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Carriers Cutting Costs, Centralizing

By J. Sharpe Smith

January 6, 2016

The Year Ahead

Carriers will cut costs in 2016 by reducing their regions to few super regions, which portends a reduction in staff and more outsourcing.

At the Wells Fargo Securities 2015 Technology, Media & Telecom Conference in November, Verizon Chief Financial Officer Fran Shammo noted that the company’s wireless structure had not changed from 18 years ago when the carrier was competing with regional operators and needed a local presence.

“You are now dealing with major national players, so that structure kind of out matured itself. We need to get to a structure where we can efficiently make quicker decisions more broadly and get rid of some of the bureaucracy within the environment. We believe that this structure will be a lot more efficient for us to operate under so we have a lot of internal support for that,” Shammo said.

Martin Travers, president, telecommunications, Black & Veatch, didn’t believe centralizing purchasing administration is a new trend, saying that it varies by carrier – some buying nationally others regionally — depending on their situation.

“It goes back and forth whether companies opt for a centralized versus decentralized organization. It is done for strategic reasons,” he said.

But Travers did believe that carriers are as price sensitive as ever. “The services that Black and Veatch offers have always been carefully evaluated price-wise by our clients, in today’s market, costs remain high on the client’s priority list in terms of selecting suppliers,” he said. “In certain cycles, speed and scale can trump costs, but I don’t think we have been in that cycle for a year and a half.”

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