Media companies are the biggest threat for telcos

"Not the other telcos, playing in the market, but the media companies in the world are the major threats for the telcos. They will become their main competitors."

It is a pretty black-white, probably somewhat exaggerated assumption, but it is meant as a provocation to the telcos to force them to start thinking about their future portfolio.

Take a look at Viacom, Vivendi or Bertelsmann. They all create, manage and distribute content. For distribution, different channels are used : TV and radio broadcast, print, DVD, CD, call centers ... From their point of view, the telco networks with ADSL or VDSL are just another distribution channel.

No telco is able to create content, they are too inflexible and sluggish to react fast enough. It is not their core business. The only chance to enter this space is to buy a market leader for media. However, this is too expensive for the telcos, they don't have the money for such adventures.

But what, if we turn it around. What if Bertelsmann would buy, say, Deutsche Telekom ? They would obtain the access to the end users and a professional organisation to manage this access. The "Bertelsmann package" could look like this :

• DSL connection,
• flat rate for domestic calls
  
• access to your favorite magazine online,
  
• Bertelsmann Book Club membership,
  
• 10 free musik downloads and
  
• 2 VoD
  

for 50 € per month.

Not "Call-'n-Surf comfort", but "Call-'n-Listen-'n-Watch-'n-Read-'n-Surf comfort" ... or "the spirit to create". A more powerfull message to the market, isn't it ? The combination of first class content, first class marketing and first class connectivity.

Telcos are running into a big revenue and ebitda problem, since revenue is declining and most of cost cutting has been leveraged. They are at the crossroads : find a way to offer value added connectivity and increase revenue or become a target for take-over.

Of course, telcos could enter into cooperations with the media corporations, but the latter are used having full control about what they do. They simply can't afford to have negative impact on their image. They are very conservative regarding their channels. Innovative about what they do, conservative on how they do it !

I'm sure, it will not take so long anymore, before we see this happen. And I beg, Google or eBay will kick it off !