Introducing Two-Sided Markets: A Template For Future Growth In Telecoms?

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Details the move towards a two-sided marketplace for telecoms services, and the relevance of that change to future retail, wholesale and B2B value-added services (VAS) platforms. (Jan 2009, Foundation 2.0)


This briefing report introduces one of the core Telco 2.0™ Initiative themes – the move towards a two-sided marketplace for telecoms services, and the relevance of that world-view to future retail, wholesale and value-added services (VAS) platforms.

For those not well-versed in economic theory, the general concept of the ‘two-sided market’ can be a little slippery to grasp at first, especially when applied to telecoms. This document aims to introduce and explain it, highlighted by reference to numerous examples from other industries.

The document outlines the differences between one and two-sided models, their relevance to the industry, and  growth opportunities arising from the application of two-sided models.

Who should read the report

Group strategy director, business development and strategy teams, CIO, CTO, CMO.


Two-sided markets bring together two distinct groups of customers, with a platform provider enabling and enhancing direct interaction between them. Telcos have an opportunity to forge new business relationships, and tap into huge new revenue streams, by evolving such platforms between customers and ‘upstream’ sectors like advertisers, content providers and governments.



  • The limitations of the current telco model
  • A new discipline
  • Condition, continuum, or landscape?
  • Configuration: two-sided markets = two sides
  • Configuration: the two sides need to interact
  • External elements: quantity is quality
  • Asymmetry: who pays matters
  • The wisdom of crowds requires a crowd
  • Good theory, but it can’t be used
  • Asymmetry: the middleman must stay in the middle
  • Multi-home vs. single-home markets
  • Turning theory into practice
  • Two-sided markets in practice
  • Elephants are born big
  • A compelling proposition
  • What do you know about the customer?
  • No bronze medals
  • A regulatory misfit
  • Competition law concerns
  • Not a binary choice
  • A pricing challenge
  • Conclusion: a different kind of business