 The telecommunication business model mapped by the business model canvas
Table 1 provides the visual template of Alexander Osterwalder implemented for the current business model of a mobile telecommunication service provider. The value proposition of a service provider in the mobile telecommunication industry is to provide communication services to end users, giving them access to their own network and other network operators’ networks and the Internet. Its key activities are voice, messaging, data provision and the provision of broadband services. (cf. [CaPi03])
Telephony or voice telecommunications refers to the communication of sound over a distance using wire or wireless telephones and related technology. There a different methods of carrying voice traffic; IP networks (VoIP), mobile networks and traditional PSTN networks. The technical aspects are not focus of this paper. The emphasis is on the value creation voice business is producing. The current business model regarding voice in the telecommunication industry works the following way. On the supply side are different service providers that can own the required infrastructure by themselves or use an existing one of a network operator. The service providers offer different price conditions and on the demand side are the customers that will sign a contract or use a different price model of one of the service providers. Usually the subscriber pays a fee to be connected to the network, and then per-usage fees. Thus the revenue streams flow from the subscribers to the service providers.
Summary of Chapters
1 Introduction: Provides an overview of the pressure on the current one-sided telecoms business model and outlines the paper's aim to analyze the transition toward two-sided models.
2 Theoretical foundations: Establishes the theoretical framework, including one-sided and two-sided market definitions, and introduces the Business Model Canvas as an analytical tool.
3 The current one-sided telecoms business model: Analyzes the current industry landscape, its challenges, and how existing assets like customer data can be repurposed for future growth.
4 The future two-sided telecoms business model: Details the transition to two-sided structures, pricing strategies, and provides real-world examples such as Vodafone live! and Jamba.
5 Conclusion: Summarizes the potential for telecoms to leverage two-sided models while acknowledging the competitive threat from other digital players like Google and Apple.
Exhibit: Contains visual representations of analytical frameworks, including Porter’s Five Forces, the National Diamond, and the Business Model Canvas.
Keywords
Telecommunications, Business Model Canvas, Two-sided markets, One-sided business model, Customer Data, Identity Management, Value Creation, Revenue Streams, Network Effects, Voice Telephony, Broadband, Service Level Agreements, Mobile Payment, Premium SMS, Digital Transformation.
Frequently Asked Questions
What is the primary focus of this paper?
The paper focuses on the transition of the telecommunications industry from traditional, one-sided business models toward two-sided, platform-based business models to drive future growth.
What are the central themes of the work?
Central themes include value chain analysis, the strategic importance of customer data and identity management, network effects, and the adoption of modern analytical tools like the Business Model Canvas.
What is the main objective of the research?
The objective is to demonstrate that by leveraging core assets and adopting a two-sided platform approach, telecommunication companies can gain power and generate new revenue streams in the face of declining traditional voice revenues.
Which scientific methods were utilized?
The author utilizes a qualitative research approach based on existing business model literature, primarily employing the Business Model Canvas (developed by Osterwalder and Pigneur) and industry-standard analytical tools such as Porter’s Five Forces and the National Diamond to evaluate strategic positions.
What does the main body cover?
The main body examines the current one-sided model, identifies technical and economic challenges, analyzes the potential of customer data as an asset, and outlines the mechanics and benefits of future two-sided models.
How would you characterize the work using keywords?
The work is characterized by terms such as Telecommunications, Two-sided markets, Business Model Canvas, Customer Data, and Network Effects.
How do cross-side network effects influence the proposed business model?
Cross-side network effects are critical; content and service providers are more likely to join a platform that already possesses a large customer base, which mobile network operators can provide, thereby increasing the platform's overall value.
What role does identity management play in the proposed strategy?
Identity management is presented as a key capability that allows telecommunications operators to efficiently manage and monetize customer data, which is essential for creating profitable B2B and B2C partnerships.
How do companies like Apple or Google threaten this transformation?
Companies like Apple and Google are viewed as competitors because they already possess significant user data and have established their own two-sided platforms, potentially displacing traditional network operators in the digital services ecosystem.
- Quote paper
- Sebastian Straube (Author), 2010, Challenges and opportunities to the Telecoms Industry , Munich, GRIN Verlag, https://www.grin.com/document/180403
