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3/24/2006
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Rocky Road Ahead For Telecom Carriers: Gartner

Similar to the disruption that music download sites initially brought to the music industry, the telecommunications carriers, especially those in the voice telephony market, will suffer the most, a new Gartner study says.

Telecommunications carriers face hard times during the next five years as new companies move in with innovative ideas, emerging technologies and lean business models, research firm Gartner Inc. said Friday.

This year's expected shift comes from Internet and digital content, growth in network bandwidth, and new entrants and business models into the market, the research firm said.

Similar to the disruption music download sites, such as Napster, initially brought on the music industry, the telecommunication carriers, especially those in the "voice telephony market, will suffer the biggest shock," said Elroy Jopling, research director at Gartner.

Jopling attributes the change to digital content and a change in voice communications. Transforming telecommunications is voice over Internet protocol (VoIP) from companies, such as Skype and Vonage. They will deliver services though text-based technology, such as instant messaging, the Short Message Service ((SMS) and other Internet services.

Networks will present less and less of a barrier to applications and instead become application enablers. As high-speed networks become prevalent, Jopling said network operators will move away from integrators and software developers.

User devices from mobile phones to servers will likely contain more sophisticated communication applications and networking intelligence. Jopling believes IBM Corp. and Microsoft Corp. are positioned to lead the transformation because the companies have demonstrated the ability to adapt to change in both technologies and business models.

Jopling calls Google Inc. "the most frightening newcomer for established carriers" because it has the "financial muscle to make a big impact, the boldness to experiment with new markets and business models, and the luxury of being able to bide its time."

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