The earlier approach of network transformation needs to be replaced by customer-centric service transformation. With many new services, there will be short- to medium-term pain, which needs to be recognized, but successful operators are likely to embrace open innovation by creating a flexible network architecture that enables faster rollouts and provides access to third-party applications.
A joint survey by Frost & Sullivan and Telecom Asia of more than one hundred service providers in the region looked at how operators are bracing themselves for the next set of services that will boost revenues and subscriber numbers and the key challenges involved in this transformation.
A key objective of the survey was to gain a clearer picture of what the new-age operator will look like. With telcos pursing multiple technology network platforms and the proliferation of value-added, rich-media services, their spending choices for new infrastructure and architecture are getting tougher by the day. Are operators prepared for the new communications landscape and are their long-term investments positioning them for growth in the right areas‾
Although the definition of a next-generation telco varies based on the market context, each operator is transforming due to one or more of the following factors: convergence of media, devices and networks; increased competition for new subscribers from both existing and new players; and the maturation of traditional revenues.
The survey identified four key insights that validated the common refrains being heard in the telecom markets:
- It is about customer-centric services, and not networks
- Mobile broadband is for real
- The transformation roadmap is not free of operational potholes
- Next-gen telecom providers should borrow successful characteristics of Web 2.0 services and OTT players
The customer, not the infrastructure
'Convergence is placing increasing stress on operators to enrich the customer experience and incorporate a wide diversity of services to attract new consumers and retain existing customers,' said Jayesh Easwaramony, head of telecoms research at Frost & Sullivan Asia Pacific. He noted that complex services (network connectivity plus other content-based components) are now the norm rather than the exception.
The survey found that operators' top goals over the next year were acquiring more subscribers (40% said it was their main objective) and increasing revenues (34%), while 29% said increasing profitability was their top goal.
The top priority for over 36% of respondents was to increase ARPU through new value-added services. It is interesting to note that retaining existing subscribers was the second most important priority across operators, clearly showing the impact of high competitive pressure that is affecting even large growth markets like India. More than 30% of respondents said new loyalty, retention or churn management strategies would be their top priority to reach their key objectives. Another 27% said converged or bundled services were their No. 1 priority.
Just 13% of those surveyed said investment in OSS/BSS-related projects would be their top priority while 16% said aggressive pricing of basic services would be a key strategy - hopefully a clear signal that the fierce price wars are coming to an end in many markets.
Easwaramony pointed out that the bundling of services provides the twin benefits of increasing subscriber acquisitions and decreasing churn.