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Customers don't care what telcos call themselves

04 Apr 2016
00:00
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Telecoms operators have been called a lot of things. Regulators prefer the term “communications service provider,” whereas in North America they have always been referred to as “carriers.” In this digital age, where every player craves relevance, new terms have started to appear: “digital operator,” “digital service provider,” and even “digital lifestyle provider” have all crept into the telecoms lexicon.

The term “digital” has become so overused that it is not always clear what it means – or is meant to mean – in the context of a telecoms operator. Essentially, it can be used to refer to two things: the internal structure, technologies, processes, and culture of the company or the (digital) services that the company provides. Ideally, the two go hand in hand.

All telecoms operators are, to a greater or lesser degree, embracing digital technologies, processes, and cultures. “Digital transformation” is currently a popular way to describe large-scale projects that seek to modernize, rationalize, and replace IT systems and processes. However, strategies to provide digital services are less clearly defined and less widely deployed. Most importantly, there is much less consensus about where the best opportunities lie for operators.

The term “digital lifestyle provider” seems to have been most enthusiastically embraced by network technology and solution vendors. Many of these companies would, in the past, have seen themselves as providers of value-added services and solutions. But as operators have shifted toward partnership models and capabilities that sit in the cloud, they are seeking to develop new lines of business in areas such as platforms, monetization, enablement, and orchestration.

So is “digital lifestyle provider” an achievable (or desirable) goal for telecoms operators?

“Lifestyle” services could include any of the services that we use in our everyday life outside of work. Telecoms operators are providing some entertainment services, such as TV and music, to their customers and are seeking to expand into new areas such as smart home and the Internet of Things. But the idea that they can become “digital lifestyle providers” – given that consumers are quite happy to obtain their digital lifestyle services from a huge number of different providers – seems wildly ambitious. Enabling these services is a more realistic aspiration

One telecoms operator that has spent considerable time considering the sort of company it wants to be is Telefonica. After disbanding its subsidiary Telefonica Digital two years ago, Telefonica set itself the ambition of having digital infuse every aspect of its organization. But at the end of 2015 the operator reviewed its strategy and announced a new definition for what it wants to be: “We want to create, protect and boost connections in life so people can choose a world of unlimited possibilities. And by focusing on people, we aspire to become an Onlife Telco.”

“Onlife” does not, in itself, mean anything. But the term – developed by Telefonica with global advertising agency WPP – is presumably a play on the words “on” and “life.” “On” is interesting because has a similar meaning to “connected.” Consumers and enterprises increasingly value telecoms operators as companies that connect them to their preferred services, applications, and devices. But telecoms operators are reluctant to see their role limited to being connectivity providers for fear that connectivity alone is not enough to enable them to grow their revenues.

Given that telecoms operator strategies are starting to diverge, we should expect a fragmentation in terms of how they describe themselves. A number of telcos have already become mainstream providers of pay-TV services; others have emerged as ICT service providers. In any case, does it really matter how telecoms operators describe themselves, so long as they build strong, trusted brands?

The evidence to date is that customers do not really care what telecoms operators call themselves. In the UK most people talk about the network when they are referring to their mobile operator and their home phone or broadband provider when it comes to fixed telecoms.

It is arguably more important to the telecoms operators in terms of how they perceive themselves, their value, and how they may need to change in the future. Telefonica is one operator that clearly wants to drive change, both within its own organization and in its perception in the market. But whether it can settle on terminology that it is prepared to retain for a generation, and that is enough to change how it is seen by its employees and its customers, is another matter.

Mark Newman is chief research operator for operator strategies at Ovum. For more information visit www.ovum.com/

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