While communications service providers (CSPs) are seeing revenues from voice and SMS services dwindle, because of the increasing trend of social media, the unparalleled growth of mobile broadband in SA is keeping many alive.
This is the opinion of Rob van den Dam, global lead in telecoms at IBM, who cites research carried out by the company into consumers and how they prioritise their communications spend, in light of the current social media wave that has taken hold of SA.
If research into the global wave of social media and how it is being adopted locally is accurate, he says, SA's CSPs stand to face an uphill battle in terms of maintaining traditional revenues.
Van den Dam says social media in SA is ranked as the number one source of information and communication. "Many consumers have switched to over-the-top services like Google and Facebook as cheaper alternatives to traditional communication services in both mature and emerging markets.
"South Africans [under 25] regard social networking as the number one communication channel, while in countries like Sweden, social networking is ranked as the second means of communication in this age group."
Because consumers are more aware now than ever before of the options that have opened up to them thanks to the rise of social media, CSPs are under pressure to drive new means of getting customers to take up their services - while many have not kept pace and are falling by the wayside.
Mobile solutions
However, he notes, one of the "brightest spots" in the industry toward the end of the decade was the phenomenal growth of mobile broadband, facilitated by the rollout of High Speed Packet Access networks.
"This growth helped mitigate declines in overall revenues and driven in part by the increased penetration of smartphone devices like the 3G Apple iPhone."
Van den Dam notes mobile broadband growth is also paving the way for a second wave of fixed-mobile substitution, but this time in data connectivity services. "Overall, global mobile data traffic has more than doubled since 2008, with future growth forecast at 130% year to year."
He says capacity on current 3G networks is likely to be exhausted by the end of the year, increasing pressure on providers for additional investment in network capacity and to fast-track the evolution of 4G services, as data demand is also increasing.
Driving opportunity
Despite the rise of social media and the uptake it has seen in SA, says Van den Dam, operators should see it as an opportunity rather than a thorn in their sides.
With customer loyalty currently "very low", social media gives operators the opportunity to drive loyalty to a new level, he says.
"[Service providers] can use social media to engage and answer customer questions to create the customer experience and increase customer loyalty. Consumers are increasingly less interested in CSP Web sites, traditional advertising, e-mails, promotional offers and retail stores. Rather, they prefer to proactively exchange information about CSPs with friends and family, or gather it via Internet search or social media sites."
He says, ultimately, service providers need to question the continued spending levels for traditional channels and find ways to exploit social networks without destroying their neutrality.
"To understand the consumer, CSPs should effectively collect customer data from a variety of sources - including social media - and channel it in the right direction."
He says most of the CSPs IBM engaged with during a recent study identified customer-centric objectives as their organisation's top priority. "Providing a greater customer experience, every time, is vital for limiting churn, building loyalty, and for competing against over-the-top players, including Google, Apple, Facebook, WhatsApp and Skype.
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