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.