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London, 4th February 2008 – Both fixed and mobile telecoms operators are taking a risk if they believe that price competitiveness alone will be the way forward to grow a sustainable business in the long term. That is the conclusion of a unique two day conference held on the subject of Telecommunications Cannibalization in London researched and organised by BroadGroup Tariff Services, which ended on the 1st February.

From the conference, it is clear that many operators continue to struggle with the challenges of raising or maintaining ARPU levels and customer loyalty. Vodafone UK’s Robin Tucker saw that the need for the operator to regain customer trust through simplified pricing and understandable offers which are required not as an optional extra but simply as part of a way of doing business.
And wholesale operator TeliaSonera International Carrier illustrated the benefits of a focussed strategy on customer care with retention levels of 96 per cent. The company is seeking to build on this loyalty by restructuring its business around core customer groups, including Gaming and Media, in order to develop specific services for each sector.

Increasingly consumers in mature European markets associate bundled services with price discounting and will only change supplier if a greater bundled cost saving is demonstrated. This is creating an environment where pricing is being forced down and operators are in danger of missing what part of their proposition may be adding value and are increasing levels of churn.

In the enterprise space, the telecoms operator is also having to provide a more consultative sales approach with the emphasis on allowing the large customer to more efficiently manage his or her IT infrastructure in the LAN and WAN. Again this transition is proving challenging as it means understanding a wider range of technologies, buyer behaviour and moving away from being a price-based network supplier.

Consultancy firm BWCS gave an example of the benefits to be had from using converged technology based on IP as a means of contacting employees first time with as few as 25 per cent of calls to organisational employees being answered first time. The distinction to be made is that the gain is in overall organisational productivity rather than in costs per call.

At the event BT Global Services gave an update on the adoption of their Corporate Fusion service which is now available in 8 countries, and which is being trialled in the Asia Pacific region. The next phase is to offer integrated FMC services in CDMA-based markets such as the US, Japan and Korea. BT sees much interest in the service from the Asia Pacific area.

UK WiMAX pioneer FREEDOM4 (backed by Intel Capital and Pipex Wireless) sees WiFi as a complementary service to WiMAX. FREEDOM4 WiMAX is currently available in Milton Keynes and is being launched in Manchester. The company has the intention of launching services in another 8 cities over the next year and sees a requirement from consumers in local areas which are not well catered for by DSL services and small business users who wish to have a low cost alternative to SDSL services.

Deutsche Telekom claims that it is suffering from minimal fixed line losses, mainly due to the relatively low cost of fixed line telephony. The low cost of the fixed line equivalent helps to explain the relatively high percentage of voice calls carried over fixed lines. The German market is seeing Fixed Mobile Substitution (FMS) as mobile operators follow the same price structure as their fixed line counterpart. Deutsche Telekom are now playing their part in encouraging FMS with the launch of T-Mobile’s @Home service with a monthly fixed rate of 4.95 Euro per month with Home Zone calls at 4 Euro cents per minute.

The variety in FMS and the adoption of mobile services in Europe was outlined by Nokia Siemens Networks. And as each market has different rates of mobile adoption NSN argues that it is unlikely that there will ever be a “one size fits all” technology that will be used to create Fixed Mobile Convergence.

Mobile and Fixed Line operators continue to experiment with how they can adjust to the demands of Web2.0 services and social networking. Comverse reported that all mobile operator RFP’s received in 2007 have asked how to integrate social networking sites into their mobile content. All providers are concerned about the cannibalization of their SMS revenues, reports Comverse.

But even though there are challenges of competition and changing customer requirements it can be overlooked that the global telecoms market as a whole is still growing. Analysts in the past have been too conservative in predicting mobile growth and penetration rates, argued John Tysoe of The Mobile World.

“The subscriber growth curve that we are seeing today in India is almost the exact same as what we previously witnessed in Europe,” he says. The key difference is that ARPU levels are much lower. But the Indian mobile operators still seem able to generate profitable revenue growth from relatively poor subscribers by developed market standards. And in emerging markets subscribers are willing to spend a higher proportion of their incomes on mobile services.

“Overall, operators should focus on providing value added services to their customers rather than attempting to offer ever increasing bundles or price discounts, says Margrit Sessions, Managing Director of BroadGroup Tariff Services. “Unless they change direction and either focus or learn new skill sets, it is likely that cannibalization will claim more victims in the coming year.”

Note to editors:

About the BroadGroup Tariff Services Telecoms Cannibalization Conference:

The Telecoms Cannibalization Conference ran over 2 days from the 31st of January to the 1st of February 2008 and had speakers from:
Alcatel-Lucent, Anthem Capital Finance, BT Global Services, BWCS, Comverse, Deutsche Telekom, Ernst & Young, FREEDOM4, iBasis, Lebara Mobile, Nokia Siemens Networks, The Cloud, The Federal Network Agency of Germany, The Mobile World, TeliaSonera, 3i plc, Verizon Business and Vodafone.

During the two day conference, the speakers addressed the following questions in an interactive format

• Is Enterprise Convergence now finally becoming a reality?
• Can rising ARPU and FMC ever really go together?
• How good are telecoms providers at really maintaining your loyalty?
• What is the future of voice services and the voice specialist?
• Also, what new market entrants are likely to make an impact in 2008 and beyond, and
• Which technology will really drive Convergence in the direction of the customer?

Further information on the conference will shortly be available via the event website at

For copies of the proceedings contact:

Margrit Sessions BroadGroup Tariff Services for more information, +44 208 993 6861, +44 777 625 4827,

This press release was distributed by ResponseSource Press Release Wire on behalf of BroadGroup in the following categories: Computing & Telecoms, for more information visit