The Telecom Digital Transformation
The digital communication landscape is changing. Modern telecommunication companies are currently faced with a decision — either stay put and hope for the market to shift, or take initiative by investing in digital transformation to convince their subscribers to stick with them.
While global communication and connectivity is expected to increase in the coming years, the way in which people communicate could negatively affect telcos’ overall profits.
The reason for this shift lies in the proliferation of “over the top” services. OTTs and their popularity among consumers leaves telco incumbents in a difficult position, as their profits are beginning to dwindle even as the world is becoming increasingly connected.
In this article, we’ll be providing insights into why telecom companies must consider this transformation, and how it can be facilitated in the current digital communication landscape.
How Is OTT Affecting The Telecom Industry?
OTT, or “over the top” providers, deliver audio, video, text, and other services to their users over an IP network. This means they can bypass traditional operator’s networks completely. Services such as Facebook, WhatsApp, Zoom, Spotify, and Netflix that are dominating the attention economy are prime examples of OTT providers.
The same voice, messaging, and video calls offered by traditional telcos are now being delivered by OTTs through more innovative, user-friendly, and convenient services. Not only that, they also provide these services at a fraction of the cost of telcos.
It’s true that OTTs and their users need telcos for the underlying digital infrastructure, meaning telecom companies are receiving some profit. However, OTTs often generate revenue through subscription fees and other costs.
OTTs are offering many of the same services that telcos traditionally provide. Telcos are losing subscribers to their own services to OTTs and therefore are losing revenue. This is what many refer to as the “cannibalization” of voice and messaging services by OTTs.
Nearly 4 billion social media users spend nearly 140 minutes each day on their accounts. A 2018 McKinsey & Company report found that almost 40% of all revenue that traditionally belonged to telcos were generated from messaging applications coming from OTTs.
The demand for digital communications services won’t be decreasing any time soon. How can the telecom industry remain relevant in a field that’s evolving away from their traditional services?
Paths Toward Progress
Instead of becoming overtaken by OTTs, telcos can address the competition head on by developing their own set of services through a comprehensive digital transformation. This means developing comparable or improved services to existing subscribers from scratch.
Telcos will need to source experienced professionals who know how to build these systems from the ground up. It’s important to outline key ideas and steps towards achieving this complicated transformation.
Architecture
Proper architecture sets the right digital context for all your communication services and strategies. Proprietary models such as the TwelveFactor App and its derivatives allow telcos to build reliable digital architectures.
Technology
Digital technologies allow telcos to address specific digital communications needs and issues once they are clearly defined. For example, cloud technology can be leveraged to improve understanding of consumer demand for companies looking to address their customers’ needs.
Delivery Cycles
Observing delivery cycles and constantly monitoring progress is crucial for facilitating successful digital transformations. Use analytical tools to track your progress and determine whether their technological solutions are striking chords with their subscribers and make changes as time goes on.
Evolving Into The Digital Age
Even while OTTs remain popular among users, telcos can invest in their own set of communication services to not only retain their subscribers but potentially entice new ones.
Improving your digital infrastructure with a focus on consumer data can help telcos make more informed decisions not only remain competitive, but thrive in the ever-changing digital world.
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