Opinion
Trends and Challenges 2021+: Five Recommendations for Action by Telecoms Providers
What was innovative yesterday is already obsolete by tomorrow.
This is more true now than ever in the era of the pandemic which, in many cases, intensifies and accelerates this process. The speed of development is and will always remain high in the telecommunications industry.
And here it is clear: COVID-19 is challenging for the industry, but it can also speed up innovations and advance suppliers’ competitive capabilities, especially in the e-commerce environment.
Where are the opportunities? And what matters most right now?
Particularly since the start of the pandemic, it is clear in most industries that constant change has become the “new normal.” For the telecoms industry, the most important question is how will communication service providers (CSPs) develop? Especially since many services – such as pure connectivity – are increasingly regarded as the norm, other players are advancing in sectors where value creation is the most intense, and cut-throat competition is increasing.
Against the backdrop of the ever-present goal of increasing revenues and market share, many CSPs have recognized that it’s time to become a true “real-time company.”
Digital commerce and time to market are two of the critical success factors here; while eroding customer contact and digital disruptors are among the greatest challenges.
One thing quickly becomes clear: In the first step, telecommunications companies need a future-oriented technological foundation to use their data profitably, increase earnings, and be able to generate added value.
Here are five recommendations for telcos that want to leave half-hearted projects behind and create a digital framework for the e-commerce environment of today and tomorrow.
1. Put the focus on the customer – now for real (eSIM sends its regards)
The exceptionally competitive fight for customers is not a new phenomenon.
Understanding the needs and desires of customer groups and individual users while maintaining customer contact is, therefore, more than simply part of the current agenda for telecommunications providers.
Currently, we are experiencing a rapid change in customer behavior, which requires new organizational and technological strategies.
Customer journeys are increasingly fragmented, new touchpoints arise, online and mobile dominate; previously, direct contact was a matter of course, now not much of this remains.
CSPs have to be in a position to adapt their digital business constantly to continuously remain competitive. This means rethinking and redesigning commercial offerings, employing new techniques, and integrating innovative services into portfolios. And internalizing the motto: “Experience is the new product!”
A good example of the eroding connection to the customer is the paradigm change triggered by eSIMs and the challenges that accompany them. These “embedded” SIM cards are permanently installed in devices and can be activated on the software side with various CSPs’ profiles and network information.
Device manufacturers and other providers thus have the opportunity to bundle hardware and communication services. Traditional CSPs are no longer involved, since they automatically lose direct customer contact and become “white label” suppliers.
Wherever possible, they will now seek mergers with global alliances to monetize communication services themselves once again. Additional sources of revenue could also open up in this segment, such as machines or household appliances with integrated wireless connectivity.
In every case, what’s important is to think of the customer in a future-oriented perspective and position oneself accordingly. Customer centricity – not just on paper.
2. Use Artificial intelligence and machine learning to cultivate customer loyalty – starting with predictive analytics
What, specifically, do customers want and need – in a particular situation or range of interests, at a particular time?
The more relevant and individual the information about new products, services, and offerings is, the greater the chances to acquire customers and gain their loyalty on the long term; also, to do so against the backdrop of comparison and opinion portals and publicly visible evaluations by customers.
The prerequisite is targeted marketing, which is oriented with the appropriate granularity to customers’ requirements. Through appropriate customer channels, storage, and enrichment of customer data in compliance with data privacy regulations in a state-of-the-art Customer Relationship Management (CRM) system, information can be provided quickly and used for personalized marketing campaigns.
Here, the handling of technical innovations such as artificial intelligence (AI) and machine learning (ML) becomes an economic success factor for telecommunications companies.
Predictive analytics is already being deployed – a technique that helps analyze internal and external data, detect patterns, and anticipate future events. Important keywords: Regression analysis, multi-variable statistics, pattern comparison, predictive modeling, and forecasting.
There is also enormous potential for AI and ML in other areas of application.
Thus, within the future of the telecoms sector, scenarios can be supported involving automatic detection of network problems or the identification of accounting fraud, for example.
