With falling ARPU, increasing churn and slowing sub growth, Globe Telecom CEO and president Ernest Cu said the revenue model is shifting toward the long tail.
“Gone are the days when you develop a product like SMS that generates billions of pesos. Besides SMS and over-the-air loading, I haven’t see any big hit coming from us or the industry as a whole.
“There is no silver bullet. It’s a long, hard slog going forward. But we believe growth in mobile broadband is very strong, that’s why we’re building out both Wimax and 3G networks.”
Cu was speaking at a telecom conference organized by Frost & Sullivan in early November in Manila.
Since everyone has the basics down, he noted that it’s important to have targeted offerings for smaller segments of the population. “Besides the long-tail affect, it’s no longer a one-size-fits-all market.” He pointed to the need to customize to the user’s behavior and habits.
With over 20% of subscribers using multiple SIMs, he said the battle is no longer for new acquisitions. “New subs don’t directly translate into increased revenue.”
Because of the changing market dynamics, he said Globe has had to fine-tune its approach and is focusing more on quality acquisitions. “We no longer aggressively give away SIMs with a large embedded load, because it doesn’t give value to the service. People are just looking for the freebies that come with the SIM.”
He said Globe is also looking at strategies that stimulate use. “The battle now is which SIM to use, which is similar to choosing which credit card to use.”
In the consumer’s mind, it’s a commodity, so he said they have to focus on things like loyalty, understanding usage profiles and designing services that fit those profiles.
Looking at the LTE-Wimax debate, Cu said both technologies have a place, particularly in a country like the Philippines.