The telecommunication landscape is constantly shifting and the line between Tier 1 and Tier 2 providers is getting more and more blurred. By Eckart Zollner, head of business development at New Telco
Advances in technology and trends in efficiency creation, such as sharing infrastructure, are constantly changing the rules that define what a Tier 1 and Tier 2 provider is.
Providers, both Tier 1 and Tier 2, have to look for ways to focus on their core strengths and revenue opportunities in order to remain competitive and retain their positions in the market. In order to free up their time and resources to do just that, many providers are looking at outsourcing and the benefits it can offer.
Telecommunications infrastructure is essential for a host of services, from voice and mobile communications to data services and Internet connectivity. Tier 1 providers have most of their own infrastructure and Tier 2 providers have some of their own, leveraging of other providers to complement their own offering, while both providers work collectively to deliver this infrastructure and associated services to the market.
However, infrastructure requires both a capital intensive investment and a wide range of specialised skills – which can also be costly – in order to effectively cater for growing demand and changing service offerings. Outsourcing some – or all – of their infrastructure requirements can help providers to tap into any skillset that they may not have, as well as shave costs on the already costly exercise of building infrastructure.
One of the biggest benefits of outsourcing is having flexible access to a host of skills. Outsource partners that specialise in various areas are able to develop and build upon the skills of their teams.
Should a service provider wish to address a specific area of their network, they can make use of the outsource partner’s skills for the limited time that they need them, without having to invest in their own resources which would end up redundant once the project has ended.
Outsource partners can allocate resources to the service provider’s requirement and, on completion of the project, redeploy those resources elsewhere. This ability to access skills as and when needed provides service providers the agility to adopt new technologies as they emerge, without needing to invest heavily in new resources and training every time.
Outsource partners can be used by service providers for a variety of services, from technical and network planning, to installations of specific technologies and infrastructure, to maintenance of certain components of their existing infrastructure.
In some instances, it makes sense to outsource the bulk of a service provider’s infrastructure, however, providers need to ensure that they select outsource partners that are able to work independently as well as interdependently.
One of the risks of using multiple outsourcing partners on a single project or infrastructure area is when the concerned outsource partners are unable – or unwilling – to communicate with each other. This can result in finger pointing and much time wasting as issues are resolved.
Ensuring that proper agreements are in place between the outsource partners and the providers can prevent unnecessary hiccups in service delivery.
Another factor to consider when using outsource partners is their reputation and reliability. Service providers can achieve the best benefit from an outsource partner who has a strong reputation in the market and can provide references of their superior skills.
Providers should also look for outsource partners that offer quality of service at competitive prices. The ability for the outsource partner to innovate and constantly improve their skillset alongside their innovation is also a definite advantage.
Effective allocation to an outsource partner of certain components of building, expanding and leveraging off of existing infrastructure can ensure that service providers are able to focus their own resources where it matters most to them.
Tier 1 providers are generally most suited to wholesale selling of standardised services and can thus focus on standardising the delivery network behind their services, while Tier 2 providers are better suited to customised client solution design and can focus on customer specific needs. That is not to say that the two are mutually exclusive. Tier 1 and Tier 2 providers are increasingly overlapping and even relying upon each other for outsource needs.
This symbiosis, and the strategic use of other outsource partners, means that Tier 1 and Tier 2 providers can deliver on whichever area they specialise in themselves, not only enriching the market, but enriching themselves.