New Business Models and Revenue Models in Telecommunication

Market

It’s been a while when technologies have been established and because of its efficiency
of input-output interactions, a rapid development has marked the telecommunication industry.
Companies need to adjust and find new strategies and business concepts to be able to materialize
their goals through this advancement. From simple to complex environment, they should be able
to stand still in order to survive in this global competition.

To respond about the business issues and demands they discovered and continue to do
research works about new and effective business plans. Traditional commerce are now being
modified and checked if it is still applicable to online way of trading or the e-commerce
(Electronic Commerce). Since the business that is involved in this paper is referring in
telecommunication industry, the business concepts that they should be engaging is more
advanced than a normal level of concepts that some e-business do.

Suojapelto (2001) defines business models through what your business concepts is,
meaning you need first to define what your company is selling and to whom and from this you
can be able to determine your competitive advantages. It is also supported by the following
statement:

-A business model is simply a business concept that has been put into practice
(Hamel, 2000, p. 112).

Furthermore, Suojapelto's thesis cites that defining the business concepts alone is not
enough anymore. Since telecommunication industry boost extremely let us bring it to the
complex way of handling the situations.

Many new business models arise as the time goes by. Gary Hamel has described a
business model in his book ‘Leading the Revolution’ (2000). According to Hamel, business
models forms around four separate components: Customer Interface, Core Strategy, Strategic
Resources and Value network. They are joined together by three other components: Customer
benefits, Configuration and Company boundaries.
Figure 1. Business model by Gary Hamel (Hamel, 2000, p. 92)

1.) Customer Interface has four components for customer services.

•Fulfillment & Support
•Info & Insight
•Relation dynamics
•Pricing Structure
(Hamel, 2000, p. 80 - 85)

2.) Core Strategy. It is the quality of how the firm chooses to compete. Core strategy includes
three elements:
•The Business Mission.
• Product / Market Scope.
• Basis for Differentiation.
(Hamel, 2000, p. 71 – 74)

3.) Strategic resources. A company’s competitive advantage rests on its unique firm-specific
resources. These include following element.
• Core competencies.
• Strategic Assets.
• Core Processes.
(Hamel, 2000, p. 75 – 77)

4.) Value Network. Many of the resources that are critical to a firm’s success lie outside its
direct control.
• Suppliers
• Partners
• Coalitions
(Hamel, 2000, p. 88 – 91)
 In the figure above, between Costumer Interface and Core Strategy we have the consumer
Benefits as its linker, which shows the actual benefits that is being offered to the costumer.
Benefits refer to a customer derived definition of the basic needs that are being satisfied (Hamel,
2000, p. 97). Coming between Core Strategy and Strategic Resources there is a link called
Configuration. Configuration refers to the unique way in which competencies, assets and
processes are combined and interrelated in support of a particular strategy (Hamel, 2000,
p.78).The last linkage is between strategic resources and value network, and is called Company
Boundaries. Important aspect for the business model is the choice of what the firm will do itself
and what it will outsource to suppliers, partners, or coalition members. (Hamel, 2000, p. 92).

Finally the underlying concepts such as efficiency, uniqueness, fit and profit booster are
the factors on how the concept is going to make money.

Michael Rappa has defined also a business model of the Web as the method of doing
business by which a company can sustain itself – that is, generate revenue. According to him in
there are nine different Web based business models that are implemented in variety of ways.
These models include: brokerage, advertising, infomediary, merchant, manufacturer,
affiliate, community, subscription and utility business model. (Rappa, 2000) Rappa’s model is
concentrated heavily on the factors of the company and the position of it in the value chain/web
internally.

Alexander Osterwalder and Yves Pigneur (2002) suggest adopting a definition which
emphasizes on the following issues that a business model has to address:

• [Product innovation] What business the company is in, the product innovation and the
value proposition offered on the market.

• [Customer relationship] Who the company's target customers are, how it delivers them
the products, and how it builds a strong relationships with them.

• [Infrastructure management] How the company efficiently performs infrastructure or

logistics issues, with whom, and as which kind of virtual enterprise.
and finally,

• [Financials] What is the revenue model (transaction, subscription/membership,

advertising, commission, licensing) and the cost model (cost of goods sold, operating expenses
for R&D, sales and marketing, general and administrative)?

Cato (2010) emphasizes that 'while we all agree the need for new business models, we
need to view this from multi-dimensions and, above all, not forget the revenue model. I think it
will be harder to address revenue models as an afterthought than it has been to address billing as
an afterthought – and we all know that story'.
Conclusion

Identifying business models and revenue models for telecommunication market is even
harder and broader not just because of the requirements given but also the topic indeed.
However, as I further read articles about e-commerce, I arrive into my own version of what
business model is and it is a blueprint of ideas and beliefs for increasing your profit and
diminishing your cost structures. As this generation turns into more complex approach I'am very
sure that more business models will be discover that will effectively and cater the unsolved
problem of the e-business communities.

References

Cato (2010), New Business Models, yes but Revenue Model as an afterthought can be hard
work. Available at: http://TelcoProfessionals.com/Cato.html

Hamel, G. (2000), Leading the Revolution, Harvard Business School Press, Boston, USA

Osterwalder, A., Pigneur, Ya.(2009), Business Model Generation, Bled, Slovenia

Osterwalder, A., Pigneur, Yb(2002), An e-Business Model Ontology for Modeling e-

Business, 15th Bled Electronic Commerce Conference e-Reality: Constructing the
e-Economy, Bled, Slovenia, June 17 - 19.

Panagiotakis, S., Koutsopoulou, M., Alonistioti, A., Business Models and Revenue Streams
in 3G Market, Athens, Greece

Rappa, M. (2000), Business models in the web. Available at:

http://ecommerce.ncsu.edu/topics/models/models.html#anchor1803509

Suojapelto, K. (2001), Master’s Thesis the business models of telecommunication equipment

manufacturers: Case Nokia, Lappeenranta University of Technology