Intelligent and self-learning systems do not just give telcos tools for understanding their customers better and talking to them in a more goal-oriented fashion in real time; they pave the way for an end-to-end digitalization of entire process chains. Therefore: it’s time to use AI and ML.
3. Bundling, 5G, IoT, cloud, and more: Detect opportunities and think up new business models
CSPs and digital content – that’s nothing new.
For example, Viacom has developed from a CSP into a media group since 1994, with the takeover of the majority of Paramount Pictures, and later with various acquisitions such as CBS and Dreamworks Studios. For more traditional CSPs, digital content is now becoming an increasingly important instrument for ensuring customer loyalty.
The pandemic has contributed to this, in that consumers have been staying home and spending a lot of time in front of screens. Streaming is the trend, while old-fashioned TV is not making any gains, or is even declining.
In the meantime, partnerships with Netflix, Amazon Prime, or Disney+ are no longer a differentiating characteristic; instead, they are now a commodity product that customers simply expect.
CSPs thus have to play a more active role in the market for existing and forward thinking digital services to gain or maintain market share. Lurking behind this are different technical possibilities, ranging from the use of an external service under a company’s own logo to joint systems.
Another interesting bundling example is currently under development: Some CSPs are considering offering energy services in the future – and vice-versa. The rates are calculated in similar fashion and based on comparable structures, which would mean that the IT work required would be reasonable.
Right now, 5G is still largely regarded and treated as a fast version of 4G, but telecommunications providers in corporate markets will therefore increasingly expand existing business models or develop new ones; for example, in healthcare, in education, or with regard to autonomous driving.
Low latency times of less than 1 ms as well as high and predictable network bandwidth up to 10 Gbit/s make this possible. In the private sector, 5G is also opening doors for new formats, such as cloud gaming via Google Stadia, GeForce Now, Vortex, and Magenta Gaming.
The former low-bandwidth networks can in the future be used for data transfers with low network profile, which includes the Internet of Things (IoT) sector.
The cloud market is also growing by leaps and bounds.
This is also being driven by the pandemic and more people working remotely, meaning that secure storage is more important now than ever. The market share of U.S. tech giants such as Amazon, Microsoft, and Google is estimated at 60 percent, and it seems that these providers have divided up the “cloud pie” among themselves.
Here, there is nevertheless still noteworthy potential for CSPs.
This is the case for telecommunications offerings that are associated with cloud services, such as customer-oriented offer bundles (telecommunications, data services, and IT systems integration) and added-value services such as application hosting.
With that in mind, the focus is also on individual services or partnerships with established providers – or arbitrary combinations of both. Most importantly, when the concern is new business models and sources of revenue: There are no holds barred!
4. Break the spell of digital disruptors
New players in the market are also increasing competitive pressure for telecommunications providers. Whereas these digital-native organizations have mastered all technologies, traditional telco providers frequently have difficulties with new approaches such as microservices architecture, event-controlled architecture, or programmable infrastructure.
An example: Thus far, telecommunications operators have not succeeded in generating much demand for their IoT offerings despite great interest. Instead, it is the non-orthodox market participants that have broken into the market.
In addition to favorable price positioning, this can frequently be traced back to simple transaction models (direct online purchasing). Many providers in this segment do not even have their own networks; they only sell products.
In these cases, the only things that can help telcos would be building their own top-quality solutions or acquire a successful disruptor, therefore entering the market quickly.
5. First digital transformation, then strategy change: Select the right sequence – and then move fast
To be able to deliver what modern, informed customers want, the telecommunications companies first have to dare to complete a true digital transformation.
This should happen prior to a strategy change – even if that is a prerequisite for a successful implementation. Many of the technology platforms that traditional telecommunications companies are using today are really showing their age. So it’s no wonder that IT costs are too high due to the complexity and redundancies of the legacy systems.
Monolithic architectures frequently form the inflexible backbone (back-end/legacy system) via which most transactions are handled (for example, payment traffic, order management, availability check, etc.).
In an environment that has to rely on agile development and microservices, these architectures impede digitalization. In these scenarios that have developed over time, the business models often have to orient themselves according to the IT possibilities, and not the other way around.
