Report author Rob Pritchard observes: “Although the eventual result of the Ofcom strategic review remains unclear, it looks certain that the status quo will not endure – providing an as yet unknown range of threats and opportunities across the service provider side.”
The report also finds that the market will continue to be affected by the on-going consolidation between fixed and mobile providers – even though the O2-Three deal looks threatened by a shift in EC policy.
“In addition to the structural challenges on the supply side, the market is also being impacted by the move to a cloud-based model which has implications beyond technology and increasingly will involve customer representatives across multiple business units such as marketing, finance and business administration – meaning sales strategies must also evolve.”
The 1,080-page report profiles and compares 62 representative providers of fixed and mobile enterprise telecoms and related IT services in the UK.
The report states : "As yet, the result of the Ofcom strategic review is unclear – other than the fact that the status quo is not an option. On one extreme would be the full separation of Openreach from BT, which would cause considerable turmoil and make the eventual sale of BT to a foreign owner significantly more likely. On the other, increased regulatory scrutiny and fines would aim to make Openreach more accountable but would still leave the unit under the control of the BT Group.
Whatever happens, competitors to BT have already been making their case - generally for separation – and must prepare to take advantage of whatever outcome is delivered by Ofcom. A full separation of Openreach might not actually be that helpful in the short term for any players reliant on it for access as the disruption would affect all Openreach’s customers. The biggest beneficiaries would be competitors of BT that have no or little reliance on Openreach – so Virgin Media Business would be the main winner.
When it comes to developments outside of regulation, it is clear that basic fixed and mobile services are commoditized, so service providers are increasingly looking to move up the value chain to engender customer loyalty and to maintain margins. This makes sense also because the increasing complexity of ICT means that customers have a growing need for professional and integration services. At the same time, the role of ICT increasingly as a businesss enabler and provider of competitive advantage means that IT Managers and CIOs do not want to spend their time focused on the day-to-day ‘nuts and bolts’ of the network – leading to growth in managed services.
The shift to the cloud not only means a change in operational focus from in-house and capex to hybrid and opex, it also entails a more dynamic use of ICT across the enterprise – from marketing to business administration: adding further to the complexity and range of tasks faced by those trying to manage their company’s networks and applications."