In a highly competitive telecoms market, the customer experience is coming to the fore, in the fight to attract revenue for operators, according to Anders Lindblad, president of Ericsson Middle East. Lindblad told CommsMEA that consumer demand and new technologies are driving a shift, which operators would do well to heed.
“We have come back to the fact that the network has become more relevant to the consumers. In the days of voice build out of GSM etc, it was very much about getting coverage, and ‘do your voice calls work?’ It was a strong differentiating factor for the operators to have a good network. Then for the next ten years it was more about branding and pricing, the network went away.
“What is interesting now with the introduction of new services, particularly the internet on mobile, you come to a new challenge, it is not only coverage, the consumer experience really differs depending on how well you built your network.
Lindblad said that according to global studies conducted by the vendor, consumers are no longer motivated by cost, but by customer experience, but that is changing how the operators need to address their customers and their network capabilities.
“For the first time, price factor is not the number one choice for consumer perspective, it is the quality of the network”, he said. “The big challenge for the operator is that quality of the network for the consumer is not the same as quality of the network for the CTO. You can have great networks based on your old technical Key Performance Indicators (KPI), but you still have a poor performance of your services for your customers.”
For this reason, Ericsson is focused on developing its solutions for Customer Experience Management. The company is developing solutions to give an end-to-end view, from a service perspective, which can classify different services such as applications, voice, video streaming, so that operators can see how their networks perform for specific applications.
The aim is to provide that measurement, almost to an individual basis, Lindblad said, so that the operator has visibility into each customer, and to both provide a better customer experience and to provide proactive customer relationship management, for example by offering compensation to individual customers, to make up for poor connectivity, to improve their overall customer experience.
With the proliferation of services, operators need better segmentation of customers, and need to also change the mindset and culture of the operator company. In many of the older operators, who were usually PTTs and were technology focused, they now need to change their approach to business, and to work more with marketing and sales, and become more agile.
“The most challenging thing is not to understand that you need to change your business model, it is changing the company,” Lindblad said. “All the CEOs and CxOs are in agreement that they need to do this, but the challenge is how to change.”
Although the region is quite diverse in terms of its progress towards adopting this change, Lindblad said that the impetus is there from many of the operators, at the same time as the customers not just demand change, but are also willing to pay for it. There is some resistance to paying for better data, mainly because fixed internet services were initially offered free of charge in many markets, but in those regions that are leading in the diversification of services, such as Korea, Japan, the US and the Nordic countries, operators have been able to incrementally introduce new service offerings which have resulted in significant increases in ARPU.
“They transferred the revenues from the old services to the new services, they took it in steps, they started by charging for the internet, then they differentiated on speed and download capabilities, then they started to differentiate by [multiple] devices, next step was include some services. You get more and more articulated [in customer engagement],” he said.
In terms of prospects for the business in the region and worldwide, despite credit rating agency Moody’s having recently cut its outlook on the company due to tough competition in the telecoms equipment sector, Lindblad is positive on the future for Ericsson.
“So far, so good on the telecoms side,” he said. “We are twice the size of the number two and number three together. We have been able to stay ahead on the business side and equipment side, radio is our flagship and there we are determined to continue to proactively invest.”
In other parts of telecoms business, the competitive landscape is changing rapidly, Lindblad said. In areas such as cloud, IP-based infrastructure, software defined networking, the company is finding itself in competition with established ICT players and also with start-ups. Ericsson intends to increase its focus on M&A in order to stay ahead with these emerging technologies, and the company has recently appointed Rima Qureshi as SVP and chief strategy officer for the Ericsson Group to drive M& strategy.
“We are putting in a lot of R&D money, but we are also acquiring companies in this area to make sure that we don’t spend too much time to grow organically, and we take some of our earnings to create a strong portfolio end-to-end. It is going to be an exciting next decade, it is as big an opportunity as the radio side.”
The convergence of telecoms and IT is also opening up new areas for Ericsson, and the company is looking beyond technology development to increasing services play, to become involved in the value chain of delivering services to different vertical sectors. The company has been steadily growing its managed services offerings, Lindblad said, and Ericsson has over 30,000 staff involved in systems integration, with more than 2000 of them in the Middle East. Ericsson’s ICT business and its managed services have both tripled over the past three years.
On a telecoms technology front, while Ericsson is still involved in 3G and GSM roll outs in some parts of the wider Middle East, it is in the LTE arena that Lindblad sees the most activity. Ericsson is trialling 5G in other global markets, and services like LTE Advanced, Voice over LTE (VoLTE), and broadcast are mainly driven by the most developed markets, but the GCC is stepping up.
“The GCC is really picking up the pace when it comes to LTE. It is very close to being on par with Korea and the US. We are in heavy discussions with the operators that are most advanced on starting to see how we can introduce this. The interest there is mainly on VoLTE,” he explained.
VoLTE is gaining a lot of interest for a number of reasons, Lindblad said. As a native, pure IP means of communication, the service is far superior to VoIP OTT services, and it also utilises the LTE frequency for voice up to 30 times more efficiently than voice on 3GSM. With integration with circuit switch VoLTE is also a global proposition, if operators can reach agreement on inter-connectivity.
“I would say ‘Skype, watch out, Viber watch out’ — we are giving a tool for the operators to do a pure IP play, and the quality will be vastly better, and you will be able to integrate it with circuit switch and do it globally. It gives the operators the toolbox to practically wipe out the likes of Viber, Skype, Whatsapp, if they want,” Lindblad noted.
LTE Broadcast is also opening up new possibilities for services, Lindblad said: “We are developing capabilities in the network, in an extremely resource efficient way to be able to broadcast anything to consumers. You are really getting into a platform that can compete with satellite and digital broadcast. Everywhere you can have an Ericsson network with a device that supports LTE, you can have these services. You are already on a platform that enables upstream and downstream communication, so you can complement it with a lot of other services, which makes it extremely interesting.”