TMCnews Featured Article

The global telecom wholesale market represents about $130 billion a year worth of transaction volume, and is changing, says Forrester (News - Alert) Research analyst Mike Cansfield. One of the obvious changes is that the business, which once largely a domestic business, has globalized.

BT (News - Alert) Wholesale and Tata Communications, for example, now act as distributors for international voice for each other outside their respective network footprints. In other cases carriers are outsourcing their voice operations.

Wholesalers also are combining formerly discrete services to offer customized packages. In many cases this means offering media customers network capacity, storage, caching and content delivery services, for example.

Traditional wholesale products, such as voice interconnect, and private lines, often are provided with addtional features as well. Also, voice services often are sold as part of a bundle of transport, roaming or other services.

The product shift also produces a business shift from cost-plus-margins on components to contractual terms that emphasize risk and reward sharing between wholesaler and retailer, says Cansfield.

In addition to the legacy private line and voice services, Ethernet connectivity, IP-interconnect products, and IP virtual private network (VPN) services also are typical wholesale products.

The wholesale market also features new types of customers. Where the traditional market segmentation tended to be around fixed, mobile, and Internet service providers (ISPs), this is beginning to change.

AT&T Wholesale added systems integrators and content providers to its target customer segments, for example.

Deutsche Telekom (News - Alert) ICSS segments the market by corporate service provider or virtual network operator, carriers’ carrier, broadband operator, content/application/media provider, plus fixed and mobile.

Wholesale customer needs are differentiating as well. Some customers want full service options while others only want to buy specific components. the upshot is that the wholesale business, though commonly seen as a "commodity" sort of business, is becoming more complex, with multiple niches, customers and products.

Wholesale portfolios also are migrating from "what is required by regulators" to "what is asked for by customers."

In many cases that means more managed services. BT Wholesale managed services have grown to 19 percent of total in 2009, compared to 10 percent in 2008, for example.

Since the inception of wholesale in the 1980s, wholesalers have primarily concentrated on the supply of products mandated by regulators. Today wholesalers that offer on-demand bandwidth services, for example, are becoming more prevalent.

Customer care and customer control also has become more important as well. Carries now offer multiple options for service levels and support, for example.

AT&T (News - Alert) Wholesale through its “BusinessDirect” portal offers customers the opportunity to manage and monitor service directly while Telstra Wholesale provides single points of contact and 24-hour service, says Cansfield.

The growth of managed services also is leading to per-contract pricing replacing the traditional regulated pricing. Deutsche Telekom ICSS also is talking of pricing-per-transaction, or application, performed for its customers. In short, the pricing of wholesale services is becoming more commercially orientated and similar to those between telcos and other large business clients.