As a partner in IBM's Global Business Services Communications Sector, P.K. Prasanna works with telco clients to develop new revenue streams. He recently spoke with Supplements Editor Joan Engebretson about a new opportunity he sees in community networks.

The Independent: You have suggested that one of the best ways for Independent telcos to generate new revenue streams is to create community networks. How do you define a community network, and where are the revenue opportunities?

Prasanna: A community network is really a network of subscribers with common interests and objectives. Some examples might include Classmates.com or CincyMoms.com that provide a common venue to interact with people who share an interest. An Independent operating company could have a wholesale portal that could access a number of these specialty community networks that are specific to their region — for example, a high school sports network. The best way to start would be to partner with some existing community network providers, even if they are in different areas, and then to build on top of that. The IOCs would cross-promote these networks.

Probably the most important revenue opportunity is advertising. I have seen some subscriber fees for community networks, but that's usually the exception to the rule. Most people would assume this would be free. There will probably be some commerce transaction as well. The telco might have the ability to monetize a piece of that.

The Independent: Can you give an example of a type of advertiser that might be interested in paying to reach people in a community and explain what the value proposition would be?

Prasanna: The advertising market is undergoing significant restructuring. There is a lot more growth in online, and your typical print and media advertising is becoming more of a challenge. For online advertising, particularly in targeted ads, advertisers are willing to pay much more. A sports equipment manufacturer might pay five to 10 times more for having access to a targeted community.

The value the telco would bring is it might have insight about the usage and behavior of subscribers and the relationships they have with other subscribers in the community. Or it could be simple things such as the amount of bandwidth they consume or the purchases they make on a portal. There are a lot of data points that the telco can stitch together to provide an interesting picture.

Privacy and security are the flip side of the same coin. It will be very important for any service provider to provide those kinds of capabilities.

The Independent: What is the best way for a small Independent telco to reach out and sell this kind of advertising?

Prasanna: The best way is to use partnerships and existing advertising aggregators as a way to get started. The small telco would create partnerships as opposed to building a big infrastructure with a new sales force.

The Independent: What level of revenues might a small telco generate from a community network initiative?

Prasanna: That's going to depend on the region and the number of subscribers and data available. It's still a new area, so I don't expect initial revenues to be very high. But it's a strategic area for these telcos to get in and get knowledge about and get comfortable with the business model. Could it do 20% of revenues in a few years? We will be in a better position to judge that in six months or so.

The Independent: What are some of your other ideas for Independent telcos to generate new revenues?

Prasanna: Marketplace and exchange models — these would be like eBay sites but would not compete with eBay. They would be much more integrated with communities and targeted to specific groups. Telcos also could help other enterprises create community networks by offering professional services bundled together with a Web site and portal. User-generated content also may be an opportunity. There may be a very interesting play to involve a certain family that has a child on the team and to post their video content on a local sports portal so others can see it. It remains to be seen how to monetize this, but users will generate more core revenues through increased bandwidth needs and potentially lower churn as well.