This is bad news for competitive capability, as success factors such as flexibility and time-to-market are by necessity left behind.
There are a lot of opportunities here to integrate legacy applications into state-of-the-art architectures. The most common solution is connection via APIs and connectors.
In this context, the so-called “decoupling” of the customer-oriented front end from the back-end layer becomes a central focus.
This is how providers can create personalized customer experiences, gain freedom to experiment, increase their agility, and scale more efficiently. Additional touchpoints with customers can thus be incorporated flexibly into the front end via APIs.
The goal is to realize significant cost reductions and optimize the essential KPIs: productivity, efficiency, quality, and time-to-market.
The year 2020 has shown us how quickly things can change and exactly how fast the digital transformation is proceeding.
Sooner rather than later, telecommunications companies have to transform themselves into digital service providers and E-Commerce players to stand up to and battle the “digital dragons.” This is a term that Gartner’s analysts have coined for companies that already have a functioning highly-scalable online business model; examples include Amazon Web Services and Alibaba.
Transparency instead of complexity, modularity with standards and open interfaces – this is how the digital transformation itself can be completed at high speed. It’s high time for telco providers to act.
About the authors
Steven Bailey, Chief Strategy Officer (CSO), AOE GmbH
Steven Bailey has many years of experience and expertise in the digital transformation of international companies and the development of their business and IT visions. As Chief Strategy Officer at AOE, he is responsible for business development and customer support in the digitalization and omnichannel E-Commerce strategies sector. A focal point of this work is the development of B2X transaction portals and mobile solutions that allow companies to map new business models and generate long-term revenue streams.
Uwe Ritter, Board of Directors, People at Work Systems AG
Uwe Ritter can look back on more than 35 years’ IT experience. After completing his computer science degree in Ulm in 1983, he worked for two years as a development engineer at Dornier System GmbH in Friedrichshafen. After that, he joined Nixdorf Computer AG in 1985; he remained there in international marketing for Unix systems and as Director of the international Targon support until 1990. From 1990 to 1996, he built up the technical marketing department at Oracle Deutschland GmbH. In 1996, Uwe Ritter was a founding member of Siebel Systems Central Europe. During his first years there, he was responsible for establishing sales support and marketing activities; then he took on various management positions in Siebel product marketing, and was finally responsible for Siebel’s entire technology basis as Executive Director. At the beginning of 2004, Uwe Ritter joined People at Work System AG as shareholder and chair. He is responsible for the areas of products, consulting, and development.
Feeling the Pinch?
The rising cost of living is difficult to avoid. April 2022 saw food prices increase by 6.7 per cent, the highest petrol prices on record and inflation rise to a staggering nine per cent. As millions of customers see their mobile tariffs soar, Ross Slogrove, UK country manager at cloud calling specialist Ringover reveals his advice for avoiding the price hike.
From July 1, 2022, Virgin Media will hit its 3 million customers with a price hike of 1.5 per cent. So, if a customer signed up to, let’s say, a £30-a-month tariff after May 5, 2022, they will pay an additional 45 pence each month. EE has already increased its prices by 2.7 per cent each year — or £11.30 if you have a £35-a-month contract — while O2, Three and Vodafone are all increasing by 2.5 per cent.
Pay-as-you-go prices are also taking a hit. From July 2022, call costs with Three will jump from 10p to 35p per minute. The cost of sending a text will double, affecting the 14 per cent of Brits that use a pre-pay mobile.
Given Brits are already battling with price hikes from every angle, these costs mount up. 45 per cent of UK households have at least two mobile phones, while according to Ofcom, just two per cent don’t have one at all. And then there’s the toll on businesses, with many still relying on mobile packages to keep employees connected.
Take a Hike
When a mobile contract comes to an end, it’s common for that tariff to be rolled onto a monthly rolling contract at the same price, even though the customer has paid off their handset. Research from Which? shows that customers who allow their mobile phone contracts to roll over without enquiring about better deals could lose up to £100 a year.
