The Great Telecom Shakeup – How Will Enterprises Benefit?

Spend Matters welcomes another guest post from Matt West of NPI, a spend management consultancy focused on eliminating overspending on IT, telecom, and shipping.

Unless you’re in the telecom industry, you probably haven’t noticed that it is in the throes of an historic shakeup – one that will have a lasting impact on enterprise buyers. Think about this:

  • Japan’s Softbank wants to buy T-Mobile and roll it into Sprint.
  • CenturyLink recently acquired Tier 3 after its giant acquisition of Savvis, and there are rumors that Rackspace could be next.
  • AT&T is buying Direct TV, while Comcast and Time Warner Cable want to merge.
  • Level 3 has announced its bid to buy TW Telecom.
  • Google plans to buy Skybox.

There’s more to this list of course, but you get the point. How does this affect enterprise customers? Will the outcome be in their favor?

For the most part, the answer is yes. A landscape where players like CenturyLink and T-Mobile are better poised to compete against AT&T’s and Verizon’s business services and wireless offerings means prices could come down. We can also expect to see the traditional wireless and wireline leaders make bolder, riskier moves. Large carriers like AT&T and Verizon have historically been reluctant to make sweeping changes to pricing. That swings the door wide open to new, more nimble carriers, which are eager to capitalize on the frustration of businesses who are tired of the inflexibility of their incumbents.

While much of the M&A activity referenced above won’t finalize for some time yet, today’s enterprise buyers can already see the scales tipping in their favor as they negotiate with their current carriers and providers. For example, players like Time Warner or Level 3 traditionally haven’t had the footprint to provide services to much of the enterprise sector. Now, those dynamics are changing as new power-players emerge with nation-wide capabilities that can scale to the demands of large businesses.

If you’re negotiating a contract with your wireless, wireline, or cloud provider in the next 18 months, keep track of what’s happening in the landscape and how it’s affecting (or will affecting) your incumbent provider. As they ready their competitive strategies – whether it’s new pricing, better discounts, or new offerings – enterprises are well positioned to gain more leverage and extract more flexibility in their vendor agreements.

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