A lot of my work involves consulting with organizations on the consolidation of their digital infrastructures. Recently for example, I worked with a client in a pan European telecommunications cost reduction effort. They were spending several million Euros a year across 27 countries. A substantial fraction of that cost was in mobile voice.
With other clients I had already gone through the exercise of consolidating digital infrastructures, such as server farms, and computer centers. Typically, the larger scale that is the result of the consolidation can lead to substantial cost savings, as well as improved quality of service. Some of this should be expected with GSM operators as well. After all, GSM is 15 year old technology.
Our main hypotheses were that better management of the contracts and their costs would lead to savings, and that lifting the contracts to the European level would allow for consolidation savings at the carrier side to be passed through to the client. The former turned out to be true, the latter not.
Although companies such as Vodafone, Orange and T-mobile have established themselves as large international players, their internal consolidation is very limited. They appear to share capital, and harmonize technology and capital expenditure, but operations are very much an opco responsibility (typically on a national boundary). There is some global brand management, in particular with Vodafone, but sales is organized along opco boundaries. In our search, there was hardly a pan European sales organization to be found, and the international account managers we dealt with had to collect the proposal data themselves from country offerings.
Apparently, there is little value for the carriers in consolidating the sales organizations on the international level. Why would that be the case? Some indication can be found in the successes of the national players, Dutch Telfort being one. They found their greatest successes not in scaling up their sales, but in specializing towards niches (for example ethnic groups). Apparently it can be cheaper and more effective to market to a number of smaller audiences, instead of blasting a single message to a large audience.
To get numerical proof of this, an example can be found in internet advertisement rates for keywords and keyword phrases. For example the key phrase ‘mobile phone’ would cost $1.50 per click with Google’s adsense, but ‘mobile phone mp3 player’ would cost only $0.95 and would also allow you to better target your ad text. Obviously, you would need a lot of these smaller audiences, and that is why you need to have advanced sales and marketing processes.
If you want a metaphor for this story: consolidation is a ‘back-office’ thing, and divergence is a ‘front-office’ thing.