Bandwidth players must add value

Bandwidth is to become a commodity item in the near future and traditional wholesale telco suppliers are going to have to add value to survive, according to Senior Ovum consultant, Sue Uglow.

While high-bandwidth capacity is lacking in Australia at present, eventually Uglow believes competition will increase, prices and margins will fall and services will be the saviour of the wholesale market.

"The APAC region is going to have to wake up," she said. "The economics of bandwidth are going to change massively in the region within one or two years as new cables are lit."

Uglow believes the new utility and private cables being installed in Australia will even force Telstra to lower its wholesale prices. Although true commoditisation of bandwidth is still a fair way off in the region, it has already begun in the US and parts of Europe.

"Our interviews with APAC incumbents indicate they are scared," said Uglow. "They haven't really got their heads around what it will mean for their business models yet."

Uglow said to maintain a competitive edge, all communication service providers need to seize any opportunity to move into value-added wholesale services where sustainable revenue and margin growth is achievable.

"Communications companies should partner with related organisations in the areas of e-commerce, ASP and content provision to deliver bundles of customised, value-added wholesale services to new types of wholesale purchasers, such as ISPs, e-commerce providers, systems integrators and even very large end users," she said.