GENEVA -- "A dysfunctional industry. That's what the telecom industry is today, said Dr. Norman Lewis, director of Technology Research at Wanadoo UK.

Lewis's comments kicked off the "What Business Models Work" session, a high-level debate organised by the ITU at TELECOM WORLD 2003, as part of its forum programme. Speakers included Takeshi Natsuno, managing director, NTT DoCoMo; Colleen Arnold, general manager, IBM; Romain Bausch, CEO of SES Global, and Peter Barnes, CEO of the Canadian Wireless Telecommunications Association.

"We have deep structural problems," said Lewis, breaking down the elements of the telecom industry into vertical chunks of appliances, access and content and applications.

"Each silo focuses on its own narrow slice," he explained, which trigger "deep coordination problems." With road mapping planned by different people, he said, key industry elements like processes and users fall between the cracks. He proposed a more horizontal approach.

He added: "There's an inherent disjuncture between investment and return-on-investment. That leads to an enormous amount of risk, uncertainty and a silo mentality. Placing the customer at the center is threatened by a number of barriers that suggest failure rather than success. Everybody wants answers."

Takeshi Natsuno provided some fresh answers in his animated presentation on the company's i-Mode strategy that captivated the audience. He urged the industry to think outside the box to find ways to bridge the Internet and non-Internet world through services that the average man on the street would find useful and to look at content as the cornerstone of a company's strategy when launching new services. Four years ago nobody listened to me; you said Japan was a small island country. We don't need perfect methods, since we can remember how imperfect methods fail. Focus on naturally good technology and business models for the market, customer and partner. We need to move to a non-telecom way of thinking."

He added: "The best business models are for content providers, not for carriers or wireless vendors. i-Mode is a value chain co-ordination with each layer provided by different vendors. We need to synchronise the evolution of technology with speed and content delivery."

Enter IBM through Colleen Arnold, general manager of the company's Global Communications Sector. Arnold's presentation focused on the "on-demand" model that customers want now, a fee-per-use service with a variable cost structure that allows them to turn on and off the services tap as required.

She said: "Such a shift in mindset, management and resource allocation can only be made with high commitment from the top. For the next ten years, we need to drive productivity and efficiency in our commodity areas, and develop new innovative solutions that customers are asking for in an on-demand model."

She added that customers chasing new trends need to react rapidly, without interruption and want dynamic service provision for spikes.

To achieve such a radical transformation in mindset, she suggested "flipping the business," much as IBM did, with its now-commoditised computer business, to find out where costs can be driven out and new on-demand services added. "Those savings will then fund and fuel investment areas. There's a lot of money spent for maintenance of the old system. We should not be a commodity, focusing only on being cost-effective," she said.

She stressed the importance of collaboration. "With our combined strengths we can deliver on a per usage basis. We'll all deliver on the pieces we're best at, in areas such as voice, video, storage, networks and broadband-on-demand."

Panelists also shared some wise insight. Among them, Peter Barnes, CEO of the Canadian Wireless Telecommunications Association, highlighted "co-optation", or the marriage of co-operation and competition.

"Because for cooptation to work you need to talk to people you love to hate daily, you need top management's commitment to the concept," he said. Barnes also underscored the importance of collaborating in a "trust zone" - neutral areas that facilitate co-operation, like industry associations. Rising to the challenge of working with our rivals to sort out larger sectoral issues will ultimately widen the market and increase the opportunity for everyone, he said.

"PDAs and voicemail are not terribly intuitive," he said. "Using them should be as easy as driving someone else's car. The simplicity and transparency of this act needs to be translated to customers."

Barnes used the examples of unifying SMS in Canada across an alphabet soup of mobile phone standards, and current efforts to do the same with Wi-Fi and 3G phones so that those wanting to use the wireless Internet from laptops or handsets no longer have to wade down a complex protocol path.

"We unlocked more value through cooperation among competing carriers because we made the market bigger," Barnes said. "Canada's SMS grew 250 percent in just over a year."

The satellite industry perspective was supplied by SES Global's Romain Bausch who stressed focusing on one's core business and learning from others' failures -- in case of satellite, Iridium and Globalstar. Sprint's Christian Moeller emphasised the need to work off the same interoperable IP platform.

He said: "We recognise that the application layer on the technology side needs to converge with the network. That allows applications to be distributed and drive off interoperability and standards."

Moeller pointed to the evolution of new business models in other industries, like the railway and container businesses as guides as to how things may evolve and the time it may take for the telecom industry to settle on the ideal business model.

He added. "It will take time for us to find the best business models and partnerships. Looking at other industries it's not hard to imagine that the best is still ahead. We need to open our minds to new ways,"

The session closed with a question about how to take that first terrifying step forward to adjust the business model to meet new challenges. Natsuno stressed the freedom to choose that we all have today, adding that small successes that naysayers initially doubt will lead to larger successes and that action of any sort is important. He also emphasised repositioning oneself in the business ecosystem.

Arnold underscored the need for top management commitment to change, a mindset shift that will ripple through the entire organisation. "You need to get alignment on what you're going to do," she said, highlighting initial internal resistance to IBM's new Linux push on worries that it might cannibalise its server business.

Barnes highlighted the importance of a regulatory, policy and legislative environment that will support such a shift in a flexible framework.

Lewis added: "I urge you to think the unthinkable. We are on the cusp of a significant change. i-mode unsettled everything."

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