Ditching a contract mid-term and without penalties isn’t possible. However, consumers should evaluate whether their minimum contract period has ended if they’re considering switching. If a customer was on a standard 24-month contract that’s rolled on after this, they’re probably over-paying and need to negotiate a better deal.
Claiming that mobile phone networks overcharged UK businesses and consumers by £7.6 million last year, BillMonitor can provide analysis into the best mobile tariffs for your needs. Money Saving Expert has an easy-to-use price comparison tool, too.
Ditch the Big Guys
Some research into mobile virtual network operators (MVNOs) may also be worthwhile. Unlike the “Big Four” mobile network operators (MNOs) in the UK, MVNOs do not own their own wireless infrastructure, so use radio networks operated by EE, O2, Three and Vodafone. They include the likes of Giffgaff,Tesco Mobile and Sky.
In Which?’s Annual Mobile Network Survey of the best perceived mobile operators, O2, EE, Vodafone and Three were outperformed by MVNOs. Three fared poorly in the customer survey, receiving the lowest rating for network reliability with customers unimpressed by its technical support.
In contrast, virtual networks Smarty and iD, which both use Three’s infrastructure, were among the highest scorers in Which?’s table with customers applauding the networks’ value for money. Three of the highest scoring carriers in Which?’s survey were Giffgaff, Tesco and Sky, which all use O2’s infrastructure.
Head to the Cloud
Shopping around and switching providers will save consumers from the Big Four’s price hikes, but what about businesses? It may be best for them to ditch traditional telephony altogether.
There are currently 4.98 million business landline numbers in use, according to Ofcom figures. However, this is expected to drop below 2 million by 2024, from a high of 8 million in 2013. With the switch off of the public switched telephone network (PSTN) imminent, businesses that rely heavily on calling should consider an internet-based alternative.
Voice over Internet Protocol, or VoIP, is often a cheaper alternative to traditional telephony. While a traditional landline phone system sends voice communications via an analogue PBX system, VoIP phone systems transmit voice calls over the internet as data packets to bring voice and data capabilities together on a single network, eliminating the need for separate lines and providers for each.
A company using a VoIP service doesn’t need to work with multiple service providers for its office, mobile, and data services, IT support is reduced and hardware and installation needs are condensed. Furthermore, because users are no longer tied down to a particular country, address or phoneline for their communications, companies can save on the cost of international charges.
With the cost of living rising, price hikes are difficult to avoid. However, consumers must check in on their current mobile contracts or they risk losing money. For businesses, it’s time to move on from the landline and onto more cost-effective, future-proofed alternatives.
About Ringover
A leader in cloud communications, Ringover seamlessly combines unlimited calling, group messaging and video conferencing into one easy-to-use app. No expertise is needed to set up and integrates with your CRM or helpdesk tools. Within a few clicks, you’ve gained access to all the data you need to enhance your call centre or sales team’s performance and boost customer engagement.
Big Tech’s entry into telecoms is shaking up the industry
2021 was a huge year for tech giants and telecoms with Google, Verizon and most recently Amazon Web Services (AWS) all announcing plans to enter the telecoms space. The convergence of Big Tech telecoms is nothing new and each company has their own plans to disrupt the current landscape for the better. But is this disruption a dream or disaster for telcos? Here, Hamish White, CEO of digital-first telecom software provider Mobilise, navigates the benefits and drawbacks of the growing tech-telecom convergence.
Despite seeming similar, in many ways telecoms and Big Tech are polar opposites. While Big Tech tends to position itself at the forefront of innovation, paving the way for new upcoming capabilities, the telecoms industry tends to stick to its traditional but stable principles and ways of working. But could a unification be just what’s needed?
Better Together
Big Tech’s entry into telecoms has a wealth of potential for service providers (SPs) and their customers. Big Tech has what many providers are lacking — the resources, financial resources and culture to accelerate the pace of innovation of the telecoms industry by applying a Big Tech approach product development and improvement. Big Tech brings its own way of innovating to the market, resulting in quicker, better products and services that smaller providers can tap into too.
