How Will You Take Advantage of a More Competitive Telecom Landscape?

By Matt West

Director of Telecommunication Services, NPI

July 09, 2014

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If you’re not paying attention to the shake-up in the telecom industry, it’s time to tune in. Here are the highlights:

Japan's Softbank wants to buy T-Mobile and roll it into Sprint; AT&T is buying Direct TV, while Comcast and Time Warner Cable want to merge; Level(3) just announced its bid to buy TW Telecom; and Google wants to buy Skybox. This all comes on the heels of Verizon's mega-deal divestiture of Vodafone. And, as if the FCC and Justice Department weren’t busy enough inspecting these mega-mergers and divestitures, they are also trying to set new rules on how much control internet providers can exert over the pipes they own (Net Neutrality).

For the most part, this is great news for all parties involved - including customers. For example, Verizon Wireless is finally free to make deals that consider holistic revenue (wireline and wireless). CenturyLink is able to compete on a larger scale against Verizon and AT&T, and the same could be true for Softbank. Then, there’s T-Mobile – which is well on its way to shaking up the status quo. And while a prospective merger between Comcast and Time Warner may not be good for consumer television, the combination would offer elevated ability to serve the enterprise customer on a national footprint.

So, what does this mean for enterprise buyers?

For starters, more competition in the marketplace means prices will likely come down. We’re already seeing this in wireline services, such as IP VPN. In the last year, the median price for a 10 Mbps port declined at an average of 18 percent in the world's major cities.

We can also expect wireless and wireline providers to make fundamental changes in pricing strategy and flexibility. Currently, large incumbents like AT&T and Verizon are reluctant to take this risk, but increased competition may soon force their hand. New and/or smaller carriers see areas like pricing, discounts and contract flexibility as battlefields for capturing more market share – and they’re willing to accept the risks of change to slowly chip away at the market dominance of their larger competitors.

Finally, enterprise buyers have more leverage when they come to the negotiation table with their large incumbents. Traditionally, players like Time Warner or Level(3) haven’t had the footprint to provide services to much of the enterprise sector. That’s changing as new power-players emerge that are able to provide nation-wide services at competitive prices.