Skip to Content
Author's profile photo Former Member

Telcos: Three Steps into the future

The fact can no longer be denied– in the
digital world, Telcos have fallen behind. Service providers are no longer in
the driver’s seat of value creation and the way people consume
telecommunications services has changed fundamentally. Voice and message
communication alone is no longer driving revenue and the SMS- era for text
messaging is long gone. OTT-players have filled a gap that Telcos hadn’t even
noticed existed and now the race begins: what are they going to do? Where are
they headed? Who will be the first to succeed and outperform its fellow
contestants? There are three points that become clear:

Number One: The deal is off the table

For the past years, it seemed like Telcos had a
secret pact with each other: sell basically the same, stick to selling rate
plans and most importantly, force customers into contracts for a minimum of 12
months, or better still 24 months. That agreement is no longer set in stone:
Earlier this year at CES Las Vegas, T-Mobile CEO John Legere surprised everyone
with an announcement that in the US, his company will absorb the
rival operator’s early contract termination penalty for customers switching to
T-Mobile. This bombshell obviously broke the sacred bond between Telcos. However
it looks as if T-Mobile’s strategy has paid off quickly and has since gained
significant market share. This means it won’t be long until overseas
organizations follow suit.

Number Two: The new center is the customer

The power has clearly shifted towards the
consumer. Today, consumers can get whatever they want from whoever gives it to them
first, which means Telcos need to step up and compete in order to outrun the
other players in the field. Furthermore, there are many competing for the
consumer’s attention: not only OTT-players but banks, retailers, consumer
product and software companies. Telcos have to move from being product centric
to being customer centric, with driving consumer satisfaction and loyalty as
their first objectives. Although it sounds obvious, it still entails a big
transformation for most established companies. All leading players have
accepted the shift towards the digital economy, as painful as it may be, since
it is the only option they have.

Number Three: The Digital Business

The transformation into a digital business
opens up a plethora of opportunities for Telcos to tap into new sources of
revenue, such as enabling the Cloud, M2M, Mobile Commerce and the Monetization
of Data. While transformation is difficult and a painful challenge, this is
where strong partners come in to play: they provide the expertise, customer
relationship and a footprint in the target markets to help enter an entirely
new business successfully. Transformation will not happen overnight and it’s
all too easy to make a hasty move in the wrong direction, but considering
options for too long would be fatal too. Therefore, finding the right partner
will be crucial.

In reflection, it does look like the
telecommunications industry on a whole is gearing towards a transformation
path, which is a good thing- not only for the industry itself but also for the
entire economy and most importantly, for us – the consumers. Telcos are on a
path of rebuilding their identity and redefining their role in the new ‘digitally
connected economy’ ecosystem and they are certainly taking the first steps in
the right direction. They should not however consider taking this path alone.
The right partner must have the appropriate credibility and market access to
drive the significant change Telcos need.

John Legere’s announcement at CES Las Vegas:

John Legere’s speech:

TMO US gains market share:

STL report on the Telcos’ chances:

Assigned Tags

      1 Comment
      You must be Logged on to comment or reply to a post.
      Author's profile photo Former Member
      Former Member

      Insightful... I have been thinking similarly for a few years. I used to use the term "Stuckiness" in the place of "Stickiness" which was the strategy of 12 and 24 month contracts... But what's the point the customer usually runs as soon as the contract is over as T-Mobile is finding out now that they have taken the "Stuckiness" out of the equation. Customer loyalty should be the real goal, and you do that by providing the products and services that meed your customer's needs, then wants.