The multibillion dollar mega-merger announcements involving AT&T with Time Warner Communications and CenturyLink with Level 3 Communications have focused on more than the usual regulatory, competitive and financial issues. These massive communications mash-ups present two very different mergers: one is focused on consumer content (AT&T and Time Warner) and the other is business network services oriented (CenturyLink and Level 3), but both will require significant back-office IT assessments if the combined entities are to survive and thrive in an increasingly cutthroat environment.
Once the dust settles from the financial transactions and the business strategies are aligned around future service roadmaps, the next step forward must be focused on IT. But the larger the acquisition, the longer and more complex the technology rationalization will be.
The $85.4 billion deal between AT&T and Time Warner creates a unique and highly complex technology roadmap for the new organization. AT&T’s assets, which include wireless, broadband, satellite and pay-TV services, already position the organization as one of the strongest content distributors in the U.S. market. Joining forces with Time Warner, exclusive of the recently divested Time Warner Cable assets to Charter Communications, creates a massive media content creation and delivery provider.
The combination of content creation and service delivery provides new opportunities for AT&T to deliver new video and high-value offerings to its customers at a time when today’s consumer wireless users expect just that. Direct links between content creation and content delivery processes will also more tightly link the development and delivery processes with the ultimate goal of creating new revenue streams.
As the wireless market segment moves toward 5G, AT&T is positioned to leverage new wireless capacity as a viable alternative to existing cable/video choices. From an IT perspective, AT&T’s back-office infrastructure will need to support a broader range of service offerings, including on-demand, bandwidth-intensive content services that can be priced based on the quality of delivery (e.g. standard definition, HD or 4K) and the quality of service.
Meanwhile, the $34 billion acquisition of Level 3 by CenturyLink creates a larger, more powerful business services provider, which makes sense given the dramatic increase in internet data traffic and the stiff competition both companies have faced from the likes of AT&T, Verizon and cable MSOs. The combined assets create a stronger entity, link network assets and help secure high-value data routes for business customers and high-volume users like Netflix and Google.
The IT impact of both mergers is significant. For AT&T, newly created ties between mobile and broadband networks and the acquired content origination points will require the development of new service creation, delivery and monetization strategies. AT&T, with its existing order-to-cash processes in place, will need to evolve its BSS/OSS infrastructure to ensure that new high-value service offerings can be made available, priced and delivered to whatever endpoint the customer demands.
For CenturyLink, the process will involve the rationalization of two separate BSS/OSS infrastructures to create a single view of the customer and simplify two disparate IT processes by eventually combining them into one.
In both of these scenarios, the undertakings will not be taken lightly. Each will require a short- and long-term service delivery mapping to the architectural assessment of both the current and future state of all IT systems.
And further complicating matters is the introduction of next-generation gigabit speeds brought about by new wireless and virtualized networks. These technologies will make it possible for service providers to deliver new services to the market and create new and sustainable revenue streams. But unless the service providers also look at their back-offices systems and processes—especially in light of major business changes—they won’t be able to reap the benefits of delivering value-added, cloud-based and other services and will instead remain primarily connectivity providers.
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