Telcos must learn from digital natives

Telcos have a lot to learn from digital natives such as Google, Amazon and Uber, according to BearingPoint Asia Pacific senior representative Dr Chris Stephenson.

During an interview with Telecom Asia, Stephenson said traditional companies in many industries are under pressure to respond to digital native competitors or face being steamrolled.

“I think there has been a wake-up call to say how does a traditional business transform their thinking, transform their strategy and their business model to compete with a digital native. It’s very difficult because these guys have got a lot of momentum already and they’re moving very, very fast,” he said.

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 Digital disruption is coming

Telecoms operators in Asia Pacific are facing some of the same pressures from digital disruptors, Stephenson said, citing the example of Australian ISP group TPG’s entry into Singapore as the market’s fourth telco.

“They’re a real disruptor [in Australia]. They’ve managed to create a business model that really relies on deep discounting. It relies on operational efficiencies and disturbing what might be a fairly ordinary market-disturbing it and disrupting it,” he said.

“They’re going to move into places like Singapore. There is a lot of conjecture about whether Singapore needs another carrier, but certainly they’re creating a lot of waves.

Interviews with operators in the region have found that basically across the board, declines in the cost of building infrastructure are failing to compensate for growth in demand for services and the pressure to discount existing services due to competition, Stephenson said.

Operators are seeking to compensate for these pressures by introducing digital type products into their portfolios.

“A lot of them are now saying, “Well, maybe I can bring a digital streaming product, a TV or music or something like that, and combine it with some other products and get stickiness and get better margins,” but I suppose yes, that will work but is it enough?,” Stephenson said.

“I think the really innovative players in this space are saying, “Let’s create alliances and partnerships with people that aren’t traditionally in the CSP or that kind of marketplace to come up with something that’s quite unique and difficult to copy.”

From pipe to platform

One thing major digital disruptors have in common is that they are using more of a platform model than a traditional business-to-customer relationship, Stephenson said. Operators have an advantage in pursuing this model in that they often have millions of pre-existing customers.

To achieve this, operators will need a platform that’s a full ecosystem where all sorts of partners can participate, and then develop a range of offers in conjunction with these partners, in all sorts of industries such as banking and enterprise services via the IoT.

But operators are lacking the technology or resources to easily implement such a platform, Stephenson said. One solution is to slow down development of legacy technologies and solutions in order to concentrate on digital.

“That gives you an environment where you can try out the minimal viable product concepts quickly. You can fail fast. You can roll stuff out fast. You can kill it if it’s not working,” he said.

“Our current suggestion typically is if you actually want to get started, set up an innovation stack next to your current legacy and start to pipe your legacy products through the innovation stack, which is the platform, to get you to a point where you can be a lean startup kind of behavior to try and send all these things out.”  

This article first appeared on Telecom Asia December July 2018 Edition

 

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