The telecom industry has been a buzz in 2018, with near constant news on everything from the race to 5G, mergers and acquisitions, the rise of mobile commerce, apps, privacy and more. There is no question 2019 will continue to raise significant questions for the industry, as changes to the competitive landscape take shape, emerging technologies grow more prevalent and new market entrants threaten further disruption.
These questions include everything from how and when 5G deployment will become a reality, to whether eSIM will usher in a new era of finicky consumers who can pick and choose their operator at the click of a finger, to whether the consolidation of Telco companies will become the new normal, or more of an exception?
Here are my predictions as we look ahead:
The true value of 5G will be revealed
Operators have been in a constant battle with each other in the hope to have the best consumer 5G offerings. The harsh reality is that the roll-out of next generation capabilities will be lengthier than consumers expected, device manufacturers will be slow to adopt the standards, and a whole host of other challenges to 5G enthusiasm will arise.
For years, operators have been focusing on speed, coverage and price. In time, the 5G hype bubble will burst, revealing the realm of possibilities to focus their businesses on monetisation opportunities for new and emerging technologies.
Thanks to eSIM, operators will double-down on customer experience
A recent survey found that consumers were often put off switching carriers because of the complication and inconvenience it causes to do so. The eSIM will eliminate that, allowing users to switch carriers without getting a new SIM card.
After Apple let the cat out of the bag with the launch of dual-SIM iPhones for niche market, it is expected that Apple will make the eSIM globally available in 2019. The eSIM will become mainstream in 2019.
With the competition becoming available so readily to the consumer directly from their mobile device, operators will receive greater pressure to be competitive with pricing. Consumers will have the ability to choose between services and networks, and devices will have the intelligence to automatically and seamlessly switch to a network, either mobile or Wi-Fi, and accept an offer with the best performance and value at any moment in any location.
Although the arrival of the eSIM will be sure to weigh upon their stock valuations in the near term, it will create the opportunity for huge innovations in the long haul. This shift unlocks new ways to grab customers with pricing, packaging, offers, and experiences. Operators should see this as an opportunity, and embrace the time to innovate. It will create a virtuous cycle of revenue and experience that will drive improved stock performance for those willing to invest in change.
MVNOs or M&A? A battle of bears vs. bulls
The Network Bulls see the world quite differently, as is manifest by the robust M&A activity that has recently been headlining the Telco press. Rather than shedding network assets and going all-in as virtual operators, they’ve been doing exactly the opposite. Whether through aggressive mergers and acquisitions, or sizable infrastructure investment, the Network Bulls are betting their P&Ls, and their futures, on a belief that the network-experience itself is crucial to success.
For Network Bulls, the physical infrastructure itself is the differentiator necessary for unlocking customer value. From towers and cables to servers to content, large operators don’t just want to borrow the assets they’re dependent upon, they want to own them. These Bulls believe that the core functionality of the network is inseparable from customer experience. At the heart of their business case is a very simple truth - if the network’s too slow or too unreliable for a customer to do what they want; no amount of great customer experience will overcome their dissatisfaction.
They believe that only when you own every piece of the customer’s experience can you offer them precisely what it is they want. Yes, a good app experience is a bonus, however, it’s the speed, reliability and accessibility of the network, not to mention the content that can be piped through it, that forms the foundation upon which success will be built.
Which vision will rule the market? Will it be the virtual operator using agility and personalisation to offer compelling customer experiences or will it be the big carrier leveraging network investments to enable richer and more robust customer experiences? While it is unclear which side will become the industry norm, these duelling visions of customer experience mean that consumers will be the winners, no matter what.
2019 will see an acceleration of competing visions of the future of Telco.
MVNO’s – (Network Bears)
MVNO’s have evolved from their humble prepaid origins to become thriving operators in their own right. The Network Bears fundamental belief is that customer experience is the primary driver of loyalty and revenue. An MVNO’s business model is built on the principle that ownership of physical network infrastructure is irrelevant to success. For them, ownership of the front-end customer experience is where the real financial opportunity is located. Towers and networks are important, but only as a means for ensuring reliable connectivity for their customers.
Integral to the business model of most MVNO’s is the ability to focus on niche markets or specialised offers. Freed from the costs of infrastructure maintenance, MVNOs can chart a path to profitability built entirely on customer experience and the loyalty that results. The outcome is a business model that is laser-focused on digital experience which they believe is ideally suited to today’s dynamic, rapidly evolving market.
Many large operators have joined this trend of customer-experience-first. The number of operator-backed digital sub-brands has been exploding around the globe. Which, for those Network Bears, is just one more proof-point that, for consumers, the experience trumps the network right down to the bottom-line.
Traditional Telco operators – (Network Bulls)
The Traditional Telco operators are leading massive M&A efforts in order to build bigger vertically integrated network.
Jennifer Kyriakakis, co-founder, MATRIXX Software
Image Credit: O2