Where Next In Wholesale
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WHERE NEXT IN WHOLESALE The Profit Challenge for Voice and Data Published June 2004 39pp 30 Tables and Charts |
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Synopsis
Based on a survey conducted with carriers in Europe, Asia Pacific and North America, this new report provides a timely strategic assessment of the future of wholesale voice and data, where it is headed, and how value can be built.
The respondents represented approximately 50% of the total international voice traffic on public networks. For data services, half of the top 10 carriers responded to the survey. The identity of the carriers in the survey remains confidential.
Evaluating critical issues in wholesale, the report analyses responses of carriers surveyed to issues concerning buyer and seller relationships, routes and volumes, retail and wholesale, competition, pricing, and revenue and volume expectations.
The report findings suggest that a point of transformation has been reached in wholesale which will be similar in impact to the emergence of "Refile", following US market liberalisation in 1984, and subsequently in Western Europe and other OECD countries.
Identifying fundamental change in the key drivers for wholesale businesses, the report assesses the implications for the original marginal costing business model. In particular, the findings reveal the current relationship between wholesale voice traffic, and retail traffic, and measures how far this has shifted.
Confronted by over supply and a high level of sensitivity in pricing in both voice and data markets, the report suggests that survival of carriers in wholesale will depend on whether their businesses are based on an incremental cost model, and compares the financial profile of a Tier 1 retail and wholesale carrier, and a pure play wholesale carrier, the impact of investment and scenarios for future sustainable models.
The report assesses the critical decisions carriers now confront in taking forward wholesale businesses, including the implications of the findings for current wholesale infrastructure and technology, and the move towards integrated IP, and the impact of the growth rate in mobile international termination, and VoIP international traffic.
Arguing that the business rationale for wholesale as a marginal cost contributor to the retail cost base can no longer be sustained, the report proposes several alternative innovative strategies to build value and opportunities to enhance margins.
Answer 6 Key Questions About Wholesale Today
- What are carrier perceptions of current wholesale voice and data markets?
- What are the key issues in today's wholesale markets and why do they matter?
- Why are some wholesale business models more financially sound than others?
- How will investment impact wholesale development, and where should it be applied?
- How to meet the profit challenge?
- What are the forward strategy options that should be considered?
Who Should Buy The Report
- All operators, service providers and suppliers engaged in Wholesale Markets
- Voice and Data Carriers
- Aggregators
- Single Route Operators
- VoIP Players
- Regulatory Organisations
- Law Firms
- Supplier Companies
- Consultancies
- Financial and Investment Services Organisations
Table of Contents
List of Figures
Executive Summary
Voice Value
Consolidation
Higher Margins
Data Value
1. WHOLESALE CARRIERS – SURVEY RESULTS
Voice
Routes and Volumes
Wholesale
Retail
Revenue and Volume Expectations
Buyer and Seller Relationships
Buying
Selling
Competition
Pricing
Data
2. FINANCIAL REVIEW
Tier 1 Financial Profile
Retail and Wholesale Tier 1
Wholesale Only Tier 1
Impact of Investment
Building Value
Consolidation
Enhancing Margins
3. CONCLUSIONS
Tables and Charts
FIGURES
| Figure E1. | Relationship between Number of Routes and Total International Volumes Billion MiTT |
| Figure E2. | Relationship between Number of Routes and Wholesale International Volumes Billion MiTT |
| Figure E3. | Relationship between Number of Routes and Retail International Volumes Billions MiTT |
| Figure E4. | Percentage Voice Volume Growth |
| Figure E5. | Perceived Competitors in Wholesale Data |
| Figure E6. | Perceived Competitors in Wholesale Voice |
| Figure 1.1 | Number of Routes per billion MiTT Terminated (Total) |
| Figure 1.2 | Billions of MiTT Terminated per Route (Total) |
| Figure 1.3 | Number of Routes by Traffic Volumes (Total) |
| Figure 1.4 | Number of Routes per billion Wholesale MiTT Terminated |
| Figure 1.5 | Billions of MiTT Terminated per Wholesale Route |
| Figure 1.6 | Number of Routes by Wholesale Traffic Volumes |
| Figure 1.7 | Number of Routes per billion Retail MiTT Terminated |
| Figure 1.8 | Billions of MiTT Terminated per Retail Route |
| Figure 1.9 | Number of Routes by Traffic Volumes |
| Figure 1.10 | Voice Revenue growth expectations 2004/5 |
| Figure 1.11 | Voice Volume growth expectations 2004/5 |
| Figure 1.12 | Key respondents issues for buying international voice termination |
| Figure 1.13 | Key customer issues in buying international voice termination |
| Figure 1.14 | Perception of Key Competitors in Wholesale Voice |
| Figure 1.15 | Regional Pricing (US$ cents per minute) |
| Figure 1.16 | Perception of Key Competitors in Wholesale Data |
| Figure 2.1 | Voice Volume Growth Expectations |
| Figure 2.2 | Percentage of Carriers by percentage of Carriers Retail Traffic Carried on International Network |
| Figure 2.3 | P&L for the Carrier International Retail and Wholesale Business |
| Figure 2.4 | Illustrative P&L for a Wholesale Only Tier 1 |
| Figure 2.5 | Illustrative P&L for a Wholesale Only Tier 1 to Break Even |
| Figure 2.6 | Illustrative P&L for a New Network |
| Figure 2.7 | Illustrative P&L of Growth Required to Break-even on a New Network |
| Figure 2.8 | International Prepaid Card Business (UK Pound Sterling) |
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