Regulatory liberalisation -- often accompanied by privatisation and the removal of state control from the incumbent national operator -- is revolutionising the industry. The telecom operators will now have to compete over price and service along with entering into partnerships with organisations involved in other activities but, who may be competing directly or indirectly with them.

Managing change
Network technologies are also changing in response to customer demands and competitive pressures. The industry is facing the so-called bandwidth explosion with fibre optics and high-speed processing combining to allow the telecom carriers to deploy capacity in huge volumes across global traffic routes. Soon such capacity will also be available in individual businesses and homes.

A single fibre which five years back could accommodate 2.5 gigabits (thousand billion bits) per second, is today capable of accommodating tens of gigabits and tomorrow hundreds (or even thousands) of gigabits. Soon we will be deluged with terabits (a million or 1012 bits) and even petabits (a thousand million or 1015 bits)!!

As a result, both the established and new carriers are having to rethink the way their services is priced. As the cost of delivering bandwidth falls further, the market will move to different pricing models. It will be specially for voice, which is the one network application that does not demand more data capacity.

Data centrism
The bandwidth explosion is just one symptom of a much more fundamental change -- the shift from voice to data. Internet and increasing business reliance on enterprise networks to synergise global operations, will entail increased use of the telecom infrastructure to transport data. This switchover has already occurred in the USA and UK, and most industrialised countries are not far behind. By 2005 it seems likely that over 90 per cent of the network traffic in the US will be transfer of data mostly via the Net. The telecom players should also gear up to usher in new concepts like E-commerce and invest in infrastructure that carries data.

Simultaneously, customers are getting more demanding as they upgrade the strategic value of communications. Once viewed as a critical cost centre, the corporate network and its associate applications are now seen as strategic value centres.

There is an increasing convergence taking place between the content providers who are getting into the business of telecommunications and the operators and cable companies that are providing content. In the future, the business opportunities will come packaged as many services under a single brand and specialisation in core competencies.

Side by side new niches will also be emerging and new business models will have to be deployed to exploit them. In many cases these new business models will undermine the bundling strategy of the other players. To respond effectively, and stay in the game, all players -- both new and incumbent -- will be forced to provide services quickly. All this even as the players will need to make hard choices about what can sensibly be done by themselves, and what might be best done through partnerships.

Competition: Still new
By now competition is passe in the telecom sector. Therefore, customer focus has shaped the product or service development. And, the monopolistic nature of the industry has to make way for adaptations and soon. For instance, investment costs for providing global telephony services actually fell by 91 per cent between 1988-1996 even as the average real tariff rates fell by a mere 21 per cent over the same period. All that is now changing fast.

The first changes transforming the monopolistic provisions occurred in the USA, where the political spotlight fell on AT&T. The result,a break-up in the US tradition of anti-trust actions which forced. AT&T to divest its local networks, splitting them into seven regional operating companies (the so called Baby Bells).

Similarly, in the UK an ideological mood swing saw the conservative Margaret Thatcher administration promote general business de-regulation to enhance national competitiveness. Importantly, a rolling privatisation programme for state-owned utilities was mooted with British Telecom being one of the likely candidates.

Agreeing to competition
Initially mired by controversy, by the mid-1990s telecom competition got widely accepted as a worthwhile political goal. Liberalisation of the telecom specialised network services in the European Union led to competition from January 1998. Besides,1997 also saw the successful completion of the World Trade Organisation (formerly GATT) negotiations. By end-1997, 70 countries had signed up to the GATTS in telecom services.

Today, with competition having intensified in many countries there is a rapid deployment of alternate network infrastructure and a service provider choice. For national and international services at least, choice is now available to both residential and business customers around the world.

How competition happens
Progress is slower and more problematic when it comes to competition for universal access. Major cities are getting wired by competitive providers to offer broadband services for voice and data. Radio access will only increase the competition with alternate providers able to reach the target customers without having to dig up roads. Cable TV networks and new satellite services will also be providing access network diversity, increasing the range of services and competing among themselves to reduce access pricing.

Also, parallel liberalisation of other utilities, specially electricity supply and railways, has witnessed companies with existing networks of crucial rights setting up consortia for competitive development of the network.

Much effort is also going into unbundling the existing local network bottlenecks. Regulation allowing users transparent access to the incumbent operator's network to use the services of another provider, has proved to be critical for effective competition.

Many places this has been achieved through the equal allocation of access codes to all long distance players, enabling the user to select the alternative carrier of choice on a call-by-call basis. Competitors actually lease an access circuit to a particular customer across the incumbent's network on a cost basis.

Another version enables unbundling at the so-called physical level, where the competitor leases the actual copper wire from the incumbent to the home or business and provides the supporting electronics at both ends. The could lead to the introduction of high speed digital services to homes. This in turn could facilitate high-speed Internet access.

The result is that the new competitive markets in Europe in particular may not have it easy as UK had it 15 years back when the service prices gradually fell enabling both the old and new players to adapt. Instead, sweeping service price reductions and an imminent round of industry consolidation will occur.

Vertical integration vs horizontal specialisation
Rapid change across the entire information technology (IT) industry and the Internet is blurring the old IT business boundaries. As such, not only must the telecom industry now compete with itself, but it has to also compete with companies with established customer relationships in other IT sectors.

Technology vendors
Consolidation is also occurring in the communications equipment market withestablished telecom equipment vendors absorbing many leading data networking equipment companies. Their resulting enhanced product portfolios and extended distribution channels are so designed as to allow them to compete effectively in an increasingly convergent market.

In fact, there is an onset of a value shift in their own businesses. These huge companies instead of simply supplying complex technology building blocks to be integrated by the telecom operators themselves, are instead integrating along with managing the networks on behalf of their telecom customers. Some are even acting as network operators by participating financially in satellite and international network projects.

Internet service providers
The ISPs are a direct challenge to the telecom operators with already a substantial cross-ownership in place. Most large operators have their own ISP arms. The result, the Internet services market is expected to split into infrastructure and content/specialised services segments, with telecom/ISP hybrids using their economies of scale to win both consumer dial access and business customers.

Integrators
Other IT players are also aiming to compete as service providers, using their technology integration and application programming skills to build and manage corporate users' network and applications running across them. Global data network operators, for example, are able to service their multinational corporate customers with both voice and data services.