Over half of leading telecom carriers will not survive the IP revolution, according to analyst Gartner.
Mobile broadband, Internet Protocol (IP) technology and the aim to become full-service providers are driving telecom carriers to build non-core business units and over-investing in immature technologies.
Historically, carriers have been able to depend on high revenue growth from broadband or mobile services, but they now face the prospect of rapidly declining revenue growth.
As a result, Gartner predicts more carriers will invest in new markets to compensate for revenue losses in traditional telecom services like public switched telephone network voiceover the next few years.
The analyst says half of these new approaches will fail because many carriers have a limited knowledge of their existing subscriber base and may not understand the new business models.
‘The synergies between the different business models and markets are very limited,’ said Martin Gutberlet, vice president at Gartner.
‘This type of diversification carries a high risk of losing focus on today’s core business priorities such as customer retention and cost cutting, with no guarantee of increased revenue growth in the long-term,’ he said.
Gartner predicts that year-on-year growth of total revenue from telecom services (80 per cent of total global telecom market size) will shrink to just 1.7 per cent in 2010.
The analyst predicts telecom carriers will strive to be profitable on much lower margins than today with telecom service revenues rising from $1.3 trillion in 2006 to just $1.5 trillion in 2010.
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