Innovation key in a shifting telecoms market

By Dean Young, Portfolio Manager: Connectivity Services at T-Systems in South Africa

The advent of cloud computing, the digital era and the growing phenomenon of ‘Bring Your Own Everything’ or BYOx has caused a dramatic shift in the telecommunications market. Consumers and business alike are demanding cheaper and more ubiquitous access to communication, both voice and data, however this and a number of other challenges have put enormous pressure on telcos to meet their customers’ needs and still remain profitable. Data instead of voice has become the top priority when it comes to revenue generation. As a result we are seeing significant consolidation within the telecoms space, with mergers and acquisitions becoming the order of the day. Competing on infrastructure is no longer a viable option, and as the market has shifted, so too has the focus from delivering products to offering services and solutions that add value for customers. Diversification and innovation are key in today’s shifting telecommunications market.

Cloud computing and mobility have both had a profound effect on the telecommunications space, driving insatiable demand for high speed, high quality and affordable data. In today’s world, everything is connected, digital and online, and data connectivity is the glue that holds this together. Many service providers now incorporate cloud offerings into their portfolio. However, companies like Google and Amazon that play mainly in the consumer space have created new demand – for single providers that offer a one-stop-shop type of service, and we are seeing this filter into the business market as well. Customers, both business and consumer, want to subscribe to a single aggregator that meets all of their communication and application needs.

This demand has resulted in traditional telecoms providers looking to diversify their offerings, in order to cater to the need for bundled solutions. No longer is telecommunications about who has the best infrastructure or the widest coverage, it has become about who can offer the most value to customers. Telcos today must not only provide voice but high-speed data, cloud services, mobility and more – effectively becoming a broker of services in order to take their value proposition to the next level. In addition, the need to rollout LTE, combined with limited available spectrum and licensing, is driving telecoms operators to buy up smaller providers specifically to access their LTE licensing. As a result we are beginning to see collaboration between fixed-line and mobile operators, as well as mergers and acquisitions cross the entire telecoms space.

On top of these changes, telcos are also looking at OTT services to push increasing volumes of content to users. While the majority of this activity is currently limited to the consumer space, businesses are exploring this option too particularly from an educational and marketing perspective. Convergence has truly become the way of the future, and telecoms providers must move further into the ICT space than ever – South Africa is following a global trend in this regard, as providers in North America and Europe have already made this move.

The traditional telco model is shifting from purely infrastructure-based to a hybrid service provider model with value added and bundled services. The only way for local service providers to remain relevant in this challenging and dynamic environment is to diversify their services and sell further up the value chain. Bundled offerings across fixed-line, mobile, voice, data and cloud-based solutions are the core components of a new portfolio of products. Innovation is critical to maintaining competitive edge and profitability.

 

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