Formulating strategies for a competitive telecommunications market

In constructing a market strategy, a telco needs to determine the sizing of the market if wishes to service. A balance must be achieved between the le vel of capacity and the reach of their various networks, matched to the pre dicted market demand for each of these networks. The decision for the telco to invest either through building ifs own networks or leasing from of her operators, will depend on how the marketplace is changing. This in turn wil l be influenced by customer behaviour and how this will affect market trend s. The investment decision will also be dependent upon whether the telco is an established operator or a new entrant. This paper concentrates on the demand for residential services provided ove r fixed and mobile networks. In particular, the trend for some customers to disconnect from fixed networks and use mobile-only services for their tele communications requirements will be explored. The implications for the bala nce that telcos need to achieve in the provision of their fixed and mobile networks are examined. An. interactive model using system dynamics has been created to allow policy makers to explore different 'what-if' scenarios. T hus the implications of various proposed strategies can be investigated bef ore a commitment to invest is made. The model allows a holistic view of issues such as how the number of custom ers and usage will be affected by different tariffing structures. It also p rovides a method for determining the 'churn' of customers created by a comp etitor announcing a cut in call costs. A further benefit to a telco is that revenue per customer for the whole market can be calculated. Ultimately, a more in-depth understanding oft he marketplace is developed, enabling the creation of network strategies that have a greater opportunity for successf ul revenue and profit generation, as well as attracting and retaining a lar ge customer base.