Telcos must team together: study

Telecommunications companies need to team together and respond well to customer needs in order to remain competitive, according to an Andersen Consulting study called Vision 2010: New Strategies for Communications Enterprises.

Blake Hanna, a partner in communications and high-tech with Andersen Consulting in Toronto, said the challenge facing Canadian telcos in the wake of deregulation and increased competition is to learn to form teaming relationships.

“That’s a new competency that they’re going to have to develop. They’re used to being in charge,” Hanna said.

“They’re used to being in a dominant relationship where if you were going to be a provider to them, you’re on their vendor list, and if you don’t do what they say, you’re not on their vendor list. That’s not the type of relationship that’s going to win out today and in the future. It’s going to be much more collaborative, peer-to-peer relationships.”

Hanna said such skills are lacking in Canadian telcos today, as well as many other Western companies. He added that technological development may necessitate some “unusual bedfellows” as competitors team up to get to the market first with new products.

“As a telco, I need to accept the fact that I’m teaming with a competitor today, I will see them in the market place as competitors of mine today and tomorrow, and so it takes a big-mindedness to get to that peer-to-peer relationship.”

Also as a result of deregulation and increased competition, the study said telcos will have to be better at customer service in terms of more personalized service, quicker response, lower prices and product bundling or face losing up to 30 per cent of their customers.

“They’re vying for you and me as customers, so whoever pays most attention to the customer is going to win the battle,” Hanna said. “It’s not a net loss of 30 per cent of customers in the market place, as much as it’s mobility of the customers by other companies getting their attention.”

Teleglobe Communications Corp. has already begun a transition to a more customer-oriented company, according to Andrew Burroughs, vice-president for global marketing and product management for Teleglobe in Reston, Va.

“We started out as Canada’s monopoly international telephone company serving one customer with one product,” Burroughs said. Teleglobe has since expanded to have more than 700 carrier customers, 80 broadcast television customers, and a handful of corporate customers as well.

He said Teleglobe’s biggest challenges have been changing from that monopoly mindset to being able to do fast and efficient customer service.

“We developed customer service because we didn’t really have customer service, we had technicians talking to other telephone companies,” Burroughs said.

“For us, customer service is important because, yes, there is severe competition out there. Teleglobe now operates in about 40 countries…so we have to offer customer service to a divergent customer set.”

Teleglobe is also investing US$5 billion to deploy a 160 IP/ATM-based switch network with fibre links called GlobeSystem. The system will provide voice, video and data mostly to ISPs and corporations, but could even extend the services to consumers through the company’s residential subsidiary.

The changes in products, customers, location and service levels have meant a complete cultural change for Teleglobe.

“We’ve gone from monopoly to international carrier and the next stage for us is megacarrier…which would be where we have the bandwidth capacity in-country linking countries together, not just looking at North America outwards, but really having end-to-end facilities across many markets,” Burroughs said.

Teleglobe’s model fits one of the three models the Andersen study states will be successful: in this case being a company that covers all of the bases that it can.

The other two models covered in the study are: becoming a dominant player in one piece of the business, such as Sprint in the long-distance market; or becoming a solution provider and acting as a broker and integrator of the best services available to a given customer, such as MCI Systemhouse.

Hanna said which way a company will grow depends largely on its heritage, what sort of assets it has in terms of human, product or financial resources, and what the company’s corporate profile dictates.

“The strategy is very much a function of what the company has been and how it continues to see itself,” Hanna said.

“Bell has Bell Nexxia for its national accounts,” he said as an example, “it has Internet strategies through its Sympatico brand, so I think it’s trying to be the Canadian dominant piece…and it’s still into the service provider business with CGI.”