USA Telecom Incumbents May Struggle Against Rising Enterprise Challengers

Published on: 19th Sep 2012

­Investment and growth in the US telecoms industry has given birth to a number of viable alternatives to the incumbent carriers, according to Ovum. This will drive better services for enterprises, but incumbents will need to completely review their go-to-market strategies, revamp traditional segmentation, and create new integrated service offers to ease the pressure from the increase in competition.

The US market is the largest in the world for enterprise services. Its recent consolidation and reorganisation, along with the limited focus of some of the incumbents, has created an opportunity for challengers to pick off enterprise services business. In a new report the analysts review five of the current challengers in the US wireline enterprise market and provide recommendations for both incumbents and enterprise customers.

"The advantage for US challengers is that they can provide the sort of unique offerings and differentiated services that are often missing from the established carriers' portfolios," says Mike Sapien, principal analyst at Ovum. "These challengers are in such a position that they do not need to offer the full range of enterprise services or serve all enterprise segments. The US market is large enough to support many alternative providers."

The incumbents' focus on revenues, regional location, number of employees, and existing service segmentation is too broad, and leaves gaps that challengers can fill. Win-back programs are no longer sufficient, and Ovum recommends preventative action through business intelligence, reviewing segmentation, and new channel tactics.

"Using analytics and market research to predict and model customer behaviour will help anticipate what services and tactics should be used to manage and maintain close customer relationships across all segments," explains Sapien.

The financial turmoil of the Internet boom and bust means that enterprises may have concerns around choosing more risky challengers over incumbents. To ensure that a service provider is a good fit for the individual enterprise, Ovum recommends gathering "like-customer" references, examining geographic service coverage, and reviewing the terms of service failures (including the option of returning to a former provider).

"Most customers do not focus on the terms of service failure or repeated outages until things go wrong. After failures or repeated outages occur is not the best time to consider penalties, outage credits, or moving back to your previous provider," concludes Sapien.

 

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