June 28, 2005 09:55 ET

Deloitte-The Hundred Year Storm: Wireless Disruption in Telecommunications

TORONTO, ONTARIO--(CCNMatthews - June 28, 2005) -

The telecommunications industry is about to be disrupted only for the second time in its history.

Technology advances are increasing the bandwidth available to wireless communication services, making many wireline providers increasingly vulnerable to competition.

The future of wireless technology and its role in telecommunications continues to be the subject of endless and heated debate. What is missing from these discussions is a theoretically sound and empirically validated framework for understanding the motivations of those who will determine the outcomes: customers and the service providers who seek to satisfy them.

Deloitte Touche Tohmatsu Global Technology, Media & Telecommunications Industry Group announces the launch of this report that brings a new level of clarity and insight to the issue of when and how markets for wireless technologies will evolve. Written by Michael Raynor of Deloitte Research and co-author of the worldwide bestseller The Innovator's Solution, the underlying causal mechanisms of success and failure within the industry are finally visible through the lens of "disruptive innovation".

This report identifies powerful new ways of addressing competitive challenges and targeting potential markets for growth for providers of wireless services ranging from 3G voice services to Wi-Fi data to pooled spectrum video. The innovations that have created these technologies have set the stage for disruption. The future that actually plays out will depend upon the commercialization strategies chosen by specific players.

Conventional Strategies Will Not Work in Weathering this Storm

The conventional strategies for maintaining growth can be summarized simply: identify the largest, most lucrative markets and boldly pursue them. These types of strategic approaches provide the wrong guidance because such approaches have been developed over decades of relative competitive calm. No one alive in the industry today has seen the like of the disruptive threats incumbent providers now face. History has also shown that markets with most profit potential have often not been at first the obviously attractive ones, and have been overlooked precisely because companies adopt this shortsighted growth strategy by over-competing in saturated markets.

Disruption of telecom markets by wireless technology is analogous to a "hundred year storm": an once-in-a-lifetime event that our past experiences simply cannot have prepared us for. Wireline service providers now face threats from wireless technologies at first only appealing to their least-profitable customers - such as those requiring minimal telephonic sound quality, those who desire minimal cable channels, and those with specialized uses for WiFi technologies.

What Strategies will work?

By strategically identifying and following a disruptive approach, both new and incumbent wireless service providers can effectively navigate the storm while achieving better and faster results and avoiding costly and potentially even disastrous mistakes.

This report effectively puts theory to practice by both describing past successes and failures within the industry, and offering prescriptive insight into how providers can sustain growth through turbulence, all through the lens of disruptive innovation. It represents a powerful piece for everyone from CEOs to marketing to network management. Undoubtedly, the findings in this report have strong, lasting implications both for incumbent and new entrant providers that take heed and stay ahead of the curve by growing through disruption. Companies that ignore the warning signs may well suffer the economic consequences of becoming disrupted in the markets they have traditionally dominated. This report begins to shape the potential journeys that players must undertake to weather this storm.

About Deloitte's Technology, Media & Telecommunications (TMT) Group

The TMT Group is composed of service professionals who have a wealth of experience serving technology, media and telecommunications companies throughout the world in areas including cable, communications providers, computers and peripherals, entertainment, media and publishing, networking, semiconductors, software, wireless, and related industries. These specialists understand the challenges that these companies face throughout all stages of their business growth cycle and are committed to helping them succeed. Deloitte is a leader in providing strategic, financial and operational assistance to its technology, media and telecommunications clients

About Deloitte

Deloitte, Canada's leading professional services firm, provides audit, tax, financial advisory services and consulting through more than 6,100 people in more than 47 offices. Deloitte & Touche LLP operates in Quebec as Samson Belair/Deloitte & Touche s.e.n.c.r.l. The firm is dedicated to helping its clients and its people excel. Deloitte is the only professional services firm to be named to the Globe and Mail's Report on Business Magazine annual ranking of Canada's top employers for two consecutive years: 35 Best Companies to Work for in Canada in 2001 and 50 Best Companies to Work for in Canada in 2002. "Deloitte" refers to Deloitte & Touche LLP and affiliated entities. Deloitte is the Canadian member firm of Deloitte Touche Tohmatsu. Deloitte Touche Tohmatsu is a Swiss Verein (association), and, as such, neither Deloitte Touche Tohmatsu nor any of its member firms has any liability for each other's acts or omissions. Each of the member firms is a separate and independent legal entity operating under the name "Deloitte," "Deloitte & Touche," "Deloitte Touche Tohmatsu" or other related names. The services described herein are provided by the Canadian member firm and not by the Deloitte Touche Tohmatsu Verein.

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