3 wholesale communications trends to watch

Christian Michaud explains how platforms, online trading and blockchain will  shape the wholesale communications industry. 

The next three years will be a test of strength for the wholesale communications industry, as revenues from voice services are predicted to continue to decline. Wholesale carriers have two options: decide if they exit the market altogether or transform their approach to embrace innovation and drive those additional revenue streams. Below I explore three key trends that could help wholesale carriers that choose the latter.

The power of “platforms”

Customers of all kinds want the services they are purchasing to be easy to use. The wholesale voice business is no different.

“Just like Amazon or Uber, wholesale carriers can embrace platform-based business models to meet their customers’ evolving demands.”

A platform-based approach can allow companies to bring together a network of partners to develop innovative services and get closer to consumers by anticipating their needs in a frictionless way. Communications platforms matched with online portals can create new transparency and visibility for customers and ultimately build trust. This will also allow customers to react to demand in real-time, rapidly provisioning and monetising new services.

As APIs become more commonplace within the wholesale communication industry, solutions like cybersecurity, AI-based routing or even SD-WAN offerings can be integrated and provisioned within new platforms.

Online trading

While in the wholesale telecoms market capacity is not subject to the sorts of uncertainties witnessed in agriculture or energy, all markets see fluctuations in demand and supply in some way.

Also, despite the rise of software-defined networks (SDN) in recent years, most voice traffic is still carried across physical networks where capacity can be reasonably easily switched on and off. These networks have cost wholesale carriers hundreds of millions, so anything that might potentially negatively affect the return on investment, such as introducing new forms of market efficiency like online trading, could have more negative than positive effects. To illustrate this, the introduction of price comparison sites within the insurance market has meant that businesses now compete mainly on price. With voice services already a declining commodity, this is something that wholesale carriers probably want to avoid.

On the other hand, adopting an online trading approach may help curb uneven demand and in some situations might even drive up prices. For example, in the case of airlines, where demand for flights to a certain destination goes up, so does the price. This means that seasonal demand can be managed better, using pricing as the factor, by encouraging demand for otherwise unused capacity.

“Those who are unsure about an online trading system for fear of price decline, should consider adopting a halfway house-type approach.” 

This allows the core enterprise customer base to be served by wholesale carriers exchanging information on some form of online demand management platform, while the companies that manage a pure trading exchange model could be managed in the more traditional, semi-automated way that happens today. A hybrid approach would introduce the efficiencies that are needed in the core voice wholesale market, while ensuring that some sort of price stability is maintained in the broader market environment.

Enhancing telecoms with the help of blockchain

Over the past twelve months, blockchain has received a significant amount of hype within the telecoms sector – particularly with regards to IoT applications – and it’s not surprising. The essential attributes of blockchain’s shared ledger structure – trust, provenance, immutability and anonymity – are obvious benefits for a sector increasingly dealing with transactions between multiple telecoms companies.

“For wholesale carriers, the real debate around blockchain technology is whether these attributes warrant the hefty price tag and associated extra energy costs, that comes with it – especially in the face of shrinking revenues.”

While increasing automation to reduce internal costs is beneficial for the wholesale telecoms sector, there could be a rather high price associated with such a digital transformation. Wholesale carriers need to make sure that the additional cost will be recouped within any potential business case.  The solution would be through industry collaboration and adoption of blockchain technology in the wholesale business.

It is probably too ambitious to expect carriers to participate in a public blockchain environment, for example, like the kind we’ve seen with Bitcoin transactions. But a consortium blockchain arrangement like the one proposed by the Global Leaders Forum might be the answer for this sector. In a consortium blockchain, different organisations work together and restrict access and usage as needed to maintain the integrity of the ledger, thus allowing a limited set of trusted nodes to execute transactions. This ensures a degree of autonomy and giving the involved parties more confidence that certain types of commercial information are not potentially exposed to the public internet.

A telecoms blockchain consortium could come into existence to create the sort of virtual global managed network needed to deliver Blockchain-as-a-Service as a commercial proposition. This might include providing network, inventory, service management and settlement type functions as blockchain-based services. Introducing this solution with proper use cases and wide-spread adoption by industry stakeholders would certainly bring big benefits.

As these three trends shaping the wholesale telecoms industry at present demonstrate, there are still opportunities for those wholesale carriers that are in it for the long run to grab their share of the pie. There is still a significant amount of revenue to be won, but this will go to those wholesale telecoms companies that are willing to innovate and transform the way they operate.

Read about why it’s important to redefine wholesale communications in the digital age.