This has a positive knock-on effect on consumers, who ultimately receive a better experience from their SP. Through their advance data management techniques, Big Tech has the potential to gather, organise and present more customer data from various sources. The more a SP knows about its customer, the greater the level of personalisation they can offer. A greater level of personalisation leads to more relevant marketing, great customer satisfaction and increased customer lifetime value (CLV) for the SP. A win-win for both the SP and the customer.
Personalisation is complicated to deliver, often requiring significant investment on new technology and involvement from stakeholders across the business. As a result, smaller and medium-sized providers often cannot offer personalisation services on par with Big Tech or Tier 1 SPs, leaving them uncompetitive and missing out entirely on new opportunities.
With the help of Mobilise’s HERO platform, small and medium-sized SPs can now deliver personalisation on par with industry leaders. This is because they have access to all customer data needed for such services through one central location which also houses an orchestration layer which acts as a single entry point between interconnected systems in order to capture the data required for hyperpersonalisation.
Fair Share
Despite the potential benefits that Big Tech could bring to the telecoms market, there’s also shared concerns from mobile operators all over the world. SPs’ ongoing dissatisfaction with Big Tech’s lack of investment into the physical telecommunications infrastructure has been documented publicly.
In December 2021, the Financial Times published an open letter from Europe’s 13 biggest SPs addressing tech giants to demand a greater contribution to network investment. Why is this so crucial?
Data from Sandvine’s Global Internet Phenomena Report revealed the top six tech firms are generating over 56 per cent of global network traffic. Their entire business model and profitability relies on the infrastructure funded by SPs, but despite their successes, they’re still not contributing investment that is commensurate with the gains they’ve reaped.
What’s more, telecoms’ frustration with Big Tech’s lack of infrastructural investment is without even considering the latest layer of the problem: Big Tech’s attempt to launch products and services that directly compete with SPs.
A Market Monopoly
Several tech giants are developing or already have developed telecoms business areas. There’s concern from regulators, SPs and consumers that if Big Tech’s expansion continues, they could monopolise the entire technology sphere.
From a SP’s perspective, monopolisation has already begun. AWS and Microsoft have both acquired SAS-SM accreditation, required for the cloud deployment of one of telecoms’ latest development: eSIMs. eSIMs allow SPs to onboard subscribers remotely, virtually performing the traditional functions of a physical SIM card, directly provisioning a device over the internet.
While the intentions behind AWS and Microsoft’s acquisition of this accreditation are unclear now, it’s possibly linked to the development of eSIMs for Internet of Things (IoT) use cases covering sectors like manufacturing and supply chains, where their use improves operational efficiency.
While Big Tech is free to do this, and has the technology and resources to develop products quickly, this approach of cherry picking certain areas of the telecoms network could negatively affect the industry.
Double-Edged Sword
The implications of Big Tech’s lack of infrastructural investment is concerning. Currently, SPs are entirely responsible for the physical infrastructure that keeps our modern digital societies connected. But as of yet, Big Tech’s shown no interest in supporting this activity.
If Big Tech continues to only cherry pick certain elements of telecoms it wishes to enter, it could jeopardise the revenue SPs can make from their products and services, reducing investment availability, which could then place the critical infrastructure under threat.
There’s buzz from regulators and consumers around the impact of Big Tech’s potentially anti-competitive app store practices. In the US, in February 2022 the Senate passed the Open App Markets Act, which seeks to remove the control of Apple and Google over their app stores, creating a more accessible and diverse market. Similarly, in the EU, in October 2022 the Digital Markets Act will be adopted, banning practices used by Big Tech to gatekeep information and encourage competition.
While these steps promote consumer choice and a fair market, regulators also must consider how Big Tech’s partial entry into telecoms could have a detrimental impact on infrastructure development. The juxtaposition we see is that Big Tech could provide much needed innovation to the telecoms industry, but the infrastructure required to support this innovation won’t exist. Mobilise offers a suite of advisory services, including strategy and regulatory policy consultancy, to assist SPs and regulators in navigating these uncertain times and to see Big Tech as an opportunity rather than a threat.
The tech-telecom convergence will undoubtedly shake up the market. But more consideration needs to be taken to ensure infrastructure investment remains stable and the market remains competitive.
