Strategy for Telecom Operators to Get Maximum Benefit from Fiber Deployment and NGNs

Abstract

This paper aims to provide a strategy for the present day telecom operators to operate efficiently in the rapidly transforming telecom world. The evolution of NGN and deployment of fiber is changing the whole buildup of telecom markets. This paper intends to observe the effects of fiber deployment and NGN on market structure and propose strategy for telecom operators to cope with new market structure.Fiber deployment increases the economy of scale for bandwidth which increases the production cost difference. Basic transaction cost model presented by Williamson is extended to observe the effects of aforementioned factors to the organization structure of telecommunication firms. It has been observed that all effects favor market procurement to internal supply. Hence future telecommunication markets will be gradually divided into two groups. One group will consist of bandwidth providers and the other will consist of service providers. BT has initiated a comprehensive fiber deployment and NGN plan called 21CN as a result of which it has started selling bandwidth to other telecommunication operators. BT wholesale is working as a separate department earning huge revenues in the sale of bandwidth to other operators.Almost all Asian countries had a state owned telecom company before introducing competition. These companies face the same challenge of restructuring their organizations. To get maximum economies of scale from fiber deployment, they have to restructure themselves and disintegrate in access and service companies. Only in this way these companies will be able to sustain efficiently in present competitive telecom markets.