London, July 1st 2004 – A new survey of wholesale carriers by telecoms consultancy. BroadGroup, has found that wholesale has reached a transformational point, the impact of which will be similar to the emergence of refile following liberalisation in the US and other OECD countries.
The survey analysis, published today, Where next in wholesale? The profit challenge for voice and data suggests that wholesale is overdue for consolidation. The report has been developed from the results of a survey of Wholesale Voice and Data carriers from Western and Eastern Europe, North America, Latin America and Asia Pacific. The respondents represented approximately 50% of the total international voice traffic on public networks. For Data Services, half of the top 10 carriers were included in the survey.
Findings reveal that carrier wholesale strategies formed in the mid-90’s were predicated on the carriage of international retail voice and wholesale traffic, but now no longer deliver the original benefit of a reduction in retail cost base.
“Wholesale is a critical part of telecom businesses,” commented Nick Topham, author of the report, “but we now find a mismatch between the infrastructure available and strategies pursued against the realities of a completely changed market. The survey findings show that carriers need to address their forward strategy now, to alleviate the pressure on margin and profitability.”
Belgacom is regarded by the carriers surveyed as the most competitive carrier in wholesale voice, followed by Cable and Wireless.
In wholesale data, COLT was identified as the most competitive carrier in Europe, and Cable and Wireless internationally.
France Telecom and Level 3 were also included in the most competitive rankings for data.
The report analyses responses of carriers surveyed to issues concerning buyer and seller relationships, routes and volumes, retail and wholesale, competition, pricing, and revenue and volume expectations. Overall, the report finds that in both voice and data, the market is oversupplied and highly competitive, with pricing continuing to decline due to these effects and continuing global liberalisation.
As current technology comes to the end of its useful life and needs to be renewed, the business rationale that the wholesale business is a marginal cost contributor to the retail cost base can no longer be sustained.
The report proposes strategic options that carriers might adopt to build value in their wholesale businesses.
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