Telecom's Tumultuous Transformation

Telecom's Tumultuous Transformation How are consultants—AKA service providers—helping make sense of an industry in upheaval?

By Eric Krell

In recent years, many consulting firms rebranded their telecommunications practices as “communications” and “telecommunications, media and technology” practices. They did so to keep pace with the rapid evolution of the industry’s technologies, participants and strategic challenges. Today, those new descriptions already seem stale. “Blur” would be a more fitting name for a practice, given the industry’s furious pace of change and its fluctuating boundaries.

“We increasingly think about telecommunications, media and technology as a single practice, given the amount of convergence that’s taken place and the amount of convergence we expect going forward,” notes Rock Khana, McKinsey & Company director and co-leader of the firm’s global pricing center.

Every week it seems like more companies from other industries—electronics retailers, device and software makers, social media platforms, Internet search giants and even auto manufacturers—converge on the telecommunications sandbox. Not surprisingly, definitions of the telecommunications industry have become “nebulous,” says Strong-Bridge Principal Ken Simpson, whose firm defines the industry as “including any company focused on delivering products and services focused on connecting people or machines.”

Indeed, one of the biggest risks—and perhaps, thrills—facing consultants in the telecommunications industry is the likelihood of cracking open the paper each day and discovering that a new acquisition, technology or business model has, once again, reshaped the industry.

What if Google writes a check for Sprint or T-Mobile? What if Amazon becomes a carrier? What if one of those companies cracks the code on an advertising-supported cellular phone subscription model with monthly bills of $20 instead of $75?

AT&T and Verizon (along with their tens of billions of dollars in profits, and their hundreds of thousands of employees) shudder at these thoughts. What if OTT video (“over the top” streaming of television content via the Internet) becomes SOP? Comcast, Time Warner, Cox and Charter shudder at this thought.

Some of these companies already are responding creatively, and counterintuitively. For example, rather than attacking or ignoring the OTT threat from Netflix, Hulu, social media content providers and other disruptive competitors, some cable-television providers are embracing this new model by promoting the fact that their offerings include access to this content.

When identifying what keeps telecommunications executives awake at night, “worrying about disruption is bullet point number one,” asserts Booz & Company Partner George Appling.

100 Years of Calm, 20 Years of Transformation
Where there’s an industry in the throes of shudders, there is ample consulting opportunity. The industry’s current evolution has helped ensure that the consulting opportunities will remain plentiful for the foreseeable future.

When consultants discuss how telecommunications is changing, they frequently describe an ecosystem undergoing a rapid transformation. In the past decade, mobile has become ubiquitous, “creating whole new industries,” notes Ron Kermisch, head of Bain & Company’s telecommunications practice in the Americas.

“Witness the rise of the smartphone, accompanied by an ecosystem of mobile applications, new start-ups, and new business models.” Boundaries also have blurred.