About Mobilise
Mobilise is a leading provider of SaaS solutions to the telecommunications industry. Focused on delivering highly engaging digital-first service propositions with excellent customer experience, Mobilise has a proven track record, deep industry knowledge and a team of specialists to support clients to building and executing transformational strategies.
Clients range from large corporate organisations with over 100,000 employees to small enterprises with under 20 employees. Mobilise has a deep knowledge of the telecoms business model and our experience includes working with over 40 service providers across eight markets for brands including Virgin, Dixon’s Carphone, Red Bull Mobile, Manx Telecom and Freenet.
A seamless UX enabler
In its Top 7 trends shaping digital transformation in 2022 report, Mulesoft claimed the 2020s as the era of seamless digital experiences, enabled by modular software design. All more often, consumers are expecting the same quality of user experience (UX) from their service provider (SP) as they receive from tech giants like Amazon and Meta. Here, Hamish White, founder and CEO of telecoms SaaS solution provider Mobilise explains how a composable business model and a modular API-led connectivity architecture is an SP’s best friend.
Organisations that have adopted innovation must not just be able to use it, but use it well enough to deliver a seamless digital UX. Consumers expect the same highly engaging experience from every single brand they interact with, so smaller SPs must offer a UX that’s on a par with tech giants to remain competitive and keep their customers happy.
Offering digital services is essential in our modern digital society. A consistent, intuitive user interface is a core differentiator for SPs seeking a competitive edge, contributing to a positive CX and ultimately preventing churn. According to PricewaterhouseCoopers’ Future of CX report, 32 per cent of all customers would stop doing business with a brand they once loved after just one bad experience. So, a positive UX right from the start is crucial.
APIs Enter the Chat
In today’s digital society, data is king. But despite the widespread recognition of its power, most organisations don’t have a comprehensive data strategy in place. According to Capgemini’s Master the customer experiencereport just 21 per cent of brands have an integrated, holistic view of all customer information. For the others, data is scattered in silos in incompatible formats, and in some cases it’s not even captured and stored. But APIs help to solve these issues.
API-led connectivity links data to applications through application programming interfaces (APIs). It decouples data from the business logic and experience layer to create functions specifically with CX in mind. APIs are developed for specific purposes, but once created, they are reusable. So, adopting an API-led connectivity model allows an organisation to create ecosystems of applications that are modular, purposeful and reusable, enabling businesses to operate with more agility.
Elevating CX
Implementing API integrations, or an orchestration layer, into an organization’s digital infrastructure supports digital CX in many ways. APIs enable the full integration of external systems and third-party services so that processes appear seamless. What is actually a sequence of several individual processes and triggers behind the scenes, enabled through applications from several vendors, can appear as single interaction to a customer.
For example, in telecoms, when onboarding a new customer through an in-app eSIM subscription, subscriber provisioning, stock management and Know Your Customer (KYC) is all handled by APIs. Yet for the customer, all that’s required is the tap of a button.
For smaller SPs, having the resources and expertise to successfully implementing a API-led digital architecture may seem an impossible task. Mobilise’s HERO is a digital BSS platform that enables SPs to deliver digital-first customer experience. Through its orchestration layer, which is fully compliant with the TM Forum Open API Specifications, there are over 60 APIs available to integrate into front and back-end systems, for functions including self-service, eSIM provisioning, payments, in-app push notifications, marketplace for cross selling, and user profiles maintenance.
Preventing churn, maintaining satisfied customers and elevating CX is essential to success in the ever more competitive telecoms space. Creating a consistent, intuitive digital ecosystem, powered by APIs gives SPs the ongoing flexibility to adapt and keep pace with innovation.
About Mobilise
Mobilise is a leading provider of SaaS solutions to the telecommunications industry. Focused on delivering highly engaging digital-first service propositions with excellent customer experience, Mobilise has a proven track record, deep industry knowledge and a team of specialists to support clients to building and executing transformational strategies.
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Ian Terblanche, Global Strategic Sales & Channel Director at Sigfox
