The telecommunications industry (Telco), has undergone radical changes due to the technological breakthroughs of the last two decades. And this is just the beginning: According to HBR, telecoms ranks second behind the media in the ranks of sectors that expect a massive digital disruption over the next 12 months. It represents an opportunity to rebuild their market positions, reinvent their business systems and create innovative offers for their customers.
Wavestone anticipates that 2020 will present new challenges and opportunities. The global industry will then have about 5.6 billion unique subscribers, 5.8 billion smartphones, and operator revenues will grow from $ 1.1 trillion in 2015 to 1.2 trillion. These forecasts require telecom operators to plan and expand their operations and make infrastructure changes to solve the challenges of technological advances, as well as to work on their offerings. Indeed, the main activities that are calls and SMS continue to shrink, while data requests grow.
Below are the eight significant upheavals that await these companies:
1 – The core business of TelCos is reinventing to increase margins
Due to the increasing digitization of customers and business lines, new processes are to be considered throughout the value chain and the customer journey:
- a) Redesign of customer relationship management processes: the customer journey is digital, which means an increase in online sales, the growing importance of omnichannel, and the transformation of stores given these changes.
- b) Customer Support is the most common service that customers seek when they call their telecom call center. Not to mention that sometimes the problem persists even after the call. Digitization in customer support is a significant trend and one that can even build customer loyalty and save money.
- c) Better analysis and segmentation are needed throughout the purchasing process, but also afterward. It will reduce churn, retain customers, reduce acquisition costs and customer retention (reduction of 15% of churn possible with the right algorithms). The better analysis also allows the identification of bad payers, who can also be segmented (churn reduction of 90% for this possible population). Finally, the judicious use of data would allow the creation of a better network design through the analysis of displacements.
- d) The ” best-effort ” is no longer relevant; these analyzes will enable the ideation of segmentation possible to improve the margins of the core business. One potential point of differentiation: privacy & security as we see further.
For these 4 points, Artificial Intelligence and Machine Learning will be critical technologies that will provide better services to customers. The blockchain also. Adjacencies become strategic keys Nevertheless, and despite the best efforts, the market is saturated and mature. ARPU and RPO are down. Continuing to do the same things faster and cheaper is not a way to survive long-term: no matter the size of the dinosaur, the asteroid is already on the road. If nothing changes in terms of group strategy, growth and cash flow will remain in decline due to the growth of appetite for data that require significant investments, even as customers seek the least package expensive in a market close to 100% saturation.
Diversification is, therefore, necessary, but intelligently, using the forces already in place. These adjacencies can take the form of new financial services, IT services, or media to find new revenue channels.
To correctly manage these adjacency projects, you must:
- a) A well-defined ” value proposition” and a bright ” customer segment” based on standardized technologies and existing services and platforms.
- b) Develop platform-based solutions in disruptive technology areas close to the core business but with additional growth potential: add value from existing assets and competitive advantages.
- c) Minimize production and delivery costs by using automated and low touch processes.
- d) Improve sales by starting with an underlying service portfolio to gain ground, then develop one or two solutions with demonstrable benefits. The company should also seize synergies with its core businesses in areas such as local presence, customer access, and industry knowledge.
Opportunities like ” Network-as-a-service,” especially around IoT are starting to emerge. They are to seize.
Partnerships, new entrants and M & A
Nevertheless, if the capabilities of the company alone are not enough, it must go in search of new strategies. They often take the form of an alliance to offer an existing service (subscriptions Netflix, Deezer, Spotify, Amazon Premium), which allows changing the perception of prices. These examples are not a coincidence: mobile content and video are some of the most significant use cases for the coming years with the imminent installation of 5G worldwide, which has led to many purchases (e.g., AT & T and HBO in the US)
The emergence of new players controlling devices (Apple), cloud resources (Amazon), user information flows (Google), and technologies (Qualcomm, ARM) threatens to engulf the telecom supply chain. Outflows or declines of many established players and partners (e.g., Nokia, RIM) place the ecosystem of How Telecom Industry Works in a weaker bargaining position across the digital service supply chain. A striking example is Facebook’s Voyageur and Internet.org projects, which share these designs for free. Which makes the war for talent even harder but facilitates adjacencies.
