Challenges and opportunities to the Telecoms Industry

Seminar paper from the year 2010 in the subject Economics - Micro-economics, grade: 1,7, University of Frankfurt (Main), language: English, abstract: The actual Telecoms one-sided business model is under pressure: tougher regulation, developing technology, potential new entrants, and advancing customer expectations. The traditional voice business is facing stagnating or even falling revenues and therefore in-creased voice usage is no longer sufficient to compensate for price deflation. In the current one-sided business model, the telco buys equipment and content from sup-pliers, integrates them, and bills the end user for services. This reflects the traditional value chain in which value moves from left to right. The future business model breaks the traditional value chain. Value is created on the left and on the right side of a telco. This two-sided business model delivers value to and generates revenue from 3rd party service providers as well as end-users by providing an open platform that helps the service providers to interact with end-users in more effective ways. This model enables the genera-tion of new incomes and can be the solution to escape from an environment with decreasing prices and falling revenues. The telecommunication industry promises itself enormous economic potential and tremendous added values for all participants. The aim of this paper is to show the challenges and opportunities of telecoms' journey from one-sided to two-sided business models to reach a new era of growth. Both models will be analyzed by the business model canvas of Osterwalder and Pigneur. It will show that the telecommunication industry is able to gain much more power and new revenue streams than they do today. Chapter 2 will present the theoretical foundations used in this paper for analyzing the un-derlying business models. In chapter 3 the theoretical models are adopted to examine the actual one-sided of the telecommunication industry. This includes the current economic situation, the resulting challenges, the telecoms' core assets and capabilities and the conse-quential opportunities. Chapter 4 outlines the future two-sided business model as the result of this paper and ends with two examples of already established two-sided business processes.