Can Telcos Compete with Apple, Google, Microsoft or Amazon?

Posted by Gayane on Nov 30, 2016 11:07:55 AM

As the Internet is increasingly taking over every aspect of our lives, there has been a shift in the world order of the telecom, media and technology industry. Giants like Apple, Google, Microsoft, and Amazon have stepped in, pushing aside telecoms and making it hard for them to survive. The use of mobile VoIP alone is projected to grow increasingly over the next several years to become the underlying technology for delivering voice over the infrastructure of telcos. This is the main reason why, according to the Federal Communications Commission, “the mobile wireless industry is not effectively competitive.”

Considering the developments in the marketplace, especially the rise of social messaging apps, one of the main challenges facing telecoms is the disruption caused by the above mentioned OTTs (over-the-top companies). Indeed, according to a study by EY, 36% of respondents see it as the number one issue facing their sector.

As giants like Google, Amazon, Microsoft, and Apple entrench the telecom sector, companies in the industry must find new ways to counter that massive threat. And even though this will most definitely be an uphill battle, it will nevertheless be possible with the following tactics.

 

  1.    Smart use of data

Smartphones and similar devices are able to capture ever-increasing amounts of data about consumers. One way to stay bolster up the competition is for telcos to capitalize on the data that flow through their networks. They can do this by eliminating unlimited and free data plans and instead switching to experience-based pricing.

Another way of monetizing this data is exploring opportunities with partners outside the industry, such as the health and wellness sector. The data collected as a result of monitoring many aspects of consumers’ health and physical activity can be leveraged to create new and better health-focused platforms that will advise individuals on how to improve their health. This way, telcos can not only act as distributors and integrators of data, but also provide health and wellness apps themselves.

 

  1.    Better network technologies

In order to maintain their core networking business and satisfy a new wave of customer demand, telcos must upgrade their network capabilities. Being among the first to develop the next generation technology (be it 4G and 5G down the road) is what will keep telcos in the race. By continually updating their next-generation networks, telecom companies will be able to provide a variety of advanced services. Moreover, companies must look for ways to expand their network offerings. As such, they should consider a value-based pricing and offer bundled services in order to increase average revenue per users. This will help telcos increase their margins, if only incrementally, and offer consumers better value for their money.

 

  1.    Long-term, integrated strategy

The big players that have disrupted the telecom industry have achieved success by having an integrated strategy around which they build all their future offerings, thereby contributing to the overall value of their platforms. Telcos, on the other hand, tend to think of each new service solely as a profitable revenue source, without giving much thought as to how it fits into their overall strategy and how it contributes to the total customer experience. The traditional focus on short-term profitability along with the conflicting priorities makes it difficult to achieve a consistent strategy. In order to be competitive with the OTTs, telecom companies must keep in mind the entire value chain and have a long-term, integrated strategy and have all of their service offerings aligned with that strategy in order to improve the customer experience.

 

  1.    Increased organizational agility

Agility is key when it comes to staying afloat in this cutthroat industry. OTT competitors are grabbing large chunks of market share mainly due to the inability of telecoms to update their business and operational support system infrastructures in time. According to a recent research by Tecnotree, 89% of those surveyed think that OTTs are capable of delivering a product within 1-6 months, whereas 30% think it would take telecoms a year to do the same. Thus, telcos must be quick and responsive in order to react to constantly evolving customer demands and bridge the gap between themselves and OTTs. They have to make sure to make their services available quickly enough in order not to lag behind their able competitors.

 

  1.    Collaboration with OTTs

While it is clear that OTT heavy hitters have disrupted the market, many people overlook the fact that these very disruptors simply cannot survive without telcos’ infrastructure of satellites and phone towers in order to give their customers access to data – the foundation of their services. Realizing this, telecom companies may opt for collaborating with the OTTs rather than competing with them. This will help them create new revenue streams.

Telecom companies have not been having the easiest time in the recent years with the industry changing at breakneck speed. There is fierce competition both within the industry and from the giant disruptors that are transforming telecommunications, as we know it. This increasing pressure means that telcos need to come up with fast, efficient, and well thought-out ways of staying in business. Although it requires drastic measures and out-of-the-box thinking, it is nevertheless possible with a clear new strategy and a willingness to adapt to the new norms.

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Topics: Blog