CSL CMO Mark Liversidge, a keynote speaker at the TM Forum's Management World Asia event in Singapore, said his biggest fear is that the industry will fall into the same trap as with 3G - launching new LTE services at the same or lower price than existing services.
With new technology, he pointed out that telcos have struggled to give consumers a strong value proposition that makes them part with additional cash. Devaluing new services and the investments made is a critical area the industry needs to address. "We have done a very effective job of supporting and sustaining the business model of device makers with the subsidy model," he said.
Consumers have been conditioned to expect handsets for free. He urged operators to move away from the subsidy model and base pricing on the fair value of a device.
Liversidge also stressed that the technology needs to be invisible. "It's not about the technology and it's not about the network infrastructure. It's about making the interaction between the network and the device as smooth and intuitive as possible."
TM Forum chairman Keith Willetts explained in his keynote that there are three responses to declining margins, with most telcos focused on cost cutting, which doesn't help grow the business and is no guarantee a firm will survive.
The second is to expand market share, often by making acquisitions. "But the one that really is going to propel you forward is innovation and new services and new ways of putting those services together," he said.
The tough thing for management today, he said, is to do all three simultaneously. "Doing one is not good enough. Cutting costs, if it stifles innovation and trashes customer service, you know where that's going to lead to. You have to do all three."
The window for operators to transform their operations is not open forever, he said. "We see the writing on the wall." (See “Preparing for a hard landing”) He said that while telcos know how to upgrade networks, which they've been doing for 100 years, what they're not good at is fundamentally changing the way the business works.
Moving to a single, flat IP network is only going to take part of the cost of your operations out if you leave your business running in the same way. "Most operators over the years have built stovepipes of networks, systems and processes. If you leave that method of operations in place, you've kept your old cost base and your old, slow ways of doing things."
He said operators have to move to a more highly automated, optimized way of running the business. "So getting rid of those operational stacks is very important."