Become blurred as the modes of content diffusion gradually evolve towards digital (Twitter and the NFL, Facebook and the Bundesliga) upsetting the behavior and expectations of customers. Added to the threat of new entrants, this led to an unprecedented merger-acquisition wave.
Many actors have already begun to look at IoT through strategic investments. These are particularly new investments: telecom operators want to offer the possibility of managing the flow of data between connected devices, which means providing reliable processing of large volumes of sensor data in real-time, using minimal computing resources. The first step is to take part in new platforms like Actility that offer the ability to dynamically allocate and accelerate the processing of device-derived data to improve the quality of connections.
Talents and abilities are becoming scarce
Given the virtually exhausted computer / digital job market, many experts find that work in telecommunication companies is not ambitious enough and focuses on more new digital businesses, especially on Lean, Big projects. Data, partnership management, and monetization.
To overcome this, we, therefore, recommend the implementation of continuous training around the themes of agility and learning and a reduction of emphasis on forecasting and planning. Indeed, it is no longer enough to recruit a group with various CVs – although this is a crucial first step. Leaders must also create teams where different talents, experiences, and perspectives are brought together to tackle complex issues.
Be that as it may, telecommunications companies will have no choice but to face a dilemma: automate some of their processes or starting to rotate, empowering employees to learn new skills. And knowledge and develop their careers.
Reorganization and modernization of IT
To properly implement this automation and simplification, we first recommend server deployment, load balancing, and service ticket management, which reduces costs and improves their ability to adjust capacity and volumes. Loading. Decentralization of power is also crucial, which will allow agility but also cross-selling. Moreover, virtualization, where necessary or necessary will be particularly important. These changes will reduce the TCO (Total Cost of Ownership).
These changes bring a lot of demand for protection from customers, primarily because of the many recent hacks. Network security has, therefore, become a significant priority for telecom operators and they face challenges with the emergence of new threats that are fueled by new technologies (IoT, IoE, M2M …). Thus, several operational and technical innovations are needed to meet customers’ expectations for complete system security, from the network to the device level. It leads to investments in specialized start-ups, often with millions of euros.
Customers have little or no information about various security efforts, which is an opportunity to help educate consumers about the benefits of secure network solutions, thereby gaining trust and loyalty.
Despite security efforts, the telecommunications industry faces many regulatory challenges due to the nature and complexity of the environment. Such regulatory trends will also continue in the years to come
Last year, the EU reduced all roaming charges, and the US repealed the Net Neutrality Act. The hottest topic is still the GDPR, which costs millions. However, not complying with it would bring even more headaches. All telecommunications companies must, therefore, protect the personal data of their customers, prevent them from falling into fraud, or exposed to unwanted advertisements.
5G will upset Business Models
These laws are not without positives: the 5G will bring so much data that knowing how to manage them will be a real asset. Many companies are already testing the technology, which will have a massive impact on the industry because it will change orders of magnitude concerning the speed and quantity of data transmitted, as well as the quality of the connection. It will, among other things, connect autonomous vehicles and drones to the internet, but will also allow significant advances in virtual reality and for connected objects (IoT). The 5G is not a boat to miss.
We need some technologies to avoid this:
1) Millimeter bands: New scattering frequency, but challenging to cross buildings and trees
2) The microcells and picocells: Base miniature stations having a role of a relay in the cities (possibility of construction on the premises because small but not viable except big cities)
3) Transformation of base stations ( Massive MIMO ): The probability of transmitting and receiving more data to many more people.
4) Beamforming: This will reduce the interference most efficiently possible thanks to the signal processing algorithms that allow a choreography of the sendings
5) Full duplex: Possibility to send and receive data (incoming/outgoing signal) on the same wave at the same time.