Telcos at the crossroads

Telcos at the crossroads

Tony Poulos  |   November 20, 2012
Telecom Asia
Every industry sector and every business, at some stage or another, reaches a crossroads where a direction has to be taken and that decision could be critical in its survival. The telecom industry has had to navigate a number of crossroads in its relatively brief history, but you get the feeling that decisions need to be made now that will have major impact on business viability, even survival, over the next few years.
 
There is no need to reiterate what we read every day in the press. Cash flows are being curtailed due to increasing OTT competition, voice is now a commodity, data monetization is patchy, technology demands have to be met to remain competitive, spectrum is limited and expensive, etc. etc. It's almost all doom and gloom, and it is an image that is being projected to the investment markets that are steering well clear and embracing the new wunderkinds of social networking, internet business and mobile advertising.
 
Customers have the perception that the communications provider is a wealthy, bloated, money-grabbing machine that doesn't deserve their loyalty and actually owes them a favor by them just being a customer. Their expectations of customer service levels from telcos exceeds what they expect from their banks, travel companies, online merchants and government, but why?
  
Can't take it anymore
 
They have all become spoilt is why. With the era of deregulation came competition and that bought benefits in the form of lower service costs, subsidized handsets, unlimited usage, low-cost or even free VoIP and messaging on demand. Things are hardly desperate yet, but they could get a lot worse before they get better.
 
What the industry needs is an epiphany - a sudden realization that things have to change and they have to change pretty damn quickly. There lies the core problem - telcos, by their very DNA structure, don't like change and they certainly don't like moving quickly. Apart from finance, it may be difficult to find a more risk-averse sector. Sure, they are happy to hand out handsets and SIM cards willy-nilly, but when it comes to investing in anything remotely risky or non-core, they suffer brain-freeze.
 
Every single expenditure item, either capex or opex, has to be justified by countless investigations, detailed business cases and drawn out selection processes. Often, by the time a decision is made, the business opportunity has passed. Even when this happens there is a sense of accomplishment at not having taken a risk in something that wouldn't have worked out anyway, instead of it being viewed as a missed opportunity that may have succeeded with the right level of support and investment.
 
CSPs today are not competing with each other; they are competing with digital service providers (DSPs) vying for their customer's hearts, loyalty and wallets. These "new kids on the block" are exactly that, they act like kids without a care in the world, no sense of danger and a "suck it and see" attitude.
 
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