Business » Industry

Updated: July 3, 2011 18:08 IST

Top challenges of global telcos

D. Murali
print   ·   T  T  

One of the informative presentations at the recent ‘Amdocs InTouch Business Forum 2011’ in Singapore was of Jayesh Easwaramony, Vice President - ICT Practice in Frost & Sullivan (

Speaking to Business Line, after his presentation on the challenges before the telecom companies, Jayesh reminisced how, in the 1970s, the banking industry was revolutionised by the use of IT (information technology) where Walter B. Wriston, ex-Chairman of Citibank famously said, ‘Information about money is becoming as important as money itself.’ Similarly, information about subscribers will become as important as subscribers themselves, foresees Jayesh.

“IT’s role will be like an extended service enabler of the telco. It will play a multi-faceted role like being the service organisation that provides the customer experience-centric metrics, creates a service model-oriented platform based on scalable technology architectures, manages and operates and is the custodian of the overall user experience.” We continue our conversation over the email.

Excerpts from the interview.

What do you see as the top 2-3 challenges of global telcos?

The external or market-driven challenges for telcos are:

1) The reduction in voice revenues, on an average of 15 per cent in many markets either due to extreme competition or market maturity. This places a challenge to growth as voice still represents 71 per cent of revenues in APAC. Most operators in mature markets where penetration is above 100 per cent are facing revenue declines or flat revenue growth.

2) Although data services are growing rapidly by 15-25 per cent due to improved smartphone penetration, the data traffic over the next 5 years will increase 30 times. This creates huge pressure on monetisation and profitability of data services since new services will not be as profitable as the existing services.

3) The long-term business threat posed by over-the-top players and device players.

The internal challenges faced by telcos include:

1) Managing the customer experience: It is critical that telcos take a 360-degree approach that encompasses leveraging consumer insights to differentiate or customise network service quality improvement and customer service at all touch points, viz. retail, web, call centre, and flexibility of pricing options.

2) Increasing the business agility/ speed of service rollout: Operators struggle to roll out services as quickly as the web-based players; the cycle time reduction sometimes can be as big as doing what was done in months in weeks.

3) Organisational transformation: Many telco organisations need to transform internally to deal with these market forces and improve agility and become customer-centric. This could also mean changes to legacy infrastructure and IT systems to capture real-time information and improve efficiency.

You spoke of ‘nowism’ pervading consumer thinking. Can you elaborate on the relevance of nowism to telcos?

Nowism is the way consumers, especially the new generation, want to experience everything; it’s a lifestyle.

So, from a telco perspective, the key is how they can reorient their role to offer personalised lifestyle or life-changing services to the customer. Telcos need to invest in three ways. One, enable this ‘real-time now’ experience and monetise it. Two, use this to their advantage, by embedding real-time information in location-based services or mobile couponing etc., to help drive consumption of services and content and gain a percentage of the revenues from these transactions. And, three, they need to have a multi-device, multi-network strategy to gain from nowism like offer converged bundles that enable consumers to access content or Internet from a multitude of devices.

Looking at the growing demand for communications services, do telcos face constraints in capacity creation on the supply side?

There are theoretically no constraints apart from the availability of wireless spectrum. Although with every evolution, the spectral efficiency gains are reducing, LTE can provide the bandwidth required to serve the need on the radio side; we have seen trials of 50 Mbps+.

So you can solve the issue on the radio side, the constraint shifts to backhaul where you need more fibre. However, when we look at a demand growth of 30x in the next 5 years, operators will need smart management and look at a multi-pronged strategy, which includes traffic shaping, offload to wifi, and even smart pricing, so that they do not overprovision.

The key question is the economics of it. One can always add more sites and nodes to increase capacity. Especially in the developing markets, economics of fibre rollouts are not good; so wireless is the only option.

Are telcos discovering a great potential in offering life-changing services?

Telcos are actively evaluating it especially m-health services, mobile money, interactive TV, personalised content portals, and other productivity-based apps. The revenue from these services is albeit small but is definitely improving consumer stickiness.

Mobile finance is a classic example of a life-changing service launched by telcos. Mobile connections are 2.5 times the number of banking accounts in the world. Banking the unbanked has seen huge success through services like M-pesa in Kenya.

Access to finance is just one part of the overall ‘LEAPS’ possible by mobile. ‘LEAPS’ is defined as (Learning, Enablement, Access, Productivity and Social innovation). The social and economic potential of these services is high.

As these service multiply, the potential will be realised. I believe that cross-industry business models between telcos and other industries will be crucial in realising the potential of life-changing services. Telcos have to play more of an enabler role for others to become service providers.

What are the skills that telcos need to foster, to leverage real-time information for business value?

Telcos need to invest a lot more in understanding the consumer and developing strong insights. That’s the starting point. Then they need skills in co-creation of these services, user experience design, subscriber profiling and targeting, creation of service delivery platforms and marketing.


More In: Industry | Business

Commodity prices

Take a look at the prices of various commodities in Chennai here»






Recent Article in Industry

Ordinance boost: RCap eyes foreign funds in insurance ventures

Reliance Capital would begin "active discussions" for Japanese giant Nippon Life hiking its stake in RLIC to 49 % »