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TeBIT 2014 Executive Report: Paving the Paths to New Revenue (telecom)

October 21, 2014 Comments off

TeBIT 2014 Executive Report: Paving the Paths to New Revenue
Source: Boston Consulting Group

The best strategies leverage both good ideas and good timing. While traditional telecom services are facing challenges (which by now are traditional, too), new offerings, in new areas, are showing promise. Keeping the momentum going (and growing) means investing in IT that can spur and support innovation—and doing it now.

Even if the idea and the timing look right, what are the specifics? Where should telcos focus their investments? Can they buck the usual trend of their IT operating expenses increasing along with their capital expenditures? Can increasingly popular levers—such as outsourcing and commercial off-the-shelf software—be leveraged more efficiently? Will moving to less complex solutions and operating models always bring cost advantages? These are some of the key questions addressed in TeBIT 2014, a telco IT benchmarking study jointly developed in 2010 and conducted annually by The Global IT Association for Telecommunications (ETIS) and The Boston Consulting Group.

The report that follows highlights the insights unveiled by this year’s TeBIT study. The idea is not only to identify the IT challenges telcos face, but how they can address them. Just as importantly, the report examines how IT can best be leveraged to help telcos seize the opportunities today’s market presents. As it did last year, the study analyzes how telcos are steering their top capital-expenditure initiatives, how levers like outsourcing and commercial off-the-shelf software are being implemented, and how, perhaps, those levers could be optimized still. New this year is a close look at the relationship between complexity and costs. While one might think less complexity means lower costs, the link is not always clear cut.

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Who’s making money on the Internet? Comparing ROIC across Internet sectors

October 13, 2014 Comments off

Who’s making money on the Internet? Comparing ROIC across Internet sectors
Source: American Enterprise Institute

One of the background questions in Internet policy debates concerns what and who contributes value to the overall system and who extracts profits. In a perfectly functioning market, profits will reward innovation, investment, and the creation of value for users; unfortunately, there exist very few perfect markets. A number of things distort market efficiency; government policy is certainly one such thing, and market power is another.

Return on invested capital (ROIC) is a very good way to evaluate competition, profitability, and leverage in capital-intensive industries.

According to Morningstar, firms with 15 percent or more ROIC for a number of years are most likely have a “moat” that protects them from competition.

So let’s look at three sectors: content creators such as Disney and Viacom, who create the movies and TV shows that we stream into our homes; network services firms such as Comcast and AT&T, who provide us with broadband networks; and Internet “edge services” such as Netflix and Google, who connect network users with content and services.

The Price of Silence: When No One Asks Questions During Conference Calls

October 6, 2014 Comments off

The Price of Silence: When No One Asks Questions During Conference Calls
Source: Social Science Research Network

We document economically significant indirect costs of providing conference calls — increase in information asymmetry and more negative immediate market reaction — when managers fail to elicit questions during the calls’ question-and-answer (Q&A) session. We establish this result by focusing on earnings calls where managers fetch either zero questions or “too few” questions when they open the floor for questions. We extend the literature on conference calls as an important corporate communication medium by examining hereto unexamined costs, and propose remedies for firms to avoid such indirect costs of corporate communication.

Hat tip: PW

Dialing Back Abuse on Phone Verified Accounts

September 26, 2014 Comments off

Dialing Back Abuse on Phone Verified Accounts (PDF)
Source: George Mason University

In the past decade the increase of for-profit cybercrime has given rise to an entire underground ecosystem supporting large-scale abuse, a facet of which encompasses the bulk registration of fraudulent accounts. In this paper, we present a 10 month longitudinal study of the underlying technical and financial capabilities of criminals who register phone verified accounts (PVA). To carry out our study, we purchase 4,695 Google PVA as well as pull a random sample of 300,000 Google PVA that Google disabled for abuse. We find that miscreants rampantly abuse free VOIP services to circumvent the intended cost of acquiring phone numbers, in effect undermining phone verification. Combined with short lived phone numbers from India and Indonesia that we suspect are tied to human verification farms, this confluence of factors correlates with a market-wide price drop of 30{40% for Google PVA until Google penalized verifications from frequently abused carriers. We distill our findings into a set of recommendations for any services performing phone verification as well as highlight open challenges related to PVA abuse moving forward.

Recent Trends in U.S. Services Trade — 2014 Annual Report

September 24, 2014 Comments off

Recent Trends in U.S. Services Trade — 2014 Annual Report (PDF)
Source: U.S. International Trade Commission
From press release:

The United States is the world’s largest services market and was the world’s leading exporter and importer of services in 2012, reports the U.S. International Trade Commission (USITC) in its new publication Recent Trends in U.S. Services Trade, 2014 Annual Report.

The USITC, an independent, nonpartisan, factfinding federal agency, compiles the report annually. Each year’s report presents a qualitative and quantitative overview of U.S. trade in services and highlights some of the service sectors and geographic markets that contribute substantially to recent services trade performance.

This year’s report focuses on electronic services and includes chapters on three specific industries: audiovisual services, computer services, and telecommunication services. Each chapter analyzes global market conditions in the industry, examines recent trade performance, and summarizes the industry’s outlook.

Hat tip: IWS Documented News Service

Roaming charges in the EU

September 3, 2014 Comments off

Roaming charges in the EU
Source: European Parliamentary Research Service

The “roaming charge” refers to the cost of using mobile communications (typically with a mobile phone) to make and receive voice calls, send and receive data, or access other services, when travelling outside the geographical area of the user’s home network and using another network in the location they are visiting. (Eurostat) Wholesale prices refer to the amount network operators charge each other for carrying traffic, whereas the caller is charged the retail price.

The New Rules for Designing Fixed-Mobile Bundles: Winning with Convergence

August 26, 2014 Comments off

The New Rules for Designing Fixed-Mobile Bundles: Winning with Convergence
Source: Boston Consulting Group

Convergence and integrated telcos go way back, but the relationship has often been a rocky one. In theory, convergence offers—packages that leverage an operator’s fixed and mobile assets—have long been tempting propositions. If all of a subscriber’s needs could be met with one basket of services, customers could be steered away from other providers. Market share and revenues would rise, churn would decrease—what could go wrong? In practice, plenty.

Traditionally, most convergence offers were built around very simply discounted bundles that prompted customers to buy more and save. Telcos would slap together their existing fixed and mobile plans and shave some dollars off the price. But competitors could easily replicate such bundles, shaving still more off the cost. The resulting price war eroded margins, and even the telcos that picked up market share saw little net gain.

Little wonder, then, that many telcos now look at convergence and think, “Been there, done that—it doesn’t work.” Yet increasingly, we are seeing evidence that convergence offers can work. Or, rather, that a new take on convergence offers works. At the heart of this approach is the idea that simple discounts need not be—and shouldn’t be—the sole differentiator between a convergence offer and standalone fixed and mobile plans. Instead, an operator’s assets can be combined in ways that offer unique, compelling services that can’t be easily replicated, such as the ability to watch TV from any device.

For customers, these bundles are attractive because they have a clear “better together” value proposition: subscribers end up with more overall than they would have if they had purchased separate mobile and fixed plans. In other words, one plus one now equals more than two.

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