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Telco Services Survival Strategy: Open, Focused, Collaborative

In our previous post we looked at the challenges of understanding the true end-user value in existing and new services. So what does this mean in practise for network operators looking to deploy new voice and messaging services?

Well, nobody really foresaw the rise of SMS, or why it was so compelling to users. We’ve learned our lessons, but it’s still hard to tell whether new services and features will be successful. Value analysis is difficult. Hence the Web 2.0 phenomenon of the eternal beta product: you’re never finished, because you’re always trialling and retiring features to learn where value lies. It’s not embarrassing to be less than omniscient about user needs, since they themselves don’t know how they’ll use tools that don’t exist yet.

So should you push feature innovation and differentiation? Or should you insist on cross-operator standardisation — raising all telco boats, but to the same level?

Our take would probably incline to the latter: the telecom industry is not about networks, but about competing distribution systems of communications services (of which networks are one essential component). The job of an operator is to make things operate. It doesn’t matter too much where the technology comes from. All person-to-person technologies imply a network effect of compatibility. Telecoms is about accellerating network effects. They make good guesses of what customers want and break the chicken-and-egg problem of new communications tools — who buys it when there’s nobody to talk to. Yes, you read it here first — telcos are chickens, and better for it too!

The Telco 2.0 twist, however, is that much of that commonality needs to be at the platform APIs of operators, an area they are under-investing in. APIs create option value: you aren’t tied into one internally created vision of user needs. So far it’s been seen as a problem of the CTO and CIO in creating a service architecture to expose the data and business processes of each operator to internal and external customers, which business development folk then hawk in a “chase the buck” game of partnership deals. Only BT’s Wholesale division has articulated anything like a complete business vision for a network platform independent of an in-house retail division.

(My personal belief is that the collection and exchange of presence and context data will become a big businesses, as the value of telephony moves from the call itself to getting the right timing, channel, participants and message.)

How should operators work with Internet IM providers? If much of the defensible value comes from the identity and billing relationship, then you enter into a co-operative mode. It’s in MSN or Yahoo!’s interest to have a revenue source from mobile users, and as long as you stick to the things you do well (provisioning, care, billing) everyone wins. You’re charging for access to the API to authenticate the user, because the value of that API is the business process you created to issue phone numbers, PINs, etc. — and the investment you have made in usability and inducing users to follow those processes. If you simply think you can hold the user captive without creating value, it won’t work.

There’s a lot of room for innovation as a platform provider. For example, a customer who has just signed up for a new messaging service, and who calls up for support, could immediately be routed to a tier 2 specialist in messaging for a superb customer experience, rather than wasting time explaining their problem to a tier 1 generalist who doesn’t understand.

Lastly, the least glamorous parts of the value proposition can be the most attractive as businesses. Whilst recently skimming through various MySpace pages, I couldn’t help but notice the huge amounts of commercial messaging spam appearing in people’s public message areas. If you needed a mobile phone #, ideally attached to a SIM card, in order to comment on a public forum (even if entered via a PC), there’s value in that process. A telco provides the governance capability of sending negative feedback on those who abuse their access. (This also suggests a cross-media network-agnostic future for most operators, who derive little benefit from the risk of network capex.)

So we think the critical factors for adapting your voice and messaging strategy as an operator are:
* Enable open business platforms, which touch more than just network APIs but include all relevant customer data and workflows.
* Collaborate cross-industry in the distribution of new basic features that interoperate (e.g. the ability to deposit a voicemail into someone’s mailbox directly without their phone ringing).
* Stop worrying about building the ultimate voice and messaging product: it’s a world of niches, and partner accordingly.

Only by understanding the limitations of the Internet model, and how they themselves create value, can operators thrive in an all-IP world. Yet it would be surprising to see the project and product pipeline governance process of most operators pay any heed at all to these strategic imperatives. (We’re here to help — you know who to call.)

For more detailed analysis on what to do see the new ‘Voice & Messaging 2.0’ report and/or come to the Telco 2.0 Industry Brainstorm in March.

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