Friday, November 28, 2008

What is the biggest challenge Telcos currently face?

This was amswered as a part of a discussion in LinkedIn. http://www.linkedin.com/answers?viewQuestion=&questionID=373970&askerID=20831362&browseIdx=10&sik=1227942408141&goback=%2Easr_2_1227942408141&report%2Esuccess=vfLh7ZiQxNtkwQoO3efsNN1zAgQ8WXmCT24lKBBmlHq_pfcN7JydQUoVP_zdv4b8

The Biggest challenges faced by Telcos primarily are two in nature:

Faster technology cycles impacting corresponding business ROIs adversely
Creating stickiness thru personalization of products

New technologies enable users to do more at lesser price commoditizing the older technology. Earlier it was voice, text and some data that one was primarily dealing with. With the advent of 3G, 3.5G, Web 2.0 technologies voice and text have seen rapid commoditization. Not only are we talking of more advanced technology within the vertical, but we also have competing medium, most notably internet which is democratizing a lot of services.

In this kind of rapid technology cycle, Telcos face stand offs on the kind of technology that they would invest in and how much returns in future terms would they be expecting out of the those investments. Such calculations tend to go haywire when ever another disruptive technology takes over. Telcos may fail to make the returns they expected from a particular technology / product. In that kind of a scenario you would often find a large Telco suddenly becoming irrelevant because the business models are based on revenues and profits not technology cycles. Smaller and nimbler competitors bring in the new technology, create the market and gain dominance. Sometimes these new players get acquired by the market leader which provides them a suitable platform into the new technology.
Thus Technological obsolescence may impact RoIs adversely.

Content, Context and Services are the next big stories. Cumulatively we could call them personalization. Telcos that master these would be able to make business out of web 2.0, 3.0 and the others. However, that is easier said than done. It is difficult to ascertain consumer price elasticity for these services. It is difficult to understand the nature of revenue flows and the market potential and then there always is consumer inertia to move into these services. However with the eminent fragmentation of the market and commoditization of businesses, this is the essential piece of the jigsaw which will create the stickiness in consumption. Google, RIM Blackberry and Apple have made the first splash in this aspect and competition in here is set to amplify with Nokia and other following suit.

Saturday, November 15, 2008

Can the internet and social media change a B2C company’s group structure?

http://www.linkedin.com/groupAnswers?viewQuestionAndAnswers=&gid=102576&discussionID=445139&commentID=592971&goback=%2Ehom%2Eanh_102576#commentID_592971 .. in response to a question posted in Linked In

I think it already is.
The supply chain will be radically altered by Internet which is already bringing products and experiences directly to the end consumer. This eliminates a lot of the agents in the chain between the source and the consumer. Not only does it bring direct access, it also has direct bearings over the costs of channel management and the staffing. Hence a lot of companies today are paying more heed to their online presence. Presently these would only be a supporting tool, but in days to come it will become a delivery channel. What ever little remains in terms of physical deliveries is being outsourced.
This is just scratching the surface as many technology companies are already thinking of co opting and inventing with the consumer. Case in point is Dell. From the configuration of the product/services (as Dell does) to Payments (directly thru the internet) to after sales service, intenet is altering the nature of transactions
As far social media is concerned, C2C referrals are in. A consumer tends to believe another consumer more than the source. Social networking communities are gathering more clout as more and more consumer affiliate to them. Hence the developers and the businesses are seriously looking at engaging these communities. It is a much more focussed advertising media than anything else, where you are speaking directly to your target audience. Hence as you see, internet is chopping out the physical channels and social networking is redefining the role of marketing.
The direct advantage of this goes to the small and nimbler companies who find this focussed and cost effective medium to be more effective than blowing millions of dollars on channel, people and marketing as such. Currently the trend is catching in. So it is a supporting tool. However the next 4/5 years could see these mediums to beecome very relevant and substituting mainstream channels. (This substitution is also a function of the nature of your business). B2B also evolves more or less in the same manner.

