Telecommunications
The race is on
Telecom products will hit the Web in a big way.
By Todd Shryock
Smart Business Cleveland | September 2000
While books and music currently dominate most online sales, you can expect a big push by telecom products in the coming years.
Even now, providers, suppliers and resellers are scrambling to figure out where exactly they fit in on the Web. The good news is, you can expect more choices, easier access to information and better pricing, especially on bundled services.
Right now, chaos reigns. Almost 70 percent of telecom providers, both traditional residential telecom service providers as well as communications portals that sell telecom services, have been selling online for a year or less, according to Forrester Research.
Carriers see savings in customer service by putting product information online, while Web upstarts see an advantage in rapidly establishing a channel with little overhead and inventory. Voice services currently dominate online retail telecom sales, but data will make a big splash soon. In two years, Forrester predicts 72 percent of firms will sell high-speed data services online.
Portals and providers don't know whether they should be friends or enemies. Portals are looking to sell many brands and services so consumers can compare products and prices. Meanwhile, providers have their own online initiatives featuring their products and their products alone. Portals need the brand names for credibility and traffic, but want to bundle services. Providers are keeping these bundled packages for their own sales and not offering them to resellers.
On the other side, providers have limited success selling only their products in a commodity driven market and may need telecom portals to ultimately succeed. Some may even consider switching from the retail side to the wholesale side, selling products and services to many resellers.
"Carriers still have their old-world mindset," says Amanda McCarthy, author of the Forrester study. "Convinced they can go it alone, providers are keeping alternate channels at arm's length. Suspicions about the role communications portals play keeps carriers from pushing their best products through new dot-com channels."
Forrester offers three reasons why new channels will develop online:
Complementary brands. By aligning with relevant online brands, providers avoid reinventing themselves for the Web. For example, British Telecom developed an eStore for young consumers because the mother ship wasn't hip enough. But no service provider will create an online retail experience cool enough for the young. Better to put hot products like mobile phones on cool online channels like Yahoo!, AOL or CDNOW.
Breadth and flexibility. Communications portals are ringing up sales because they offer choice across product lines, geographies and prices. By linking to communications services outside the product portfolio, providers can ensure that their bundle isn't dumped because one component was missing or because an otherwise attractive bundle was not built to suit.
Self-segmentation. Today, individual preferences fall between the cracks of wide-open categories like road warriors, families with teens or early adopters. Portals like Reasonware.com address the issue by offering consumers mobile services based on usage categories such as safety and security. But to go further, providers must let consumers choose communications services based on the application at hand -- working at home, for example, or viewing home movies. How to reach: www.forrester.com
Todd Shryock (tshryock@sbnnet.com) is SBN's special reports editor.
