Telecommunications Goes All In On Digital

The telecommunications industry sits at the core of the digital revolution. It provides the communications infrastructure and services that connect the digital world. From mobile phones to long-haul data services, billions of individuals and businesses depend on the reliable and cost-effective equipment, network, and services provided by communications service providers (CSPs).

The telco industry is faced with declining revenues as its core businesses of voice and data are commoditized thanks to new market entrants such as WhatsApp, WeChat, Google, and others. The shift towards consolidation has continued and even accelerated. At the same time, customers across the board are demanding higher network reliability and bandwidth, forcing the carriers to spend billions on network upgrades and build-outs. These market pressures (combined with the fact that nearly everyone on the planet already has a phone and a service contract) mean carriers must choose among disrupting their current markets, responding to competitors creating disruption, or facing their own demise.

The clearest example of this is playing out in India. Reliance Jio has completely disrupted the Indian market – it’s gone from 0 to 100 million subscribers in six months. In response, Vodafone India is in the process of acquiring IDEA Cellular to expand its footprint in the market and establish economies of scale. At the same time, Reliance Communications has announced it will shut down.

The seismic shift of telecoms

With this type of scenario playing out in all markets, telcos are responding to industry disruption by simultaneously digitizing internal processes and building out new business models and revenue streams. The challenges are magnified because telcos run at scale – billions in revenue, millions of customers, and infrastructure that spans continents and oceans. As a result, they have sophisticated technical environments that allow them to manage their network equipment, data centers, workforces, and vehicle fleets, as well as all customer records, including pre- and post-paid service contracts, device provisioning, equipment maintenance, and billing records. The largest operators must handle all of this in markets with different rules on security, customer data privacy, currencies, and languages.

In response to these market pressures, CSPs are increasingly looking towards new business opportunities and operational models to help them manage both top- and bottom-line revenue.

Vodafone, for example, has shifted its focus from optimizing for ARPU (average revenue per user) to AMPU (average margin per user). By leveraging innovative technologies like Big Data, predictive analytics, and machine learning, the company is developing an understanding of the value of specific customers and products, helping it focus efforts on the highest-margin customers and services offerings. Others, like Verizon (which created Verizon Telematics after a series of acquisitions), are looking to offer fleet-management and other innovative IoT (Internet of Things) services. Verizon’s telematics business, for example, in October reported its organic IoT and telematics business grew 13% year-over-year, topping over US$ 220m in Q3 2017. While these examples may seem vastly different, they are both enabled by digital technologies.

The promise of digital

The telecommunications industry provides the digital backbone that innovative companies in other industries are leveraging to create value. At the same time, telcos have struggled to move beyond traditional service offerings, with only a handful of carriers entering 2018 with profitable new revenue streams. CSPs are now realizing they must look to innovative strategies that leverage emerging technologies more effectively for combined operational performance and revenue generation.

For example, CSPs are interested in IoT as both consumers of the technology and as purveyors of IoT solutions. IoT applications can help carriers efficiently manage and maintain everything from fleet vehicles to communications devices to network equipment. As telcos gain an understanding of the power of IoT, they are looking to offer IoT-as-a-Service to their enterprise customers, including data collection, secure communications, and data analytics offerings.

Similarly, blockchain is an emerging technology that cannot be overlooked. It can enable smart contracts that track the status, ownership, and repair history of communications devices and components throughout the supply chain. It can also efficiently track the billions of mobile customer devices, service contracts, and repair histories. This can directly drive better customer support and retention opportunities.

Analytics and machine learning also hold promise. They offer the ability to analyze the massive amounts of Big Data generated by customers, communications devices, repair fleets, and employee actions. From this data comes insights that can improve processes and provide insight into both optimized operational configurations and predictive maintenance and repair schedules. It can also provide value by understanding customer behavior and linking it directly to margin and profitability. This can lead to more effective and personalized products and support.

With the pace of change getting faster with each day, it’s important to focus on how these emerging technologies can solve business problems and improve customer engagement. Creating a customer-first culture, innovating using a design thinking framework, and finding strategic partners are key elements in building success for the future. The telecommunications industry is at the epicenter of the global digital transformation – now is the time for CSPs to take a leadership position for the future.

Learn how to bring new technologies and services together to power digital transformation by downloading The Future Services Sector: Connected Services for Continuous Delivery.


Internet of Things – Digitalist Magazine

Leave a Reply

Your email address will not be published. Required fields are marked *