Fixed / mobile market disruption ahead!
Enterprises should prepare now for some major changes that are likely to disrupt both the mobile and fixed telecom markets. According to New Street Research, the odds are greater than 70% that Sprint will be acquired by either a cable company or T-Mobile. In addition, Comcast and Charter Communications developed a partnership to expand their wireless offerings.
The Comcast and Charter partnership makes sense because, coverage areas don’t overlap and it enables them to work together to integrate their networks of Wi-Fi hot spots, which cover about 80% of the country. This should help them offer better coverage and lower the cost of running wireless networks by moving from their current mobile virtual network operator (MVNO) partner, Verizon Wireless’ network to offer wireless service using Sprint’s network.
While there have also been reports that T-Mobile and Charter are not interested in Sprint, Softbank’s Chairman Masayoshi Son could attempt to force a deal by acquiring Charter. In addition, the Comcast Charter arrangement could fracture if T-Mobile moves to buy Sprint, or one of the two cable companies decides it needs a controlling interest in Sprint.
T-Mobile’s CFO, Braxton Carter, said, “You can definitely dip your toe in the water with an MVNO, but you’re never really going to have true owner’s economics… I believe that that type of coalition [between Comcast and Charter] actually makes, eventually, more sense for cable and wireless to come together to truly disrupt what is happening in the U.S. marketplace.” Carter also reiterated T-Mobile’s interest in a merger with Sprint.
As T-Mobile’s CFO points out, there is an opportunity for cable companies to combine forces with a mobile company to offer “disruptive” new offerings that will impact the fixed market. Sprint CEO Marcelo Claure, speaking about T-Mobile and Sprint said, “Having a company almost the size of AT&T and Verizon, in which you combine the two mavericks…. with a different scale, [creates] synergies that are pretty interesting.”
Steps enterprises should take to prepare for disruption
Enterprises need to plan for disruption. Depending on which companies merge and what offerings they develop, prices in some segments could drop dramatically. For now, we don’t know exactly what will happen. The best way to prepare is to:
- Shorten the length of contracts and ensure there is an efficient process to review market prices. This will enable you to determine if negotiating a new contract is worthwhile.
- Develop an accurate inventory of all contracts with the services/quantity; rate plans; start and renewal dates for each provider.
- Identify alternative providers for services to help anticipate potential combinations that could help increase your buying power and leverage with providers after a merger.
- Establish a Telecom Expense Management (TEM) program to process all (fixed, mobile, voice, data and cable) network communications bills. This will help organize all the information.
Granular reporting will be critical to gain visibility into the services and usage with each service provider. It will also help to make quick comparisons of costs for similar services that you purchase from different providers. In this new world, TEM, asset management, procurement tools, invoice management and reporting, will be more important than ever.