Are operators ready to make marketplaces work?

Ecosystems and marketplaces are thought of not only as the next way to grow revenue, but also to lower costs related to product and solutions development and delivery.

CSPs are asking two key questions at all times, says Sofiène Kamoun, General Director – Strategic Initiatives, at Videotron: “How do I turn a fraction of a cent per megabit into dollars and how can I evolve and operate my network at the lowest possible cost?”

Similarly, a major benefit of participating in another CSP’s marketplace is breaking into new markets at a substantially lower cost. “At every level of the service you are at a ‘make’ versus ‘partner’ versus ‘buy’ decision and that drives the need for the ecosystem,” says Kamoun.

Just as CSPs have formed real estate investment trusts as a basis for sharing towers, infrastructure and real estate to reduce costs and eliminate the need to build redundant infrastructure, that type of thinking has moved up the value chain and into the software-based services world. “How you optimize the whole thing is part of the game now and the sky is the limit in terms of creativity,” Kamoun explains.

Building complexities

Many companies far beyond the telecoms industry have fallen in love with the marketplace concept because of the success enjoyed by brands ranging from Amazon to Salesforce. These platform-based models have enabled buyers, sellers and innovators to bring new products and solutions into a vetted and commercialized ecosystem and to benefit from the access to channels and customers it provides.

But some experts including Kamoun say ecosystem development is more important today for most communications service providers (CSPs) because delivering a software marketplace-like experience across services, networks, operations and partners remains a stretch.

Building marketplaces is not straightforward. “The implementation of it is far more complex than where it began on the applications side,” Kamoun says. “End customers want to get something tailored to the need and done quickly,” he says, “but applying the same concept in the context of a CSP through the whole stack is another story.”

The kind of fluid user experience found in software-based marketplaces will be far more difficult for CSPs to achieve because “the order to cash process isn’t there and the gap is huge before you get to plug and play, quick integration, and the rest,” Kamoun says.

The major barrier CSPs face in creating automated marketplaces, says Kamoun, is that their own infrastructure – including networks, and operational and business support systems (OSS/BSS) – is far from standardized. As a result, he adds, “the practicality is far too complex given the complexity of the domain.”

Where to start

Kamoun’s advice to CSPs which face the conundrum of needing to kick off a marketplace initiative while contending with such complexity is to “take one use case and work any given service all the way down and see if it works – crawl before you walk before you run.” This approach, he says, allows a CSP to be pragmatic and to focus on standardizing the bits that are most needed first.

The marketplace movement is just in its earliest stages and even major buyers are likely not ready to procure enterprise-grade CSP services from an open marketplace model. This can help shift the focus back to the value of the ecosystem. “Today the keyword is ecosystem not marketplace,” argues Kamoun. The health of an ecosystem reflects the strength of a CSP’s relationship with its partners, “then comes the marketplace,” he adds.

For a detailed look at how CSP marketplaces are emerging and the core principles in building them, please look out for our upcoming ebook ‘Building a successful digital marketplace’.