Insight: What Telecom 'Business Models' Mean in the Real World

Posted by Mae Kowalke on Tuesday, April 21, 2015 with No comments

When discussing the future of mobile telecommunications generally, and 5G in particular, the term 'business models' gets tossed around a lot. But what does that really mean, in the real world?

A broad definition might be to say that a 'business model' is all the core, interrelated aspects of successfully (read: profitably) running a company. By that definition, 'business model' encompasses many aspects of telecommunications, including striking the right balance with anti-trust regulation, competition among carriers, billing strategies, relationships between and classification of video distributors, and even the unemployment rate in this sector of the economy.

Here is a quick survey of some recent industry news items that illustrate the dynamics of those business aspects, as they're playing out in the real world. 

Anti-Trust Balance: Mergers and acquisitions are just part of the game for telecom companies. But making decisions about how to adapt in this way often is restricted (rightly or wrongly, depending on who you ask) by anti-trust regulation. At the moment, companies in Europe (among them, Telef√≥nica, Hutchison Whampoa, BT, and EE) face a tougher road in this regard than those in the U.S., Fierce Wireless reports

U.S. Tier 1 Mobile Carrier Carrier Competition: First quarter 2015 earnings quarterly calls are just around the corner for T-Mobile, Sprint, At&T, and Verizon, notes Fierce Wireless. Pundits are pondering questions like: Will T-Mobile maintain its momentum and surpass Sprint in terms of total subscribers? How's AT&T doing in terms of signing customers up for its Next installment and handset upgrade plan? Can Verizon retain its reputation as having the best wireless network? Stay tuned. 

Carrier Billing: Operators and over-the-top (OTT) content companies (like Amazon, Hulu, Netflix) stand to gain significantly by extending direct carrier billing options from mobile phones to other devices like tablet, PCs, and gaming consoles. Juniper Research predicts a bright future for this billing strategy, identified as an important asset in monetizing digital content. 

Video Distributor Classifications: The relationship between online video distributors (OVDs) and multichannel video programming distributors (MVPDs) is complicated, and made more so by how the U.S. Federal Communications Commission (FCC) classifies these entities, Light Reading noted. Comments are now in on whether or not FCC should reclassify certain OVDs as MVPDs. Does it make sense for online providers that offer linear, scheduled programming to have the same rights and responsibilities as traditional pay-TV operators?  Pros and cons abound, with potentially far-reaching consequences for OTT players and wannabes. 

Telecom Unemployment: Overall, the effects of economic recovery in the U.S. may not be as strong as hoped. But at least unemployment in the telecom sector is continuing to drop, RCR Wireless reports. U.S. Bureau of Labor Statistics indicate that rate is down to 1.7%, a waning trend that's been ongoing for several months. As of March, 863,400 people were employed in telecom, a category that includes telephony, VoIP, cable, and satellite television distribution; internet access; and telecom reselling. The pay's pretty good too: on average, $31 per hour.