|
|
|
Telecom
Services in Vertical Markets
2001-2006
a market research report
|
|
“Solution selling” may sound like a marketing buzzword, but in reality, offering industry-specific telecom solutions may be your best chance to maintain profitability and sustain growth in an otherwise commodity-laden marketplace.
Consolidation among carriers is creating telecom behemoths that
intend to provide everything to everyone, everywhere. Without specialization in products or locality, business customers will continue to perceive telecom services as commodities, regardless of the provider. Marketing telecom services to vertical industries––offering solutions to your customer’s business problems with a mix of customized applications, products, and customer support––will serve as an important differentiator in the years to come.
Four industries lead spending on telecom services: financial/insurance/real estate, professional business services, communications and wholesale trade. In fact, this top-tier segment will account for 71 percent of total telecom business expenditures by the end of 2006.
Insight recommends you focus your vertical marketing efforts on these industries first.
Telecommunication Services in Vertical Markets forecasts telecom expenditures by 14 industries, presenting the driving forces behind each
segment.
The bottom line: offer your business customers higher-margin, value-added services by embracing the vertical approach to marketing. You’ll strengthen customer loyalty by developing closer links to your customer’s core business. This report quantifies your opportunity and provides suggestions for success in each industry.
|
|
|
Report Excerpt
|
|
These days, growth opportunities in
telecommunications are hard to come by, but if there is a sweet spot
in the otherwise sour stew of cutbacks, layoffs, and bankruptcy
proceedings it may be in designing services for vertical industries.
The current plight of long distance carriers underscores the need to
abandon a business model dependent on a commodity offering like voice
and move toward a data-centric business model, combining Internet,
wireless, and other technologies––though at present we are very
far indeed from that goal.
The term vertical market as used throughout this
study refers to industry-specific markets, as defined by unique
standard industrial classification (SIC) codes issued by the US
Department of Commerce. In
contrast, horizontal markets refer to occupations or functions, such
as sales and accounting, that are part of many different industries.
While traditional carrier offerings appeal to nearly every
horizontal function in one way or another, vertical marketing provides
a solution to the user’s problems by catering to the user’s
specific needs within a specific industry.
Insight’s
objective in this study is to examine and quantify opportunities in
vertical markets for telecom providers. More than 90 percent of wireline carrier revenue in 2001 is
attributable to voice, and voice products and services are by their
very nature commodity products, since they exhibit little or no
customization. Moreover,
telecom providers tend to be very similar to each other in their
offerings.
As competition drives down margins, solution
selling becomes an attractive
way to differentiate and a viable way to maintain profitability and
sustained growth. Compared
with a horizontal marketing approach, which is focused on the
carrier’s offerings, vertical marketing focuses on providing a
solution to the user’s problems and catering to the user’s
specific needs within a specific industry.
New technologies make it possible to transform
the telecom business model––which traditionally emphasized
horizontal services and carrier control of networks––to a vertical
focus that is more customer- rather than carrier-centric. Such a shift can come about in part because the corporate
customers that buy telecommunications services from providers are
looking for ways to differentiate their products and services, by
being better, or faster, or of greater value, and are turning to
telecom to achieve this goal.
Insight
sees four major forces driving changes in the basic structure of the
US telecom industry, impacting vertical industry marketing
orientation:
•
Deregulation is forcing telecom providers to
compete in many technological and geographical areas simultaneously.
While the incumbent local exchange carriers (ILECs) continue
to have a lock on most local residential markets, enterprise telecom
customers have had a real choice of local, long distance, and
Internet service providers (ISPs) for some time now.
•
Consolidation among the carriers and increased bundling of
local, long distance, Internet, wireless, and other services
provides new revenue sources for providers, but also tends to blur
any perception of differentiation among the carriers.
•
Bundled service packages are gaining acceptance. An issue of Telecom
Business stated that 66 percent of businesses and 63 percent of
consumers in one study were interested in purchasing a service
bundle of telecom and data services, with at least two services
included in that bundle.
