Tata Communications' Plan to Beat North American Telcos on Their Own Turf

I've been working with the telecommunications industry since 1989, first as an academic researcher, then as a vendor, and then as a partner. It is a phenomenally complex industry because it is capital intensive, technically challenging at scale, and highly regulated. It is also a vital provider of the infrastructure needed to function in a modern economy.

After Judge Green ended the AT&T monopoly, I've always wondered what it would take for a non-American telco to break into the US market. A number have been trying and some are probably doing relatively well, but none have been that interested in telling their story in a way that would resonate with our UC Strategies audience.

Tata Communications has graciously agreed to share its story and its strategy for conquering the US market. The Tata Group is comparable in scale to AT&T and has almost 150 years of business experience. And Tata Communications has been around about the same number of years as the current instantiation of AT&T.

The first thing I learned is that Tata Communications is already active in the US market - they are providing services to over two-thirds of the Fortune 500. This makes sense, as Tata Communications is a major wholesale provider of underwater fiber, the world's largest wholesale voice carrier, and they have 1,600 of the world's telcos using the Tata Communications network to interconnect.

That said, Tata Communications is still a relatively unfamiliar name in the US enterprise telecommunications space. So how are they going to compete? Turns out they have done a lot of analysis and strategizing around this and they have a plan built on three main pillars.

First, Tata Communications is going to focus on enterprise TCO. The US telecommunications market still has room for enterprises to reduce costs. As Stanford Business School's Jeffrey Pfeffer pointed out earlier this year, telecommunication prices in the US are too high relative to costs of providing services and when compared against other markets (http://fortune.com/2015/05/04/how-can-we-fix-americas-broken-telecommunications-industry/). So it makes a lot of sense for Tata Communications to come into the market with a message about lower TCO.

Competing on price only goes so far, so the second pillar of Tata Communication's strategy is to focus on providing quality technology that is differentiated by superior reporting and management. All the telcos try to focus on quality technology, but getting the right information into the hands of the enterprise users of telecommunications is pretty rare and is a glaring hole in the telcos' approaches to their enterprise customers. In fact, PWC calls this out in their 2015 Trends report (http://www.strategyand.pwc.com/perspectives/2015-telecommunications-trends). The digital economy requires much more transparency and more accountability from the telcos. Tata Communications is capitalizing on this by building out their management and reporting capabilities for enterprises. Their approach is quite timely, and leverages a lot of parent company Tata Group's own experiences as a huge conglomerate of automobile, steel, chemical, financial services, and consumer companies. When you have a hundred of your own enterprise CIOs telling you what is needed, Tata Communications gets insights that a pure-play telco simply cannot match.

The third pillar of their US strategy is actually quite clever. Tata Communications has decided to bet large on Microsoft's impending release of its E5 Office 365 Skype for Business offer. Tata Communications has invested in filling in many of the service gaps that will accompany the release of the E5 offer, partnering with Microsoft and with companies like Nectar to build end-to-end reporting capabilities and to enhance root-cause analytics. Although many telcos are working with Microsoft on its Skype for Business launch, Tata Communications says it is approaching the service from more of an enterprise perspective than its competitors. If the E5 launch is successful, Tata Communications' plan to jump into the enterprise market with its Skype for Business management and reporting tools, combined with its aggressive approach to pricing, could pay off big.

Of course, Tata Communications is also making all the investments needed to build sales and service capabilities in the US and in Canada. Taken together, they believe they have a strong business model to play and to succeed.

The Tata Communications folks I spoke with are data-driven; they believe they understand the market better than the incumbents because, as a competitor, they know they have to differentiate. Their three-pillar strategy seems inspired by the Michael Porter primer on how to compete in mature markets, and it makes a lot of sense to me. True, there is a big bet on Skype for Business here, but that seems to be a good bet given how much Microsoft is investing in its unified communications strategy.

Do the other international telcos have crisply defined strategies for competing in the US market? I'd like to think so, although I haven't seen it detailed as Tata Communication's. As someone who cares very much about enterprise UC, it would be good to see more transparency.

This paper is sponsored by Tata Communications.