If you are CIO of a telecommunications company, you should be worried. If you are not worried, your investors should be really worried.
But why?
Cashflows are strong. Internet ARPU (average revenue per user) is growing, although voice ARPUs are in decline. Device sales are stronger than ever. Mobile banking and machine-to-machine revenue are witnessing double-digit growth. All signs are good. So why worry?
Here's a big reason: Where is the next killer telecom service that will advance your company?
Britain's iconic phone booths are relegated to history. Telecom CIOs must come up with the next generation of innovations or they could face a similar fate. (Source: Charles & Clint, Flickr)
It is not about innovation or being ahead of the curve. It is about continuing to be in the curve. OTT -- over-the-top -- service providers are getting popular with customers. Initially, their services were complementary to telecoms, but they're now gaining the status of substitutes. The disruptive business models of OTT will soon hit telecom revenue streams. At first this represented opportunity lost, curtailing telecoms' growth at a time telecoms eyed services in areas dominated by Internet players. Now, however, telecoms will encounter revenue loss, resulting in reductions in both the top and bottom lines.
Typical telecom territory is being reduced to a channel for voice and Internet plans. That’s it. No music, no apps, not even SMS. This is what will happen to the ubiquitously present telecom networks. It will happen earlier in North America and Europe; it will take more time in Africa and Asia. Eventually, telecom networks will be reduced to dumb pipes. Consequently, telecoms' billions of investment dollars will see lower and lower returns each year.
What happened? After all, these were the very companies that put a phone in every home and in the hands of every person, young and old. These businesses introduced us to the Internet and email on the go. These were the new-economy companies that created jobs for thousands. They were at the forefront of technology. They were.
Telecoms seemed to take their clients for granted. Consider customer loyalty. People have their favorite restaurants; people have their favorite phones. But did you ever hear anyone saying she loves her cellular company? Probably not. What you no doubt have heard are people complaining of variable network quality, billing errors, excessive roaming charges, rigid contracts, and impersonal service. That makes it easier for others to compete and lure away customers.
Telecoms are still here, of course. They are strong and can stay relevant if they make the right moves. A lot depends on those CIOs and what's on their minds right now.
@Kiran: Yes with free apps which acts over VoIP is something which has affected badly towards the telecom industry but its not something which they can blame to others since when you have fee things you tend to try it and try to stick to it as much as possible.
@Keveend: Exactly and many service providers have reached the top just because of their promises they gave at the beginning. Surely they will not be at the top for long if they still behave the same by just promising without delivering.
I agree. They should give the customers what they promise. You get really frustrated when the Internet speeds are low. It takes like an hour to buffer a YouTube video even.
@Keveend: Political interference is ruining everything. I feel they should be kept aside and let the business world handle it. Then the income will be high as well as the service too will be good.
I'm from Sri Lanka. It's pretty much the same story here. Everyone has a mobile phone but here they have this habit of changing their numbers frequently. That is because you can buy as much as per paid sims as you want.
How is everything alright as long as they give us connectivity to the world? They charge their customers very substantial amounts of money, their services aren't always satisfactory and they have over the top roaming charges. My father was employed in Malaysia for a while. Skype wasn't invented then. We used to talk to him over the phone. We got huge bills due to our use of the IDD facility but now with the invention of Skype and other similar software it's all free.
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