New blood and more dialogue with internet players is needed for Telcos if they want to survive changes within the telecoms industry. So says a new report from industry analyst, STL Partners.

The analyst surveyed 550 industry insiders and found the "vast majority" of those asked "expressed concerns" about telcos ability to cope with the threat from new internet and IP-based services.

STL found the majority of telecoms industry insiders now believe that telcos need to dramatically alter their business models if they are to prosper in the Web 2.0 era.  In particular, most industry professionals believe that Telcos need to be structurally separated into different businesses - one focussing solely on the network, the other on the retail and services business - with fresh blood brought into manage these businesses. 

STL surveyed insiders (mainly upper and middle management) from Operators, IT vendors, analysts and so-called 'disruptors' in Western Europe, North America and APAC. It found:

~      75 per cent of respondents lack confidence in Telcos' ability to create long-term sustainable growth in an IP-based world

~       68 per cent felt Telcos have lost control of their core product - Voice and Messaging are no longer the exclusive domain of operators

~      76 per cent felt that the controlling culture of operators (manifested in a 'walled garden' approach to services) is no longer viable.

"What came over strongly" said Chris Barraclough, director of STL, "is that the telecoms industry is going through a fundamental change. The issue for them is 'what do we do about it, VoIP, IM?"

He explained that it's not just the direction in which telcos move forward that had respondents worried. Confidence in what he termed 'Telco 1.0' management - now in their 50s and beyond - is dwindling. "There is a feeling that legacy management is a problem," Barraclough said. "They have a very telco 1.0 view of the world. respondents told us they want young internet-centric chiefs. This was particularly true in the more mature markets."

The research also found that most insiders believed more narrative with true internet players, such as Google and Skype, is needed as the industry approaches a converged reality. "As an example, they ['insiders'] said Deutsche Telekom and Verizon had a protectionist strategy, referring to their walled garden approach, which they saw as being the least attractive strategy for long term growth," Barraclough said.

The report, "Telco 2.0 - How can telcos make money in an IP-based world?" is available from STL Partners.

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