A new report on sustainability in the U.S. telecoms market finds that leading telecoms providers outperform their smaller competitors in sustainability performance and sustainable products and services offerings.
The report, issued by independent analyst firm Verdantix, finds that AT&T, Sprint, and Verizon, all companies with relatively large market share in the U.S. (32.1%, 15.4%, and 36.5% in the U.S. in 2011, respectively), have outpaced smaller providers on the sustainability front.
“Smaller operators like CenturyLink, Level 3, EarthLink and Windstream have not invested as much as their larger competitors,” said Phil Sayers, Principal Analyst at Verdantix. “These providers score poorly on corporate sustainability and service capability due to limited portfolios of sustainable telecoms solutions, embryonic corporate sustainability programs and minimal sustainability product marketing.”
Both Level 3 and Windstream fail to provide information about CSR activities on their corporate websites, while CenturyLink and EarthLink provide token information about community relations and corporate giving.
Such efforts pale in comparison to the robust CSR programs of AT&T, Verizon, and Sprint, all of which report in detail on their environmental, social, and governance performance. Today, for example, AT&T announced the introduction of their eco-ratings system, which provides sustainability information on products, at their AT&T stores.
Likewise, Sprint announced last week that, despite the continued rollout of the company’s higher-performing 3G and LTE networks, it has reduced GHG emissions by introducing more-efficient network equipment.
Bob Azzi, Sprint’s senior vice president of Network, said the Verdantix recognition is “a perfect opportunity to share our just-completed 2011 emissions reporting – since, while the study accurately describes a potential telecom emissions boom resulting from increasing bandwidth, we at Sprint have taken great strides to implement a Network Vision that enhances customer experience while increasing efficiency.”
The larger companies’ more robust sustainability performance may be a function of their ability to devote more resources to sustainability activities that are not central to their core businesses. With Verizon, AT&T, Sprint, and T-Mobile USA controlling 94.7% of the U.S. telecoms market, smaller companies like CenturyLink, Level 3, Earthlink, and Windstream are left to divide an awfully meager piece of the telecoms pie.
However, the Verdantix report indicates that smaller U.S. telecoms companies may have an opportunity to gain market share by adopting sustainability strategies. Between 13% and 35% of the report’s respondents said that sustainability is their primary purchase driver, ahead of cost savings, efficiency, productivity and brand enhancement.
“The US telecoms sector needs to get a better grip on the energy and environmental challenges facing their future growth plans,” said Janet Lin, Senior Manager at Verdantix. “Telcos face a carbon emissions boom from the exponential growth in bandwidth required by smart phones and their investments in cloud computing. Without a strong energy efficiency and CO2 reduction plan, telecoms providers will face the wrath of Greenpeace and other campaign-based environmental NGOs.”
This assessment dovetails with a recent assertion by Kellie McElhaney, Faculty Director of the Center for Responsible Business at UC Berkeley’s Haas School of Business. “CSR can be used to grab market share from competitors if communicated effectively to customers who care about environment-friendly product lines,” wrote McElhaney in a 2009 paper.
Still, more often than not, companies that adopt sustainability strategies to gain a competitive edge either already enjoy dominant market positions, like General Electric and its ecomagination commitment, or do not seek to challenge major market players head on, like Seventh Generation, which controlled less than 1 percent of the detergent market in 2010.
Far rarer is the case in which a struggling company adopts sustainability strategies in order to compete head on with market leaders. Adopting sustainability strategies to competitively differentiate may be somewhat ineffective in the telecoms industry, where core business elements such as coverage and price are significant factors in consumer purchasing decisions.