Success will come from understanding the needs of customers and managing policy in real time
The English Premier League and World Cup 2010 bidding exercise in Singapore earlier this year has put pressure on the local telcos to raise the ante in this fiercely competitive market for exclusive content. Inevitably, it drives up the cost of running the business for operators while at the same time causing inconvenience and anxiety for sports enthusiasts who have to use different set-top boxes to view exclusive content from separate operators.
This is soon, however, going to change when digital content can be streamed through the Next Generation National Broadband Network (NGNBN), and the Media Development Authority (MDA) has already mandated that the two major operators work out a way to share programs and content through a new cross carriage rule.
This is only the beginning of the paradigm shift in the telecom industry. As the industry starts to consolidate, network coverage and exclusive content will no longer be the differentiators. We can expect that telcos' operating model will continue to evolve, with customers the eventual winners from these changes.
But how will the industry evolve in this rapidly changing environment? Other factors are also playing a role; as the market becomes more open and mature, revenue growth will slow. Management is focused on maximising return on assets (ROA) and reducing cost.
Maximizing ROA
Traditionally, operators provide an end-to-end value chain to customers from exclusive content aggregation, delivery, service provisioning to customer service and network infrastructure. The forthcoming NGNBN and the mandate for operators to share content have fundamentally changed how the industry operates. Operators will no longer enjoy owning exclusive content or unique services to lock in customers.
To maximize ROA, we have already seen a horizontal restructuring of the industry in the more developed European and US markets. We see a smaller number of network wholesalers (e.g. network companies and operating companies), an increase in the number of retail service providers (RSPs), and a handful of large-scale independent media and content providers.