•
Service offerings, such as frame relay (FR) and data virtual
private networks (VPNs), as well as new network capabilities, such
as voice-over-packet and customer network management (CNM), are
significantly altering how enterprises work with carriers to find
solutions to their particular problems.
If telecom providers can focus on vertical market
solutions, they are on a path away from selling commodity voice
services and moving in the direction of higher-margin, value-added
services. When carriers embrace the vertical approach to marketing,
which includes customization (by vertical industry) of products,
services, sales reps, customer service support, documentation, and
training, they strengthen customer loyalty by developing closer links
to the customer's core business.
Back to Top
|
|
Market Segmentation
|
|
|
- US Telecom Wireline Market
- Local (ILEC + CLEC)
- LD (IXC)
- ISP
- US Telecom Business and Residential Wireline Markets
- Business Wireline
- Residential Wireline
- Telecom Expenditures by US Industry
- Healthcare
- Construction
- Retail Trade
- Wholesale Trade
- Education, Social Services & Member Org.
- Financial, Insurance and Real Estate Services
- Professional Business Services
- Hotel & Lodging
- Transportation
- Communications
- Utilities
- Entertainment & Media
- Durable Manufacturing
- Non-Durable Manufacturing
- All Others
- US Telecom Business Wireline Data Revenue
- Data
- Data as % of Local & LD Wireline Revenue
- Telecom Wireline Data Expenditures in US Vertical
Industries
- Healthcare
- Construction
- Retail Trade
- Wholesale Trade
- Education, Social Services & Member Org.
