by Umesh Jain

WHITEPAPER Communications companies are at an exhilarating stage in the history of the industry. The industry is at a point of convergence where the opportunities for growth along with risks and rewards are abundant. Communication company executives have a unique opportunity on their hands. They can transform and position their organizations for long term sustainable growth by capitalizing on the increasing demand for communications in an expanding global economy.

Along with opportunities come challenges. Just like the enormous opportunities, the challenges are abundant. Some of the key challenges currently facing all communications service providers include,

• Customer acquisition
• Churn and customer retention
• Price pressure
• Aggressive competition from traditional and new non-traditional competitors like pure-play VoIP service providers
• Over capacity

Traditional telecom companies are finding that the revenues from long distance and other traditional TDM services are gradually evaporating. The competition from pure play VoIP players like Vonage and Packet8 for local and long distance business is starting to make a dent in the revenues associated with those areas. Customers are demanding more for less as they are bombarded with marketing messages from these new entrants. Traditional players have entered the internet access market and are launching VoIP services to compete in this lucrative market. Now, customers are demanding single bill and bundling discounts. It’s an aggressive market with customer wants surpassing their needs as they get educated about the possibilities with leading edge communications services.

Wireless carriers have similar challenges of their own. The demand for better equipment and wireless data is growing. They are being transformed to becoming a data access provider where voice is becoming just another data type. Along with the growing demand for data services comes the growing demand for content and transaction services – similar to what we saw in the 1990’s with the internet boom. Once again, customers are demanding more services, better pricing and exceptional support as they try to navigate the challenges that come with data and content services.

Cable operators too are not in safe haven. The cable operators, most of who have expanded into providing internet access, are facing challenges. They are being attacked by aggressive competition from satellite service providers like Dish Network and DirectTV. Some cable companies are also trying to utilize their data networks to expand their service offerings by expanding into providing local and long distance telephone services using VoIP. This expansion from their non-traditional roots brings with it challenges associated with customer support, consolidated billing and competition with large telecos.

The new players, particular the pure-play VoIP businesses like Vonage and Packet8 too are not protected in this market. They face the typical challenges that come with startups in the communications industry, including acquiring customers, educating the market on new technologies and offerings, growing pains in operations and competition from traditional telecom and cable service providers who are aggressively moving into the VoIP market and utilizing their existing customer base and established backend capabilities to swiftly try and take significant market share in this emerging market.

So what's a company supposed to do?

One look at the state of the communications industry today clearly shows an underlying message:

“Aggressive growth opportunities bring with it aggressive competition. The need to survive in a highly competitive market brings with it the need to be the best at attracting and retaining the best customers. In order to attract and retain the best customers a company needs to provide what the customers want backed with flawless execution of ongoing support. In other words, companies that want to survive for the long haul in the communications industry will need to transform themselves from product centric to customer centric enterprises.”