To Reverse Declining Revenues, the Telco Industry Has to Think Outside the Box

A new report from independent global analyst firm Ovum showed that the telco industry may be experiencing declining revenues for the near future. Most of the decline will occur among telcos with significant exposure to Europe and other mature economies. The only significant growth is taking place within emerging markets, particularly China.

The findings come from a review of full-year KPIs of 23 of the world’s largest telcos, and the analyst firm expects revenues to slow down until at least 2018.

Ovum’s review may or may not come as a surprise to communications service providers (CSPs), which have already been in a constant dance to adapt to the latest technology and the latest competition. While Ovum’s findings seem grim, they should be embraced as an incentive to modernise and innovate their service offerings and customer focus.

The telco industry can look at two things in particular: finding the equilibrium that balances OTT contribution with their business models, and leveraging core competencies and rich data to operationally transform into a “customer company.”

1. Treat OTT players like inspiration, not competition.

The loss of revenues telcos are experiencing is, more often than not, blamed on OTT players. There’s no doubt that services like Apple, Google, Skype and WhatsApp are draining business from the industry, but that doesn’t mean that the answer is to aggressively defend market positions, or turn the other way and pretend they don’t exist.

Ovum’s telco operations analyst and report author Adaora Okeleke suggests using them as inspiration. “Telcos could feasibly play a role as service enablers, but they first need to adopt the leaner structures of OTT players such as Google,” she said in a statement. “By partnering with application developers and allowing them to use their secure platforms for service delivery, telcos will be able to drive innovation and reduce time-to-market.”

As my colleague, Steve Hateley, recently wrote, another option is to try new pricing structures that OTT players can’t give to customers. Some CSPs are experimenting with unlimited bundles, as opposed to reversed, limited bundles. There are also potential strategic alliances that could be built between CSPs and OTT providers that benefit everybody. After all, OTT players still depend on the network infrastructure that CSPs provide.

2. Create more efficient operations.

By invoking the “leaner structures” of Google, Okeleke acknowledges that there are inefficiencies in the current telco business model. But it doesn’t take too much digging to discover that this is a common sentiment.

As an example, many CSPs have more than one mediation and / or provisioning platform, which can end up producing redundancies and slow, error-filled service roll-outs. OSS consolidation may seem intimidating, but the rewards are worth it – by consolidating five systems into a single Comptel Convergent Mediation platform, for example, one CSP recently reduced operational costs by up to 30 percent.

Additionally, having a central solution for their increasing amount of network, service and other data allows CSPs to more effectively apply contextual intelligence to overcome their business challenges associated with better customer understanding.

The Future of Telco

There’s no doubt that things in the telecommunications industry are getting shaken up, but new technologies can offer a host of opportunities for CSPs just as old revenue and business models continue to decline. Comptel is working hard to provide those solutions to the telco industry, and we’re excited for the future, because those solutions mean a better experience for customers and better operations for CSPs.