The telecoms value chain is fragmenting, as broadband and other digital services expand.
This is the warning from PricewaterhouseCoopers (PWC) Southern Africa communications lead, Johan van Huyssteen, who says telecoms operators need to retool and regroup to avoid losing out when the economy emerges from the recession.
He praises the resilience and adaptability shown by telecoms companies during the downturn but cautions that, as improvement gathers momentum, the real test for telecoms companies is only beginning.
“With broadband becoming ubiquitous and the growth of digital services exploding, the telecom value chain is rapidly fragmenting,” says Van Huyssteen. He adds that telecoms operators are losing out to application, content and device providers, which are better positioned to take advantage of new revenues and opportunities being created by the global broadband boom.
Heads above water
According to Van Huyssteen, if operators are to compete successfully in the new telecoms business environment, they need to establish customer ownership and understanding.
“Customer loyalty and brand trust is shifting away from service operators towards the device itself, as well as the online applications accessed through it,” he states. He believes, to turn the tide on trends, operators must reshape their business to put the customer first in all they do.
Van Huyssteen advises telecoms operators to monetise new services effectively. He says the rising penetration of both fixed and wireless broadband has enabled the introduction of many new online services, with the mobile handset becoming an indispensable converged lifestyle tool handling virtually everything people need.
“To capture the opportunities and revenues from newer and emerging services the best approach may be through collaborative revenue sharing partnerships, which will bring access to critical expertise and speed up the time to market,” he says.
data traffic that operators have to carry across their networks.”
Although not yet as prevalent in SA, Van Huyssteen says many consumers are moving towards fixed-price access plans globally. “With the increased broadband capacity in SA due to the landing of various undersea cables like Seacom, Eassy and WACS, broadband prices are decreasing, which may result in similar models going forward,” Van Huyssteen points out.
He says under this model, it may become increasingly difficult for operators to sustain economic returns for broadband data usage and going forward, depending on the evolution of the broadband market, operators may have to adopt a user-based charging model for mobile data.
Operational simplicity
According to Van Huyssteen, improving operational simplicity and efficiency is a major objective for many operators which have grown by consolidation and the use of “bolted-on” solutions to handle new services. “This has left many of them with highly complex and inefficient operating models.”
A key attribute for success both now and in the future, he says, will be greater organisational agility in order to respond to both internal challenges and those posed by the fierce competition from the application and device suppliers. “These have had some competitive advantage in recent years due their higher degree of ability and speed to market.”
Van Huyssteen says one critical step which many operators have yet to take is to remove customer, product and business intelligence from the various silos and centralise it on an enterprise-wide basis.
“By unifying all this intelligence into one central entity, the operators will benefit from greater efficiency, agility and responsiveness to external change, whether driven by customers, competitive dynamics or regulation,” he points out.
According to Van Huyssteen, with each technological advancement, operators face an exponential rise in the data traffic being carried across their networks which results in a corresponding decrease in the price they can charge customers for carrying each bit of data.
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