Telecom Evolution 

Telecom Evolution

|TELECOM EVOLUTION

The coming telecommunication age will have a profound effect on how services are supplied and the nature of the user community. The Telecom 4.0 world will accelerate the move from a technology driven environment where value is derived from the network, to one in which income from network independent applications and services is the real currency. Traditional players will need to adapt to a market where competition comes not only from other operators but also from a plethora of niche players nimble enough to capitalise on market opportunities. Those Telcos that are unable to reinvent themselves as services integrators will find themselves marginalised or acquired.

The coming telecommunication age will have a profound effect on how services are supplied and the nature of the user community. The Telecom 4.0 world will accelerate the move from a technology driven environment where value is derived from the network, to one in which income from network independent applications and services is the real currency. Traditional players will need to adapt to a market where competition comes not only from other operators but also from a plethora of niche players nimble enough to capitalise on market opportunities. Those Telcos that are unable to reinvent themselves as services integrators will find themselves marginalised or acquired.

The cycle half-life of Telecommunications waves has decreased dramatically. The first era lasted from the dawn of the industry until the 1980s, when technology advances and market deregulation forced limited competition in the market traditional players. In the Telecom 1.0 era, prices and margins were high, competition effectively non-existent and customer service much less important.

The Telecom 2.0 wave of deregulation was enabled and advanced by a technology led mobility revolution. Controlled competition combined with market and price regulation enabled network expansion and mobility adoption, assuring good margins for all competitors. The business was primarily about connectivity (to users or service providers). The network operator retained the customer relationship – which it only shared reluctantly and for profit. Margins stayed high and customer service less than adequate.

The emergence of advanced (3G) cellular technology and all IP networks have provided the platform for the next phase in telecom innovation. The emergence and spread of consumer focused smart devices and telco independent applications stores around 2007 have enabled developers and alternate operators to bypass the traditional network providers and reach the market directly. In the current Telecom 3.0 world, the customer relationship is reversed – user relationships are linked to the kind of applications they use. The network connection or connections (wireline / wireless) are merely the enabling pipe to facilitate applications of which voice is only one. Price pressure and leakage of high value traffic to “over the top” services is accelerating. The depressive effect on Telco margins has been dramatic, notwithstanding the very significant and continuing expansion in user base.

In the coming Telecom 4.0 world, innovators will leverage the advances in network, device and cloud technology to offer many new services. Security of all data will be the key base requirement and the trend to “over the top” solutions / services will become the norm, further eroding traditional telco revenue streams and margins. Customers will no longer accept being locked into long term (Telco) relationships or being treated as a commodity. Data analytics will replace network control as the USP of the Telco. The successful Telcos will be those that understand the data and adopt a service integration approach, collaborating with nominal competitors to satisfy customer demand. Those that fail to heed and act on these changes can expect to be marginalised if they survive at all.