Informa Telecoms & Media Shop - Alternative Trans-Border Telecoms Service Providers In Western Europe
 

Alternative Trans-Border Telecoms Service Providers In Western Europe

Published: October 2005

Executive Summary

Executive Summary

The market addressed by alternative carriers in Western Europe appears to be relatively stable, but broadly stagnant. Only the smallest service providers have revenue growth in double digits - and that is either due to inorganic growth or the fact that they have started from a low revenue base.

With some consolidation occurring, it looks like prices have stabilised to an extent, with one group of customers focusing on quality and service issues, and another still focused on value for money above all else.

Service providers addressing the 'top end' of the market have been focused on improving their portfolios to offer customers greater visibility and control not just of their networks, but also of the applications running over them.

At the bottom end, with infrastructure still in oversupply and assets still regularly available to pick up at a fraction of their original price, connectivity costs are still declining at about 20% a year.

Again, at the top end, service providers are increasingly looking to move up the value chain by expanding their systems integration and IT skills as they move to position themselves as 'solutions' providers rather than just networking companies. (Service providers have long claimed to offer 'solutions,' but they are now finally getting to a stage where their propositions actually address core business issues).

At the bottom end, where resources are scarce and margins thin, networking companies are increasingly looking to partner with established solutions providers such as systems integrators, their goal being primarily to capture as much traffic as possible to load their networks.

The problem with the market being stagnant is that any jolt downwards could have serious repercussions - factors such as rising oil prices, rising interest rates or even the threat of avian 'flu could destabilise the market by affecting the global economy as a whole. Both the value-added and 'cheap and cheerful' strategies have their merits should this happen - value-added players would aim to work closely with customers to use networking to improve their productivity and competitiveness, cheap and cheerful players would just cut prices more to win business. However, in both cases service providers would have to be sure that their cost base is optimised.

Since two or three years ago, alternative carriers have managed to recover from the legacy of the Internet boom and bust years - some are now profitable, others moving towards profitability. But the path remains slippery and has plenty of potential pitfalls on the way. The winners will be those players that can react quickly to changing circumstances whilst steadily building on their chosen strategy on a day-to-day basis.