Telecom operators have managed to adapt to significant changes in the past years, transitioning from analogue networks to all-IP ones, and have enabled an information society with mobile and fixed very high broadband networks: indeed, rumours of telecoms operators’ demise have been greatly exaggerated, as those companies are very resilient organisations and have launched many transformational offerings across various markets.
Yet within the next five years, the telecoms industry will be further disrupted across developed and emerging markets:
► OTT players with global scale competing on core communication services threaten telcos’ relevance for voice and messaging services.
► Top three players in devices and OS industry capture nearly all of the value and expand their control over user experience.
► Ubiquitous connectivity and smart devices open up new business models.
► Fixed based technologies will increasingly complement mobile networks as cost and complexity of adding mobile network capacity in highly dense areas will rise.
► Mobile will undergo huge transformation with 5G, along with radical network evolution: spectrum optimisation (Selective spectrum auctions / refarming to maximise spectrum efficiency) as well network sharing.
Regulation in developed countries
► Regulatory authorities will be gradually shifting from pro-consumer to pro-investment policies leading to consolidation, with wholesale access pushed by local authorities.
► MTR will converge with fixed termination rate, roaming will disappear in Europe, compromising high margin revenue for operators.
► Regulators will be putting more focus into privacy and security.
Regulation in emerging countries
► Regulatory authorities will be continually emphasising investment policies leading to a digital and information society goal leveraging telecom operators’ strength in digital, information and services expertise for smart cities and smart government projects.
Moving up the telecoms operator maturity model
Telecoms operators are network led mostly at the state of the art of the networking and IT technology. Yet in order to thrive in the digital era telecoms operators need to adapt: depending on local market conditions and telecoms operator’ maturity, those very companies need to move though different phases in terms of telecoms model maturity.
1. The very first phase in this maturity model is a traditional telecoms strategy, shaping the organisation into a utility telecoms operator, where operators focus on running the best mobile network, and extract value via more minutes and larger data buckets in a standard/premium fashion in order to increase the ARPU. In this phase telcos focus on gaining market share quickly and try to upsell client base on higher voice and data tiers via CVM.
2. Moving to the next phase, telcos can implement an advanced telecoms operator model, where telcos would, provide fixed and mobile convergence services via quad play bundles, (differentiating with home broadband QoS) and additional services (such as IPTV bundles, premium movies and sport content, OTT streaming services) in a RGU-led approach (Revenue generating unit) moving from ARPU to ARPH (Average revenue per home). In this phase telcos focus on gaining market share through being one stop shop for the household: trying to get a foothold in households, via convergent offers and discounts then trying to sell more RGUs to the whole family.
3. The next phase, is a quantum leap to a next generation strategy where telecom operators embrace a network marketing focus: providing the best possible connection in any given situation via an universal connectivity service (to rule them all) next gen digital operator, incorporating fixed, Wi-Fi and mobile broadband as a single resource, in an “always best connected” mode, leading to an ultra-band connectivity service, with an omnichannel business model. Telcos will differentiate their offers in a standard/premium fashion with more speed and more minutes/GB of data for standard offers and best connectivity with “unlimited data” for premium ones.In this phase telcos are trying to gain market share with best in class connectivity experience and try to move their client base to a pervasive and ubiquitous connectivity universe.
So far only tier 1 telecoms operators (AT&T, Verizon, Vodafone, Orange) are working on implementing in their core markets. Major telecoms groups will have to lay out this tiered strategy.
Along this maturity model, telcos can provide a set of digital services, if they leverage their unique assets
Telecom operators are moving through the afore mentioned maturity models, yet along this maturity curve, they cater to client’s digital services needs, building digital trust in a prioritised fashion.
Also in an intensifying digital life, telecom operators cannot provide me-too products as they did in the early internet era. Telcos must provide services with unique selling points, building on their strengths, as competitive advantages: they must leverage on transversal elements that will become essential to facilitate customer digital life and experience.
Network access: As mentioned in the telecoms maturity model, if telecoms operators want to go beyond a bit-pipe future, they must provide network-led differentiation, with state of the art networks
Product and services: Telecom operators should find a balance between pushing off-the-shelf products and services (which is at the very core of the telecoms DNA) and allowing clients to build (a limited set of) a combination of telecoms and digital bundles, better covering client needs and increasing client stickiness
Customer service: Telecom operators should better differentiate customer service across their offering, gradually increasing the level of prioritisation and service when going premium. Not only that but customer service interactions should be seamless across different channels along the customer journey, giving premium customers’ choice and flexibility on how to interact with their telecoms operators in order to better meet their needs. Omnichannel with a cross-channel business model and content strategy that will improve the experience.
On top of those elements telcos should provide a mix of telco-made and OTT-made digital services positioning themselves as a “digital facilitator” for their clients, being a “go-to market” channel and curator providing best in class services/market, partnering with third party companies.
Telcos should offer practicality by aggregating their own services and third-party ones, such as music streaming services, ride hailing or possibly share value with its customers under a promotion form, providing access to its client base to the aforementioned third parties.
For example, in both developed and emerging countries telcos could become personal data agents: data privacy topics are regulatory-led, with different set of rules and regulations on where client data must be stored. Telecom operators could be at the vanguard of personal data protection and digital ID enabled, providing securely stored data in a cloud accessible from all devices and respectful of customer privacy.
In developed countries as telecom operators are facing internet companies providing best in class, well established products, they should partner with them and push those services to their clients, as there is no point for end clients to choose a me-too product from telecom operators.
Whereas in emerging countries they could push with their own/telecoms operator-backed services, as they would have less competition, and get market share leveraging network effect, before the arrival of industry juggernauts, such as mobile financial services:, payments as the cornerstone of telecoms operators led-digital drive, enabling simple and secure payments for all digital & physical transactions.
In the digital era, telecoms operators are faced with the Sun Tzu challenge: “knowing oneself and knowing the other”, If they do, then “In hundred battles they will face no danger”. Telcos, depending on the maturity of the operations and the local market trends, must move the needle along their core operating model which should be their primary focus, and in order to become digital facilitators, they should about both their strengths and weaknesses as well as OTTs’ in order to provide a operator-led stack of digital services bundling services with USPs.
About the authors:
Tariq Ashraf is a telecoms strategy and marketing expert. Tariq has a 14+ year-long strategy and marketing experience working with tier-1 telecoms operators covering both corporate and business strategy in Europe, North America, North Africa and the GCC region.
Wifak Ghaddab is a telecoms marketing expert with 12 years of experience in marketing strategy and operations within 4 different countries across the MENA.