The growth of digital is causing tremendous pain for telecommunications operators and wireless carriers. Fierce competition is seeing consumers increasingly turning to giants such as Google and Apple for broadband, voice and messaging services.
Digital introduces a whole new deal in which customers are no longer “owned” but shared across multiple providers, including the abovementioned behemoths, over-the-top players such as WhatsApp, Skype and Netflix, and emerging alternatives in the form of short-range, public hotspot and white-label networks.
As a result of all of this, operators’ traditional business model — based on revenue from voice and messaging — is under assault. Industry analyst Ovum predicts that more than US$80bn of operator revenues came to be at risk in 2015 alone.
To thrive in the digital era, operators must re-imagine their core businesses and turn disruption to their advantage. Historically, they’ve enabled the economy via communications. Now they have the opportunity to once again become the enabler at the centre of the digital economy, by providing the networks for other companies to deliver digital services and customer experiences. In this way, traditional telecoms operators can themselves evolve into true integrated digital service providers (IDSPs) that are ideally positioned to compete in the disruptive digital arena.
The transformation begins with them updating their core technologies to digital, and leveraging existing assets (strong, trusted brands, unique locality, established billing relationships, robust networks and high volumes of unique customer and usage data).
Through this they will be able to compete more effectively. They must then begin operating as a foundational platform for their own and third-party digital services. IDSPs, an example of the “platform (r)evolution” trend, use digital technologies (social, mobile, analytics and Internet of things) to build a business architecture and set of services that enable other businesses to develop and deploy the products and solutions needed to drive their own digital strategies.
There are several routes for operators to become IDSPs that can compete as disruptors:
New partnerships. Research from Accenture shows that companies can open up higher rates of growth by collaborating across industry sectors in digitally contestable markets, in order to serve rapidly evolving customer needs and expectations. In doing so, IDSPs can provide a palette of apps to deliver outcomes that customers want. For example, Vodafone subscribers in 10 countries transfer money and pay bills on their mobile phones with its M-Pesa app. Locally, operators have launched industry products such as insurance in this way.
Expand into new businesses. In a recent Accenture study, nearly a third of consumers said they trust network operators most out of all service providers with their personal data. IDSPs have an opportunity to build on this trust by establishing separate security- or privacy-related businesses across networks, as more and more critical industry components are getting connected. IDSPs can also embed security in devices that they sell and service.
Monetise specific sets of data in action. Provided they meet regulations in their operating geographies, IDSPs can analyse customer and usage data for real-time insights that other businesses can leverage to develop location-based services, product-use innovations or personalised mobile advertising. IDSPs can also use the data as a bargaining chip when forming relationships with new business partners.
Enable Internet of things (IoT) integration. IDSPs can provide or enable innovative sets of services that leverage IoT devices and sensors. For example, they could function as digital home integrators, tying disparate IoT devices together over a home Wi-Fi or broadband network, and creating (or enabling a manufacturer to create) innovative services.
By positioning themselves in the middle of the digital economy with a fully transformed digital core as IDSPs, operators will be able to compete as disruptors and win against the digital giants. Examples abound globally and locally, and operators have an opportunity to get on board with an increasing body of services in coming months and years:
- Consumer home. Deliver home security, home automation or other home hub services as Comcast is doing with its Xfinity Home business.
- Logistics. Add intelligence to the movement of products (such as a GPS fleet tracking system), to improve service levels, reduce inventory, leverage capital assets and enhance sustainability.
- Media. Provide a content platform to serve on-demand video, television and music services.
- Insurance. Use telematics to modify underwriting assumptions with real-time information, thus personalising insurance premiums.
- Pharmaceutical. Help patients adhere to medical treatment regimens to improve healthcare efficacy and reduce costs.
- Retail. Use customer preferences and actions to enable location-based marketing and customised pricing. Macy’s and Apple use in-store beacons to provide personalised offers directly to customers through mobile devices.
Over the next months and years, telecommunications customers will experience first-hand the plays by traditional voice and data service providers to transform themselves with new digital services, either launched in standalone mode or in partnership with other complementing industry players. Exciting times lie ahead.
- De Wet Bisschoff is MD of Accenture Communications, Media and Technology for sub-Saharan Africa