CEBP and Two-sided markets

One of the truisms in the technology industry is that waves of technical innovations are followed by waves of business model evolution. The wave of Telco APIs, platforms, and communication applications clearly brought innovation to the industry. As I've stated previously, STL partners' theme of Two-sided business models represents the business model evolution.

An assumption I make is that Communications Enabled Business Processes is one if not THE most important tactic in helping Global Telcos to move toward Two-sided Business Models. Simply CEBP becomes a method for smart Telcos to not only maintain but extend their voice ( and sms) products rather than lose them to commoditization pressures. There are other important tactics available to Telcos including transactional processing but given that voice is the original cash cow it needs to be a priority.

The research on two-sided networks or markets shows this model can be very tricky to implement. To purchase background articles, go to Harvard Business Review

There are many complexities to putting the idea into practice but an HBS article by Eisenmann, Parker, and Van Alstyne identify three of the most important decisions.

1 .Get Pricing Right
a. subsidize quality and price sensitive users
b. secure marquee users or anchor tenants

2. Cope with Winner-Take All Competition
a. Will the market eventually be decided by one standard or platform?
b. Does this suggest a share or fight attitude with competitors?

3. Avoid Envelopment
Many platforms have overlapping user groups. Be aware of competition from outside your typical industry. Look for opportunities to extend.

Given the evolution of Jaduka and our parent company NetworkIP we are in an awfully strong position to enable two-sided networks. I can identify 2 possibly 3 other firms with strong positions too.

One of the arguments I have with STL's work is they do not adequately discuss the technical, regulatory, and cultural challenges a global telco will have to overcome in order to implement a successful two- sided business model. The academic research puts into context both the challenges and opportunities. In my opinion, the M&A or Strategic Partnership approach to implementing the two-sided network strategy will certainly gain traction.

There will be winners but not many.