October 20, 2005
Mergers create opportunities
The recent mergers involving six big telecom players will result in a new breed of companies promising a host of services including local and long-distance VoIP, broadband Internet connectivity, wireless, etc.
The changing scenario will lead to a need for better vendor management. The present flux can be a good thing for the users who can ask for better rates for the host of bundled services on offer as well as better customer support services.
According to Fred Gratke, Assistant V.P Telecommunications, Burlington Northern and Santa Fe Railway, two or three financially stable national carriers that can offer better service are sufficient to spur competition.
According to J.T Johnson, President, Nemertes Research, a mega carrier offering several services can afford to offer volume discounts and is also less complicated to deal with as compared to interacting with a host of carriers and managing multiple accounts.
Apart from offering volume discounts on bundled services, the carriers can streamline the order processing, billing, and provide prompt troubleshooting. The changes in the internal setup of carriers are already causing billing problems and customer relationship is also being affected.
Paul Lowenwirth, V.P Telecommunications, Viewpointe Archive Services, feels that it is important for customers to ensure that they stay relevant to the carrier’s scheme of things. If customers lose their significance for the large carriers created due to the mega mergers, they risk facing a fall in the standards of service offered to them.
Customers will be required to hone their vendor management skills in order to be able to negotiate the best packages as a result of the new setup emerging in the telecom industry. IT personnel will need to know more than just the technicalities of MPLS and VoIP technologies. Their opinion will be important in drafting service level agreements and redefining the minimum revenue requirements given that data packets are being added to the voice minutes.
The interaction between the provider and client is also set to increase as the complexity of the services provided increases. Thus, a carrier’s ability to help clients utilize their technology along with providing cost savings will matter. Large clients will often pay more in return for improved services such as managed services and carriers playing an active role in securing data.
According to Gartner, half of their clients are signing 3-year contracts and around 20% are opting for 4-5 year contracts to avail greater discounts. A longer contract period is not such a bad idea as prices are not really going down. Moreover, it allows both parties to work out a mutually beneficial service-level agreement.
The spate of mergers is also good news for the smaller players who are stepping in to fill the spaces created due the mergers. These include remote-access companies such as New Edge Networks, virtual network operators such as Virtela Communications, and outsourcers like IBM.
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