28-Nov-02
Global telecom carriers tackle industry downturn differently in Asia Pacific.

Hong Kong, 28 November 2002 – Global carriers are addressing the effects of excess bandwidth, thinning margins and lower client spending in Asia Pacific differently, according to a recent research project undertaken by Fusion Consulting, a business intelligence consultancy specialising in Asia Pacific markets and commissioned by British Telecom (BT).

Since 2001, fixed line carriers have had to deal with a variety of challenges ranging from their revenues dropping amid excessive bandwidth capacity built during the Dot-Com boom era to a slow-down of enterprise spending and the general decline of connection charges. Many carriers have also overdone their capital expansion and are now burdened by overwhelming debts.

Two main revenue boosting strategies
According to the study conducted from May to August 2002, current strategies to increase revenue in Asia Pacific generally fall into two directions: to offer more value-for-money propositions and value-added-services using current product portfolio; or to slowly migrate to a more solution based product offering, emphasising managed services.

Carriers taking the former route generally feel that they are able to leverage on their good brand recognition in Asia Pacific to increase current penetration outside core markets at the expense of other carriers.

Carriers taking the solution route generally recognise the high demand and margin in managed services. These include outsource network managed service, outsource CRM managed service and IT managed service. The plan is to offer new clients a full solution package and to cross-sell managed services to current clients.

"We identified three new competitive landscapes: bandwidth products, data managed services and IT managed services," said Paul Chan, head of the Telecom practice at Fusion Consulting. "The success factor benchmarks differ from one landscape to another. For example, to be successful in the IT Managed Services segment, the carriers have to increase their support staff to sale staff ratio to more than 3:2."

On the whole, Frame Relay is the biggest data product revenue generator for global carriers, contributing to as much as 20 per cent of the carriers' overall Asian Pacific revenue for 2001. According to Paul Chan, "End clients still preferred the tried and tested Frame Relay despite the popularity of alternative offerings such as IP/VPN."

Identifying future opportunities
The study further revealed the following market opportunities in Asia Pacific:

• Deregulation in Asian markets such as China or India remains a major hurdle for global carriers which currently have limited reach into such markets and have to depend on domestic incumbents to complete the local loop. Cross-strait business in Greater China, for example, will inevitably be a major revenue driver once that barrier is removed.

• Internet Protocol (IP)-based products and services (including IP/VPN, VoIP and IP-Telephony) will be the new growth drivers in the future. IP/VPN sales are expected to grow by as much as 35 per cent year-on-year in 2002.

About Fusion Consulting
Fusion Consulting is a business intelligence consultancy providing clear strategic advice on Asia-Pacific markets. With offices in Singapore, Shanghai and Hong Kong and a network of 400 industry-specialist consultants in 16 countries, the company conducts custom research and consulting to help companies understand their markets, compete more effectively and grow into new areas of opportunity.

For more information, please contact Fusion Consulting at

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