- Financial, Insurance and Real Estate Services
- Professional Business Services
- Hotel & Lodging
- Transportation
- Communications
- Utilities
- Entertainment & Media
- Durable Manufacturing
- Non-Durable Manufacturing
- All Others
- Worldwide Internet Traffic Growth
- Worldwide E-Commerce Revenue
Back to Top
|
|
Table of Contents
|
|
|
Chapter I
EXECUTIVE SUMMARY
1.1 Background
1.2 The Market
Chapter II
MARKET OVERVIEW
2.1 Opportunities in Vertical
Markets
2.1.1 Defining the Vertical Markets
2.2 US Business Trends
2.2.1 Small, Medium, and Large Businesses
2.3 Forecasting Methodology
2.3.1 Vertical Telecom Expenditures for 2000
2.4 Key Trends in Telecom
2.4.1 Lower Communications Costs
2.4.2 The Internet
2.4.3 Results of the Telecommunications Act of 1996 in the US
2.4.4 Competition
2.4.5 Wireless Applications
2.5 A Separate Study of Data Communication Lines and
Expenditures
Chapter III
ANALYZING THE MAJOR VERTICAL INDUSTRIES
3.1 Introduction
3.2 Seven Top Vertical Markets
3.2.1 Wholesale Trade
3.2.2 Financial, Insurance, and Real Estate Services
3.2.3 Professional Business Services
3.2.4 Communications
3.2.5 Durable Manufacturing
3.2.6 Healthcare
3.2.7 Retail Trade
Chapter IV
KEY APPLICATIONS AND CASE STUDIES
4.1 Overview
4.2 Frame Relay in the Financial and Healthcare Industries
4.2.1 AT&T and KeyCorp
4.2.2 Sprint and Blood Systems
4.3 Voice Over Packet in the Automotive, Government, and Other
Segments
4.3.1 Lynk and Daewoo International
4.3.2 State of Alaska
4.3.3 Lucent and Kanematsu
4.4 Customer Network Management in the Durable Manufacturing and
Wholesale Trade Industries
4.4.1 AT&T and Air Products and Chemicals, Inc.
4.4.2 AT&T and Smurfit-Stone
4.4.3 Verizon’s CNM Services
4.5 Virtual Private Networks in the Financial Industry
4.5.1 AT&T Solutions and MasterCard Banknet VPN
Chapter V
VERTICAL MARKET FORECASTS AND OPPORTUNITIES
5.1 Definitions
5.2 Methodology
5.3 Total Telecom Wireline Expenditures
5.3.1 Total Telecom Expenditures by Industry
5.3.2 The Wireline Data Explosion
5.3.2.1 Forecast of Data Expenditures by Vertical Market
5.4 Capturing the Vertical Markets
Appendix
SIC CODES
Table of Figures
Chapter I
I-1 Total US Telecom
Wireline Market, 2000 and 2006 ($Billions)
I-2 Business vs. Residential Wireline Expenditures for Telecom
Services, 2000 and 2006 ($Billions)
I-3 Top Tier Expenditures for Telecom Services as Percentage of
Total Market, 2000 and 2006
Chapter II
II-1 Total US Business
Establishments, 1992-2005 (Millions)
II-2 Total US Employment, 1986-2006 (Millions)
II-3 Worldwide Internet Traffic Growth, 2000-2006 (Gigabits per
Second)
II-4 Worldwide E-Commerce Revenue, Business vs. Consumer,
2000-2006 ($Billions)
II-5 Long Distance Carrier Revenue Growth, 1999 and 2000
($Billions)
Chapter IV
IV-1 Frame Relay Network Components
IV-2 Permanent Virtual Circuits
IV-3 Blood Systems’ Frame Relay Map
IV-4 Kanematsu’s VoIP with Lucent’s Internet Telephony
Server
IV-5 How CNM Systems and Content Fit within the TMN Layer
Chapter V
V-1 US Telecom Wireline Market,
2000-2006 ($Billions)
V-2 US Business vs. Residential Wireline Expenditures, 2000-2006
($Billions)
V-3 Total Telecom Wireline Data Expenditures in Three US
Vertical Industries, 2001-2006 ($Millions)
Table
of Tables
Chapter I
I-1 Top Telephone Mergers
as of August 2000 ($Billions)
Chapter II
II-1 Distribution of US
Companies by Size, 1996
II-2 Establishment Size by US Industry, 1996 (Thousands)
II-3 US Employment Projections, Ranked by Occupations with
Greatest Increase in Number of Jobs, 1996 vs. 2006 (Thousands)
II-4 US Employment Projections, Ranked by Occupations with
Greatest Percentage Growth, 1996 vs. 2006 (Thousands)
II-5 Selected Vertical Markets (Year End 1997)
II-6 US Telecom Expenditures by Industry, 2000 ($Millions)
II-7 Telecom Expenditures by Employee and by Establishment, 2000
II-8 Telecom Expenditures by Industry as Percentage of Vertical
Industry Revenue, 2000 Estimates
II-9 Download Time Comparison by Type of Internet Access
II-10 How Industries in the Data Communication Lines Study
Correspond to the Vertical Market Categories
II-11 Monthly Long Distance Expenditures per Employee, 2000
II-12 Average Number of Data Communication Lines per Site, 2000
II-13 Average Number of Direct Dial Lines per Site, 2000
II-14 Average Number of ISDN Lines per Site, 2000
II-15 Average Number of xDSL Lines per Site, 2000
II-16 Average Number of T-1 Lines per Site, 2000
Chapter V
V-1 US Telecom Wireline
Market, 2000-2006 ($Billions)
V-2 US Telecom Business and Residential Wireline Markets,
2000-2006 ($Billions)
V-3 Telecom Expenditures by US Industry, 2000-2006 ($Millions)
V-4 US Telecom Business Wireline Data Revenue, 2001-2006
($Billions)
V-5 Telecom Wireline Data Expenditures in US Vertical
Industries, 2001-2006 ($Millions)
Back to Top
|
|
Pricing Information
|
|
|
Hard Copy Price
$ 799
Electronic Copy Price
(PDF
License Descriptions)
$ 939 Single-User Printable PDF
$ 1399 6-Seat Printable PDF
$ 2000 Unlimited Corporate-Wide Distribution
Back to Top
|
|
Telecom
Market
Research,
