Customers are always demanding greater choice, value for money, and convenience. Marketplaces have demonstrated their capacity to deliver these benefits for the retail market. Should communication service providers (CSPs) evolve in that direction too?
If you think of online marketplaces, you probably think first of Amazon and eBay. They are the most visited online marketplaces in the world, and have evolved their business models to give consumers a one-stop, online shopping mall where third-party vendors offer products and services. It gives customers greater choice and convenience and also facilitates the purchasing of complete solutions under one virtual roof.
It's a model that could potentially change the game for telecoms companies. As things stand, no CSP or cloud provider can deliver everything their customers want or need without some help and collaboration from partners. It is one of the reasons ecosystems are so crucial in business. Research by EY found that companies operating in at least one ecosystem drove 13.7% of their total annual revenues from ecosystem activities, plus 12.9% in cost reductions, and 13.3% in incremental earnings. A thriving and well-managed digital ecosystem in which partners interconnect and collaborate seamlessly to share data and ideas, execute contracts, and deliver solutions is now a business necessity. A marketplace can be the manifestation of where that ecosystem operates to the benefit of all.
At its simplest level, a marketplace for telecoms operators can help drive competitiveness and efficiency for all. A marketplace can enable operators to negotiate network capacity and other services with partners and other operators in general, automatically.
In efficiency terms, a marketplace streamlines processes and practices that have previously been time and resource-consuming. Automating transactions, for example, saves a significant amount of time on ordering and delivering network services, and governance rules that already exist for automating transactions makes the process simpler. Furthermore, Distributed Ledger Technologies (DLT) like blockchain can make marketplaces secure and reliable, limiting fraud and increasing trust when automated transactions are processed and examined.
A network services marketplace also presents the opportunity for operators to strengthen their own position in the digital ecosystem. By gaining a reputation as a trusted ecosystem partner, you can drive greater value for your brand.
How does it work in practice? The building blocks of marketplaces are standard APIs that highlight the availability of assets and make them easier to “buy”. Two standards have existed in parallel for some time, those from the TM Forum and from the Metro Ethernet Forum (MEF) which focused on the Ethernet; the two associations have now worked together to align their API standards.
Groups of operators are already collaborating to offer network services via market platforms in initiatives such as the Global Leaders’ Forum (GLF). This is an ecosystem of the world’s largest telecom wholesale carriers which encourages members to discuss strategic issues and to agree collaborative activities to drive the next phase of growth for the industry.
Similarly, there is another venue for operator collaboration in the shape of the i3Forum, a not-for-profit industry body designed to enable and accelerate transformation across the carrier ecosystem. In the i3Forum model, operators share voice traffic information and collaborate with other members. At present, this is more of a “knowledgeplace” than a marketplace, but represents a good first step towards greater digital inter-operator collaboration.
Research by the TM Forum in 2021 found that opinions on marketplaces varied among CSPs and their suppliers and partners. The survey found that “Some CSPs are simply looking to create B2B2X portals where they sit at the centre selling services, while others envision being participants in open platforms hosted by other companies”. Furthermore, the TM Forum research also found that for telcos, keeping control of relationships with customers is the number one driver for operating a marketplace.
But it’s important to remember that marketplaces don’t come in a one-size-fits-all format. They need to be built and tailored to the requirements of different markets, different types of customers, and different business needs. That said, marketplaces that are able to facilitate and speed up the purchase and implementation of connectivity and related value-add services have the potential to increase agility for any CSP and its B2B customers. The ultimate goal is to simplify purchasing processes by positioning the marketplace as a trusted provider that tests and certifies assets and guarantees interoperability.
Although it seems like the wholesale telecoms industry should start leveraging the power of working in ecosystems to the benefit of all, marketplaces may not be so easy to develop and standing out from the crowd may be a real challenge. As regards being a player in somebody else’s marketplace, that brings a major disintermediation risk, which telcos may not want to take. That said, some dedicated marketplaces may be viable moving forward, for specific needs such as IoT.
Instead, telecom operators could invest in “platformization”. This refers to the transformation of your business model and operations to make services easier to access and use, thanks to APIs, open-source and other digital technologies that bring agility through sales to delivery chain.
This way, each operator could create differentiation via a combination of:
It all adds up to wholesale providers being a key part of the supply chain who can reinforce, or not, the agility that their telco customers provide to their own customers.
