Innovation on call? Why it's time for telcos to differentiate
With a fast-developing tech revolution forcing major changes on the telco industry, it’s a focus on customer experience that will determine whether or not the big incumbents can stay relevant.
A digital mindset runs deep in the telco industry, who have been at the forefront – or even the conduit for – many of the digital services that have reshaped our world. Ironically, many of these have in turn threatened or cannibalised incumbent telco revenue streams. ‘Over-the-top’ (OTT) services – such as WhatsApp, Skype, Google Hangouts and Viber – have mastered user-friendly interfaces and focused on delivering what mobile customers want – a free way to make calls and media-rich messaging.
What they lack, however, is the holistic customer proposition that telcos have. Or could have, if they seize the opportunity to make full use of their market position. The continuity of service that arises from monthly contracts and pay-as-you-go services gives an opportunity to develop brands that go well beyond the immediacy of a single-service UI, no matter how cute. The reach and breadth of telco services can be a foundational element in developing omnichannel brands that customers will be proud to be a part of. Unfortunately, telcos are some way off, as shown in our recent survey about customer attitudes to their providers:
Breaking free of this ‘utility’ label is going to take customer-focused transformation, alongside strategic development (or acquisition) of new capabilities. A complicating factor for today's telecom market is simply that consumer expectations are rapidly rising, and their behaviour is less and less predictable. As with many other sectors, telcos are finding that they cannot rely on historical data to understand customer behaviour and meet their needs. It’s not just expectations that are growing either: in a 2017 report, McKinsey suggested telco providers can expect an additional one billion middle-tier customers, mainly in emerging markets, by 2025. Unless telcos can adapt and meet the demands of their customers, the door remains open for OTT services to nibble off existing revenue streams. Or perhaps to straight-up eat the lot.
Meeting rising customer expectations
Much can be achieved by improving the basics, which also has to mean instilling a continual improvement mindset. But what are the basics in 2018? Developing more personalised experiences with data-led tech will help. This way, you’re improving the delivery of customer service – and how those customers feel about it. A recent Econsultancy report showed how, increasingly, consumers are turning to private channels to share info about brands and to interact with them. This trend has big implications for all kinds of branding and marketing but, for telcos in particular, the growing desire for personalised and conversational interaction is both threat and opportunity. In other words, if you and your competitors are seen as a utility… all the more reason to invest in and develop the kinds of interfaces that can show you have more to offer.
Diversifying and adding value
Acquiring other companies, or making strategic alliances, offer another way to provide added value. With such a central, if unloved, position in their customer’s lives, telcos are well-placed to partner with all types of content providers. For mobile networks especially, a long history of providing the platform for consumer access to third-party content and digital services ought to point the way: get serious about consumer data and personalised services, and find partners who share that ambition. Video subscription partnerships are leading the way – Ovum predicts that carrier-billed subscription video on demand (SVOD) revenues will hit $4.6bn in 2022, up from $0.8bn in 2017. But smart home services, IoT and personalised transportation are all on the rise.
The message is clear: telcos need to transform to survive, even if this means moving away from traditional business models. The key differentiator is customer experience. Those who build new services around the customer, unlocking data to provide seamless, personalised experiences, will find themselves best positioned for success. And to maintain that success, they will need to embrace constant change – and keep a look out for the next wave of disruption.
Editor's note: Find out more about the research here.
Interested in hearing industry leaders discuss subjects like this and sharing their use-cases? Attend the co-located IoT Tech Expo, Blockchain Expo, AI & Big Data Expo and Cyber Security & Cloud Expo World Series with upcoming events in Silicon Valley, London and Amsterdam and explore the future of enterprise technology.
- » Telefónica will use IBM’s blockchain to manage international calls
- » New Zealand has blocked a telco from using Huawei’s gear
- » Deutsche Telekom and Ericsson offer campus network solutions to industry customers
- » FCC puts rural broadband and texting regulation on Thanksgiving menu – but not everyone is happy
- » FCC permits SpaceX to launch additional 7,518 broadband satellites