Understanding Today’s Telecommunications Industry

Understanding today’s telecommunications industry is a prerequisite for a successful architectural transformation. The tremendous changes of the industry during the last decades have completely altered their rules and structures. In the past, traditional—mainly government-owned—telecommunications operators were responsible for the technical realization of fixed-line and mobile radio communications. Their business model was based on long-term infrastructure investments that were financed through usage-based connection fees. Today, competitors of traditional operators do not necessarily require their own network infrastructure—such as, for example, Over-The-Top (OTT) providers. Increasingly, the technical connection is becoming a commodity. Innovative applications, convergent services, and dedicated customer orientation are today’s success factors. However, increasing data volumes and mobile usage still requires ongoing modernization of network technologies. A major challenge for telecommunications operators is the combination of continuous innovation requirements with a stagnating market and changing value chains. Section 2.1 explains the market conditions and ecosystem with respect to price decrease and cost pressure, competition through Over-the-Top providers, new opportunities in vertical markets, and challenges for regulators. The interrelation between commercial and technical products as well as changed customer demands and usage behavior are discussed in Sect. 2.2. The value chain reacts to the changed market conditions through increased fragmentation of the value creation and new partnering, which are topics of Sect. 2.3.