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GMK is rapidly building out a new packet-switched network and rapidly migrating all long-haul traffic onto it.
It is also employing SoftSwitching with application servers and VoIP gateways.
But it takes more than moving from circuit to packet-switching. That just provides efficiencies in operation to improve margins.
The ultimate goal is to generate new and profitable revenue streams, and that comes from next generation services.
Those operators that manage to make the transition from circuit-switched to packet-switched can look forward to better operating margins for their existing business. In the short term, this could translate to more competitive pricing of services to win new business, but in the medium to long term, because the barriers to entry are so low, most operators will achieve the same efficiency of operation, and then the margins will suffer again as operators inevitably compete on price.
But having achieved the transition to a packet-switched infrastructure, the potential for new and profitable revenue streams is from the deployment of next generation services.
It is not unreasonable to say that voice services have been mined to the limit and are saturated.
The obvious area in which to find new services is in the data services arena.
Despite the .COM boom and bust cycle, the most likely candidate to drive data services is the emerging e-commerce supply chain.
1. At the lowest level are the bandwidth suppliers.
Lots of competition here, everyone anticipated a huge demand for bandwidth due to Internet applications. As a result, lots of fibre based bandwidth around, and the price is very low.
2. The next level up are the Telco's who use the bandwidth to sell switching services.
This includes the mobile operators, who simply use a wireless link to sell the same services as the fixed line operators. Still primarily based around switching voice, but trying to migrate to switching data. Problem for data will be same as for voice: Lots of switching supply, low barriers to entry. The price for data switching is likely to fall even faster than for voice.
3. Sat on top of the Telco's and wireless operators are the 'content providers'
This is where the real business opportunity lies, as the 'price of the service' depends on the 'nature of the service'. The services are not doomed to become commodities sold at bargain basement prices. Instead, they can be sold at prices proportional to the benefit that the customer receives from the services. Lots of variety and scope for the marketeers to build product value.
Suppliers in this band will live and die by:
Their ability to create, deploy and maintain network centric I.T. applications initially targeted at the SME and corporate markets, followed by the consumer market.
To scale their I.T. systems to handle demand for service if a particular application/service becomes popular. As service creation, deployment and maintenance are technically difficult, the barriers to entry are quite high. This ensures that margins once achieved can be maintained.
This is precisely the area where the application server technology employed by GMK gives a clear business advantage.
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