Analysts at McKinsey & Company write: For the better part of a decade, telecom companies have suffered through declining revenues, cash flow, and return on investment just as tech companies like Google, Facebook, Amazon, and others have mushroomed by building their businesses on the operators' own infrastructure. While these tech visionaries have enjoyed well over $1 trillion in combined market-cap growth by innovating and thinking differently and adeptly, telecom companies have tried to compete by implementing the same old survival tactics: cutting costs, reducing the workforce, and timidly entering into new business adjacencies. The trouble is that playbook no longer applies. [...] We've seen this before in other capital-intensive industries. The airline industry, for example, despite incredible growth in travel during the early part of this century, destroyed economic value until 2015 when, for the first time, the industry-level average return on invested capital (ROIC) was just in excess of its cost of capital. This return to economic profitability was achieved through a combination of falling fuel prices; significant industry consolidation, especially in the United States; and the growth of ancillary revenues, such as checked-baggage fees. If global operators were to follow the airline industry's prior trajectory, the implications could be dramatic. That's not just for the operators that would see declining investment as capital and talent move into sectors with superior returns but also for current and future over-the-top (OTT) players, such as Amazon, Apple, Facebook, Google, and Netflix, who rely so heavily on the operators' networks and investments.
Attend or create a Slashdot 20th anniversary party! DEAL: For $25 - Add A Second Phone Number To Your Smartphone for life! Use promo code SLASHDOT25. Check out the new SourceForge HTML5 Internet speed test. ×