Where does the telecom industry
have to go once the impending mergers of AT&T and Alcatel are complete? A
new report issued today by BIA Financial Network (BIAfn) and Telecom
Pragmatics, Does Consolidation Mean the End of Innovation:
Telecommunications after the AT&T and Alcatel Mergers, describes the
probability that the market will soon be dominated by "mini-Western
Electrics," creating a situation where there will be a primary vendor
serving each of the major RBOCs. However, the consolidated equipment market
will not signal a return to the past, because innovation increasingly
depends on developments at semiconductor companies, and selling across the
globe, not just at one carrier. The report is based on in-depth interviews
with service providers, investment firms, and manufacturers such as AT&T,
Alcatel, Verizon, SBC, BellSouth and others.
The global market is not the only difference between the newly
consolidated industry and the one that existed before 1984. As chip
manufacturers push new technologies, and more software-dependent enterprise
equipment slips into telco networks, large carriers are expected to throw
away their network hardware before it serves its useful life. This has
never happened at the RBOCs, and the situation is shifting their purchasing
habits towards hardware that competes primarily on capital cost, not
theoretical operating savings that could take years to achieve.
An analysis of how carriers compete and what services they offer are
also addressed in the report. BIAfn and Telecom Pragmatics examine recent
market M&A activities and offer insights on the impacts to the industry as
a whole and to the relationship between consolidation and the expected
directions of market innovations.
"The telecom industry is dominated by long-standing relationships and
rivalries," said one of the report's lead authors David Gross, BIAfn senior
financial analyst. "As such, we think how companies like Verizon and Sprint
have historically pursued acquisitions says even more about the future than
any communication they have offered publicly. For example, why has Verizon
taken so long to respond to the BellSouth acquisition and when will we see
their counterattack? The answer is multifaceted, yet offers insight into
what can be expected next in the market."
In the report, BIAfn and Telecom Pragmatics also address:
- Who is AT&T and Verizon's toughest competitor?
- What is the mentality at the RBOCs today? (Direct quotes from RBOC
contacts provide undisclosed insights)
- Will other equipment vendors wilt under the weight of the new Alcatel-
Lucent?
- Will deployment of new services like IPTV speed up or slow down as a
result of these deals?
- Who controls product development cycles now?
- What are the three best ways service providers can gain cost
efficiencies when combining similar networks?
To purchase this report and for more information, call 800.331.5086 or
email reports@bia.com. Additional material on this report can be found at,
http://www.bia.com/TelecomReports.htm.
BIA Financial Network, Inc. (BIAfn) has served the media and
communications industries for more than two decades with financial and
strategic advisory services, as well as a comprehensive array of research
and investment resources. Telecom Pragmatics is an independent research and
consulting firm, with principals who have specialized in telecom service
and equipment markets for nearly thirty years. Information on the companies
and the report is available at
http://www.bia.com/TelecomReports.htm.