The following are some of the key issues we have observed are shaping the telecom industry right now.
We see innovation and a strong focus on customer needs driven product development as two of the key factors that will differentiate future winners and losers in the telecom sector.
- Move away from fixed and mobile voice services and commoditised data
The telecom industry globally is undergoing a massive transition. Customer’s reliance and the use of traditional fixed voice, as well as mobile voice is in decline. Data services usage, while going up, is suffering from rapid price declines, the consequences of which are minimal opportunities to generate revenue growth via the sales of traditional telecom products.
In such an environment it’s critical to enable one’s telecom organisation to expand revenue generating potential by offering various “augmented services‟ which are outside of the traditional “core telecom product offerings‟. In corporate environments, such augmented offerings are often very complex to sell, require long-term customer engagement, strategic understanding of customer environments and an ability to demonstrate ROI to customers at different levels within the customer’s organisation. From the customer’s perspective however, such services are perceived as value-adding, differentiable and more strategic to the business, when compared to traditional core telecom products. Most carriers struggle to operate in this ‘solutions space’ but going forward it will become a critical component of their success.
- Battle around the content
Given data connectivity is getting cheaper and cheaper, the cost of providing data services including new 5G networks keeps falling. In addition, more competition means that the end-customer prices keep declining. Pure connectivity is capturing an ever-smaller proportion of the information technology value chain, while content is capturing more. To prosper in this environment, carriers need to embrace creative revenue share models and partnerships with content providers.
- Network security
As the importance of the network grows (we would argue it is already on par with electricity) telecom carriers play a critical role in managing the performance and security of these network assets. Customers will begin to expect and demand more proactive protection from the entire Internet value chain. Carriers will be required to support these expectations with a range of technical and operational innovations. The desire for greater security may be an upside for carriers, if they embrace this trend and develop service offerings to match the customer needs – this may even include various FinTech offerings.
- Internet of Things (IoT)
IoT is seen as a positive force by the carriers due to the huge amount of data that connected IoT devices generate. Becoming an IoT connectivity service provider and offering Machine to Machine (M2M) devices can open up new streams of revenue for the telcos. Gartner predicts that there will be nearly 20 billion devices connected to the IoT by 2020, and that the IoT product and service suppliers value chain wil be $300 billion in revenue globally. Carriers who lead with product innovation in this space will have a clear first mover advantage.
In the next article we will explore these further…