Friday, November 14, 2008

Is Facebook the Future of Search?

http://www.time.com/time/business/article/0,8599,1710493,00.html?iid=sphere-inline-bottom --> Original Article

This article caught my eye for its provocative headline! For almost 9 years now, Google's pristine white search page has exemplied "search" for me. During my MBA days, i remember assignments and project reports that were dug out and googled. Back then and even now, Google is my saviour in terms of information i need. There was encarta and there was Brittanica encyclopaedia, but Google over ruled them all. Alongside came Wiki and the search for information found it panacea. No wonder Google is a lingo out there is the west, a connotation for information search.

So then, when i saw this headline, i was taken aback. Facebook to me is social networking. It is like a real ife experience on screen on internet. You meet freinds, you send messages, you declare your state of mind, you play, you share birthdays, you meet more people, you share photos, you share information. Prima facie, the impact of the statement never hit me. However a deeper thought on the issue made me look at it otherwise. Free world, free trade, free information, sharing are wholistically a democratization of knowledge sharing. No one screens it, we make it, we share it, it is for us. Web 2.0 and 3.0 are all about free availability of the information from consumers to consumers. As a consumer, i would much more believe a C2C source than a B2C source. In their lies the insight and genius. When you co discover with other people like you, you feel more affirmative, more reassured. I had trust a friend telling me to watch a movie because it is nice than trust all the trailers and promos of the movie. Facebook is delivering on this insight! Thus it is bridging the gap between social networking and information search. So much elementary!

This is an interesting insight and in the times to come i see a lot more of this happening and businesses come all over supporting this structure. Giving the consumer his right to referral and information is possibly going to be the next big thing. Watch this!

PS: Wiki does some bit of this thru open source content development but then it is more informative and academic than business/transactional...

Tuesday, November 11, 2008

Customer Loyalty program for telecom service providers

LinkedIn discussion on the topic of Customer Loyalty programmes by Telecom Service Providers (TSPs).
Increased competition and introduction of number portability will make it imperative for mobile service providers to introduce good customer loyalty programs.
http://www.linkedin.com/groupAnswers?viewQuestionAndAnswers=&gid=23013&discussionID=434160&commentID=550356&trk=discq_mor&goback=%2Esrp_1_1226460130686_in%2Eanh_23013#commentID_550356

Hi Ritu

I think Telecom Service Providers (TSPs) need to take a leaf out of your books (Credit Cards) on the Customer Loyalty Programmes.

However a few stumbling blocks to be kept in mind (these act as restriants currently):
1. Number Portability and Churn are devils that may and probably will ruin the ROI sheets of a lot of these TSPs.
2. Opening up of the licences can see a lot of investment in India by other TSPs (e.g. Etilasat, Telenor)
3. Hence the market will see further fragmentation
4. Given this, there is a reluctance from operators in investing in higher quantums in 2009
5. While operators reduce the capital expenditures by sharing infrastructure, uncertain economic conditions cast a doubt on returns over existing infrastructures.
6. 80% revenues of the TSPs comes from less than 20% of consumers in very small pockets. (Metros and major 10 towns)
7. Hence there is excess demand in cities and rural networks have huge white spaces.
8. Spectrum Limitations by the government donot allow operators to value sell higher services to the premium customers (the 80% revenue ones)
9. Higher Spectrum (3G) has very high entry cost which presently doesnot guarantee a break even in a medium term horizon.
10. Then there are other disruptive technologies such as VoIP which loom as a threat in the horizon.
11. The internal competition threatens to commoditize the voice and sms based revenues and most operators will need to value sell to maintain profitability.
12. However most operators are holding up their investments presently in face of toughening market and general conditions.

In all, the only gainer is the exchequer who holds the spectrum, the new technology licences and service taxes. The markets will gain in competition and users will benefit out of that but most of this will be discount deals or customer loyalty programme led. There wont be any major value lifting propositions.

Bottomline for you: While TSPs will take Credit Card Route to retain consumers, that wont really guarantee innovations and newer technology and services to consumers. Do let me know if i confused you with the discourse. Thanks Regards Manas