Strategy of Mobile Communication System Providers in Cloud (Implementation of cloud in telecom by Ericsson)

Abstract: The telecom operators are experiencing low revenues due to reduction in voice calls and SMS in their networks mainly driven by communication services like Skype, Google talk, msn and other VOIP (voice over internet protocol) products. Instant messaging services and social networking are also taking away the operator’s customers reducing them to “dumb pipes” with the OTT (Over the Top) players like Google, Microsoft and other content providers making profits at the expense of the operator. The growth of operators’ revenue is not keeping pace with the growth of traffic in their networks creating the perception that the content providers and OTT players do not share their revenue generated using the operator’s infrastructure. The operators are therefore increasingly being reduced to act as “dumb pipes” connecting the content generated by OTT’s with the operator’s subscribers. The operator’s revenue stream in one-sided, only coming from the subscriber usually as a flat data plan. The operator’s are looking at new revenue models and the cloud computing market is a business opportunity which allows them to monetize their network resources with the possibility to earn revenue from both the subscriber and the content providers. The communication system providers who are the communication equipment vendors to the operators are indirectly affected from the shrinking operator revenue. As part of this thesis, we address how Telco’s and system vendors can differentiate in the cloud computing market against other cloud service providers and monetize the network resources which they own. We discuss the roles in the cloud value network and activities in the value chain that could be adopted and the business opportunities they could pursue. We begin by introducing the telecom operator market and the challenges faced by the industry today. The research question we are targeting is then discussed followed by the limitations of the thesis. The lecommunication industry, cloud computing technology and the relevant service delivery models are discussed. A literature review is then done to formulate our theory. Theory on strategy by Porter, Prahalad and other researchers who have contributed to the research on cloud computing are discussed. The method adopted is then proposed. Data collected is first presented and then analyzed before discussing the results of the analysis.