Page 496 - Handbook of Modern Telecommunications

Network Organization and Governance 4-27

4.3 Business Intelligence and Analytics

Patricia Morreale and Deepak Pareek

The telecommunications industry expanded substantially in the past decade. Technology advancement
along with the liberalization of once closed markets and privatization of government-held monopolies
changed the nature of the industry in the 1990s and continues to shake up the industry every now and
then. In early 2000, the industry scaled new highs with respect to market capitalization. Both business
and technology disruptions have introduced significant expansion and innovation (see Figure 4.3.1).
Since then, however, the telecommunications industry has been overwhelmed by a series of events
that have led to a depressed industry segment. Over the past few years, it has suffered from severe debt,
overcapacity, customer churn, and service commoditization. The earnings declines and flight of capital
have driven the industry to reevaluate and reassess fundamental business practices and devise survival
strategies that will lead it back to competitiveness and consistent profitability.
The same forces that fed the development of new services and the entrance of new players also saw
margins grow slimmer for most services as well as significant customer churn as competitors offered
alternative choices. The expansion of the infrastructure has not been absorbed yet with an equivalent
rise in demand and profitability. On the other hand, investments incurred for expansion and for acquisi-
tion of 3G licenses are becoming a backbreaking exercise for the once solvent and profitable communi-
cation service operators. Trillions of dollars in market capitalization have evaporated in the past couple
of years and hundreds of thousands of jobs have disappeared from the sector. The telecom industry,
which is undergoing a period of difficult change, is under a great deal of competitive and market pres-
sure. The major challenges facing the industry are:

• Increased customer dissatisfaction with existing telecom services
• Market uncertainty and excessive debt
• Bandwidth commoditization
• Limited market capital
• Large, expensive, and inflexible IT infrastructures
In today’s extremely challenging business environment, many telecommunications operators and car-
riers are measuring their success by the size and growth of their profit margins. As a result, carriers are
under intense pressure to reduce or eliminate the major threats to these slim margins, including revenue
leakages and frauds, inaccurate or missed intercarrier billing, churn, inefficient network usage, and least-
cost routing plans. These competitive and market pressures are also making the telecom industry reassess
its business model and redefine the path that will return it to competitiveness and profitability.

Before Competition: After Competition:
The Network Was the Information about the Customer
Most Valuable Asset Is the Most Valuable Asset

Products Products

Network Network

Services Services
Customer Customer

FIGu RE 4.3.1 The changing landscape of telecom.