Telcos going digital is great – but not always for the telcos!

Written by on July 6, 2017 in Guest Blog with 0 Comments

digital worldTelecommunication providers all have a digital strategy and are assuming that evolving to digital will help them generate new revenues and capture market share. These same telcos have enabled over the top players (OTT) to access to their subscriber base by providing that last mile connectivity, through mobile and broadband services. These same telcos have also spent large amount of monies on new network technologies and bandwidth to those subscribers, opening up opportunities for new and existing OTT players, with no return on that investment to the telcos.

There is no doubt of the enormous market growth opportunity for digital products and services, however the current buying and selling process is challenged by fragmented and multiple suppliers leading to bilateral relationships which create delay and uncertainty. There is a significant and identifiable need for a new business model that empowers the procurement of digital products and services in an open, fair and transparent marketplace that addresses the current challenges in the value chain. What is needed is an open one-stop marketplace for digital products and services that ensures all members are treated equally and fairly.

We all remember Amazon’s marketplace, initially selling records and books from its own catalogue. It wasn’t long before the Amazon marketplace was offering multiple products from multiple sellers through a single one-stop-shop. This provided the consumer with a single order and single bill and opened up more opportunities for the sellers who joined this marketplace. What’s in it for Amazon? It gets a revenue share for these transactions and has subsequently become a global leader through providing a single marketplace for multiple products across multiple sectors.

Another major change is the way consumer are going to want to buy these products and services. Consumers will want flexibility and not lock-in, that is, more pay-per-use and less commitment to long term contracts.

Before you go embarking on a transformation program towards digital, it is important you know where you are going. The only certain statement you can make about digital is that “it is not analogue”. I see many organisations not having a clear vision and strategy and assuming change will make them digital. This is not always the case. For your customers, the experience could be very positive and you could be seen as digitally mature; despite the underlying infrastructure being “legacy”. Customers aren’t interested in technology just in their experience and, in this case, their perception of their telco is positive. So, digital maturity is dependent on the ‘view’ and perspective at different points in the value chain.

If change doesn’t happen then telcos are going to end up being a “carrier for service providers”.

For example – Why is Apple sitting on so much money?  Is it waiting for eSIM so it can become the ‘service’ provider to customer and the current mobile operators end up being ‘wholesale’ IP pipes thus leaving companies like Apple owning the customer relationship and hence the upsell of digital/VAS services?

Infrastructure vendors are also going to see sales of new devices and software decline as the telcos move to a commoditised world, driven by virtualisations and the slowdown of telcos growing their networks (footprint and bandwidth) if the revenue from that last mile is being eaten away by OTT players.

The Telco’s are likely to start saying – Why should I spend millions building better and bigger networks if regulation (e.g. net neutrality) and the unwillingness of OTT player to contribute their revenues to those Telco’s giving them access to the consumer.

Telco’s are well placed to enable a “Digital Marketplace”, however this means they need to change and adopt new business models. Telco’s also need their partner’s change the way they sell products and services to them.

Tomorrow’s Digital Telco needs a value chain of partners and supplier that are able to add value by mitigating the Telco’s risk and not expecting the Telco to own the complete supply chain of digital products and service.

Telco should drive towards the creation of a digital eco-system building a compelling portfolio across a value chain of seller and partners, which allows them to realise revenue from their infrastructure. To empower this the Telco’s will need to “open” their minds to new ways of generating revenue. In this case the Telco would look to its partners to build this “eco-system for them, or deliver this in an “As a Service” model. Once deployed it then needs to look at those successful “marketplaces” and enable sellers and partner to join in a favourable manner (i.e. freely) and drive new revenues such as:

  • Running the marketplace.
  • Hosting seller’s applications.
  • A revenue share of sellers and partners’ products and service delivered to buyers.
  • Upselling Telco Enterprise Architecture (OSS/BSS/IT) software capability to the sellers and partners, such as Billing, Fault Management, Assurance, etc.

Finally, to make this change you need to ensure you are ready to change, that is; it is not just about technology, it’s about the right mind-set, people and management, having the right governance and willingness to change in place.

This article was written by Clive Deakin and was first published on LinkedIn.

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