 | Issue: | Latin America 2009 |
| Article no.: | 12 | |
| Topic: | Profitability despite disparity | |
| Author: | Greg Le Neveu | |
| Title: | President, Americas | |
| Organisation: | Subex Ltd | |
| PDF size: | 248KB |
About author
Greg LeNeveu is the President of Subex, Americas, responsible for the company’s software products business in North and South America. Prior to joining Subex, Mr LeNeveu had many years of sales, marketing, and consulting experience in the telecom and enterprise software markets at companies, such as Micromuse (later acquired by IBM), Precise Software (later known as Veritas, which subsequently was acquired by Symantec), RiverSoft, and TEKsystems. Greg LeNeveu holds a Bachelor of Arts degree in Economics from the University of Colorado at Boulder.
Article abstract
Telecommunications in the Central and Latin American (CALA) region is growing rapidly. The sector has done well bringing services to some regions and some countries, but has had difficulty meeting much of the widely varied demand for affordable voice, broadband and value-added services. Wireless telecom services in CALA are widespread and highly competitive, whereas the growth of fixed services is much more limited. Moreover, management of rapid service is often hindered by the lack of integrated operational support systems.
Full Article
Reports across the globe confirm that the Central and Latin American (CALA) region is indeed growing faster than other telecommunication markets around the world. Telecoms services have become increasingly essential and, in many cases, integral to both businesses and residential consumers in CALA. Many of the countries in the CALA region are today witnessing a rapidly expanding middle class and increased privatization of key industries, and this is resulting in a growing demand for diverse telecommunication services. However, what is interesting to note is that the vast disparity in income groups is boosting growth in different regions and technologies and networks. While mobile, broadband and even VAS (value-added service) adoption is high in some of the more advanced countries like Brazil and Mexico, basic fixed line adoption is still catching up in countries like Nicaragua and Honduras. This diversity in growth in the region poses a challenge in the introduction of different technologies across different segments. While the more developed countries look at adoption of VAS like digital, audio and video content, consumers in the rural and not so developed regions are still getting used to basic voice services. Wireless telecom services in CALA are generally widespread and highly competitive, whereas fixed services have suffered from a history of limited penetration and monopoly provision. Recent operator activity in the region is also a clear indicator that the demand for telecom services is growing. VAS and data services are seeing an upswing. According to 3G Americas, contribution of data to ARPU has reached an average of nine per cent in Latin America in the third quarter of 2008. Big international carriers certainly see the CALA region’s potential and are upgrading their infrastructure and capabilities. The year 2008 saw heavy investments in super-core routers in Argentina, Chile, and Brazil to meet the growing demand for bandwidth-intensive applications and converged Internet Protocol (IP) services. Telefónica SA, which claims the largest telecom network in Latin America, was selected by Microsoft to provide VoIP to Windows Live Messenger customers in Argentina, Brazil, Chile, Colombia, Peru and Venezuela. As a result of the June 2007 acquisition, BT has a 180-POP (point of presence) pan-regional network covering Latin America, supplemented by VSATs for resilience, backup, and serving remote areas, and has data centres in Argentina, Brazil, and Colombia. This growing investment within the region is also leading to increased competition, which has begun to have a positive effect on many aspects of the telecom industry here. One example is number portability, introduced in Mexico in July 2008 and in Brazil in September 2008. The fact that the fastest growing countries in the regions have already introduced number portability is an indication of the competitiveness of the telecom market in CALA. Another example is the move by some mobile operators to cash in on the limited or slow adoption of fixed line services in rural areas. Mobile service providers have capitalized on the underdeveloped fixed-line network by emphasizing their ability to offer a fast, high-quality service with nationwide coverage in countries like El Salvador. Such varied growth in different markets and across different technologies, coupled with the increasing entry and competition of CSPs (communications service providers) in the region means that service providers are faced with the herculean task of managing the growth and demand of new services, while also keeping the investment cost to implement new services in check. CSPs looking at strengthening their footprint here need to be well prepared to garner the full potential of the market. They not only need to meet the basic telephony needs of the underdeveloped markets within the CALA region, but also be ready to provide advanced services to the more developed areas, to successfully compete in the region. The complexity of providing different services to different segments of the CALA society is huge. CSPs will find it difficult to manage all the data generated by the growing number of subscriber using such a diverse set of services. More often than not, various OSS (operations support systems) functions within a service provider environment, catering to different aspects such as provisioning, inventory, billing, customer care, and revenue management exist in silos. While these functions operate efficiently individually, cross-departmental data inconsistencies and system integration issues lead to redundant and inefficiently utilized sets of data. This often leads to inefficient business operations and can pull back the growth of the service provider. This can lead to lost opportunities, if the service provider is not able to recognize market and customer requirements in time. Hence, the interoperability of these OSS functions is crucial for CSPs to get a centralized and end-to-end view of the health of the business in such a dynamic environment. The ultimate goal of any business is to stay profitable, so to stay ahead and be profitable, service providers must ensure that all OSS functions perform well together, to optimise the business and deliver a superior customer experience. This can be best achieved through a pragmatic and effective approach of correlating different operational and business functions within the organization. Given this, service providers not only need to develop a comprehensive enterprise-wide approach to manage their OSS, but also need to break this process down into incremental initiatives and projects that work towards the overall goal. This requires a coordinated approach that helps them gauge the performance of their end-to-end business operations in financial terms such as revenue, cost, and margins, as well as the performance of value drivers such as customer satisfaction, quality and innovation. Simply put, such an approach enables a CSP to answer the question, ‘How are we doing today, this week, this month?’ CSPs need to have these answers at hand to successfully deal with today’s competitive landscape. The decisions made by the CALA service providers today regarding the OSS and BSS (business support system) infrastructure for their next generation networks and initial IP-based services will provide the tools to transform their future business model and operations. These decisions will have a critical impact upon their ability to deliver world-class services and remain profitable even in challenging business environments.
