Arthur D. Little: Telcos Failing to Capitalize on Mobile Web 2.0

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Arthur D. Little: Telcos Failing to Capitalize on Mobile Web 2.0

The phrase, “build it and they will come” has been used to justify the creation of everything from shopping malls to communications services. Yet, if a new report from consultancy Arthur D. Little is correct, many telecom companies are unwilling or unable to go out on a perhaps not-so-thin limb when it comes to mobile information-sharing services that fall under the “Web 2.0” umbrella.
 
Arthur D. Little analyst Martyn Roetter said in the report that Web 2.0 services—which enable the creation and distribution of content instantaneously and globally in a way not previously imagined—are a key driver of today’s Internet growth, yet telcos are not jumping on board.
 
“In order to harness and monetize Web 2.0 the Telcos will have to rapidly address the needs of this community,” Roetter said in the report.
 
Roetter included this example of why telcos should be capitalizing on Web 2.0: “Younger Europeans are already showing their readiness to interact on the move, with 38 percent of them accessing e-mail from mobile devices, while Google launched Gmail for mobile in November last year. Telecommunications businesses now need to offer access to the established web 2.0 services, for both communication and for the fulfillment of their wider social needs while on the move.”

So, the question is, if telcos aren’t joining the mobile Web 2.0 revolution, why not?
 
According to the Arthur D. Little report, telecom companies face a dilemma regarding Web 2.0 that they haven’t yet resolved: “whether to collaborate or compete with the newly emerged yet de facto web 2.0 leaders (flickr etc) and face the long haul choice of building competing communities or taking the reduced margin implied from partnerships with existing players in exchange for more rapid access to larger communities.”
 
AT&T is one example of a telco that took the latter path by partnering with MySpace and hopping on for a ride with deals included in 3’s X-series portfolio (which includes companies like Skype, Google and YouTube). Arthur D. Little’s report suggests that AT&T’s approach, while growth-oriented, is considerably more risky than what’s known as the “bit-pipe” solution of focusing solely on pure bandwidth delivery rather than services.
 
So, if telcos face considerable risk partnering with Web 2.0 companies, is there any way to mitigate that risk? Arthur D. Little suggests that companies focusing on the service-oriented space must choose their partners wisely, focusing on those that “can successfully grow profitably as the models develop from pure advertising into more mature, and in the long term, sustainable revenue streams.”
 
Seems like sound advice to me. What do you think?


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5 Comments

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I think that it is taking Telecom companies TOO LONG to make a decision and start working with the new emerging forms of business. This means that a lot of the more traditional companies are going to lose out and lose business before they even know it. VoIP is growing, and will continue to grow. Social media and business is becoming bigger than most expected, and these companies need to start making some serious decisions very soon before they become way too old and outdated for their own good. Interesting article. There is definitely going to be some significant change coming, in my opinion.

haha.. good opinion

According to the Arthur D. Little report, telecom companies face a dilemma regarding Web 2.0 that they haven’t yet resolved: “whether to collaborate or compete with the newly emerged yet de facto web 2.0 leaders (flickr etc) and face the long haul choice of building competing communities or taking the reduced margin implied from partnerships with existing players in exchange for more rapid access to larger communities.”

b 2.0 leaders (flickr etc) and face the long haul choice of building competing communities or