While customers might once have been happy with basic telecoms services, nowadays they have a whole raft of new content and device demands that have expanded the role of the communications service provider (CSP) beyond all recognition.
In addition to competition from other CSPs, each telecoms operator also faces pressure from over the top (OTT) providers such as Google, Skype and Facebook, who bypass the CSP altogether. A traditional telco will find it a struggle to compete with platform providers such as Skype and Instagram (communications), Spotify and Netflix (entertainment), Vox and Buzzfeed (news) and Airbnb and Amazon (services).
Yet, while telecom business transformation is a must, CSPs that want to become digital service providers (DSPs) are faced with a number of challenges related to both software and processes. So, what issues must a CSP might address when evolving into a DSP?
The first challenge of digitization in telecom companies involves ditching the established industry mindset and culture completely.
CSPs undergoing telecom business transformation need to view themselves not just as a basic utility service, but as a full-scale digital player.
Acting as a channel for others has always been a money spinner for CSPs, particularly as demand for data – the core service – skyrocketed. But, while the costs of providing ever faster data speeds, have risen, revenues have reached a plateau. Clearly, this affects profit margins, and should indicate to CSPs that they need to think of themselves more as platforms and less as communications channels.
Human intervention will always be needed to configure the rules, check recommendations from the system, carry out fine tuning, and so on.
But the second challenge is connected with the fact that, as digitization in telecom companies progresses, humans won’t be able to carry out increasingly complex actions on their own.
In telecom business transformation, some processes will need to be wholly digitized and a number of business processes will need to be adapted to allow humans and machines to work together. This will undoubtedly cause a degree of reluctance among some members of staff, who will be concerned that they will be obsolete when the machines “take over”. In fact, there’s nothing further from the truth. All that will change will be their responsibilities.
Thirdly, digitization in telecom companies means that organizations will need to extract and analyze data so that they know what services they are best placed to provide.
One of the cultural shifts they will need to undergo will include working closely with other services, for example, intelligent or smart homes; remote controlled thermostats, entry cameras, doorbells and voice assistants are all on their way to a home near you.
Providers of smart home services expect consumers to have a robust Wi-Fi network, so CSPs will need to partner with or buy companies to provide the extra bandwidth needed.
Is there a threat to CSPs from other areas?
Google has tried to provide gigabit broadband and TV services over fiber optic cables to people’s homes in a small but increasing number of locations in the US, via Google Fiber. But it has struggled for a number of reasons, not least that it is very expensive. In fact, Time Magazine claimed that, rather than wanting to actually operate as an ISP, Google was hoping to shame the major cable operators into improving their own services so that Google searches could be carried out more quickly.
CSPs will need to find their position in the new digital world order, and to do that they may need to partner with or buy companies who have the expertise that they need to evolve and keep up with the market demands arising from digitization in telecom services. They may struggle at first, but for those which succeed the rewards will be significant.