Tag Archives: Great Telco Debate

A ‘brand’ view of the telecoms industry

Tim Pritchard, Kantar TNS at the Great Telco Debate

In the spirit of getting outside perspectives on the evolving telecoms market, Tim Pritchard from Kantar TNS, the WPP company which is the largest custom research business in the world, joined the Great Telco Debate on the role of telecoms in the digital economy. The brand perspective raised some very interesting and contradicting themes:

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  • The customer is changing. Traditional segmentation is no longer valid. ‘Generation CX’ (young, old, educated, working class – a slice of everyone) is the new reality and brands either listen and respond to customer feedback or risk becoming irrelevant.
  • It is widely accepted that customer loyalty drives profitable revenue growth. As such, customer experience (CX) is non-negotiable. But how does it fit in with today’s telecoms ‘product’ given the world of apps and over-the-top content consumption?
  • Corporate mission statements and brand values tend not to include the customer – you’ll be amazed how few companies, even those spending tens of millions each year on CX, have an agreed customer strategy. Get it written down and socialised across the business so that everyone from the janitor to the CEO knows it, and uses it to frame their work, their thinking, and their daily behaviour.
  • WPP’s 2017 Global BrandZ  shows that 8 of the world’s most valuable 50 brands are telcos. A further 15 are technology companies. You’ve had the power for a long time, but have you leveraged that power? I would say not.
  • Most Telcos have adopted NPS (Net Promoter System) yet their NPS scores are among the lowest of any industry. Virtual network providers often enter markets and quickly start to outperform the network owners, sometimes by as much as 20-30 NPS points. It shouldn’t be that easy – there is something clearly amiss among incumbent telcos to afford disruptor brands that opportunity to create true CX differentiation.
  • A focus on self-serve business models may help to save telcos money but, aside from the customer groups who actively prefer to self-serve, tend to harm rather than enhance brand building efforts.
  • The customer voice is vital, and capturing customer feedback on specific interactions (preferably in real-time) provides critical input for both tactical response and strategy development, as well as brand building

There are 3 basic rules:

  • Don’t let customer down, especially at critical times (i.e. the moments that really matter)
  • Deliver emotional and functional experiences that stimulate long-lasting feelings for the brand
  • Do things that reinforce brand choice and deliver services to customers in a personal, relevant, and needs-satisfying manner

In short, the role of brand is changing with the digital market. Telcos and tech companies benefit hugely from high brand valuations yet typically suffer from poor customer service, reflected in low NPS scores. Part of the challenge is identifying what role the telco plays in the lives of ‘Generation CX’. Identifying, enunciating and promoting a clear customer strategy is vital to re-positioning the telco for the coming generations.

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Learn to read the digital wind: A group CIO’s perspective of the state of the telecoms nation

Phil and ChrisOne of my highlights from the last Great Telco Debate was my informal interview with Phil Jordan, former Group CIO from Telefonica, about his 20 years in the telecoms industry. We talked about the highs and lows of the role, the relative role of the CIO, telco transformation and the state of the market. Here are some of the key topics and themes:

Highs and lows of a telco CIO

  • Phil believes the industry should be proud of being at the heart of building the digital economy and helping people run their digital lives
  • Almost every day for Phil had 4 highs and 5 lows: One of the lows is that telecoms is a much-maligned industry and ‘we’ do a great job of kicking the proverbial out of each other when we gather for an industry forum such as the Great Telco Debate. ‘We’ continually complain about how difficult it is and how poor ‘we’ are at servicing customer needs.
  • A low, especially recently, is how frustrating it can be getting the industry to shift gear. We are running out of time to remain relevant and at the centre of driving the digital revolution
  • The vast majority of time has been spent fighting internally with colleagues over the digital transformation of the organisation rather than fighting with competitors, dealing with regulators or building relationships with suppliers

The relative role of the CIO

  • Telcos were traditionally run by network people and IT was very much an afterthought, resulting in overly complex systems. According to Phil, very little architectural integrity exists in telcos. IT was a system of record but is now moving to be the differentiating factor with the network becoming the underlying product. The network is, of course, the biggest asset but it is not a source of differentiation. Phil suggest that the real differentiator is the leveraging of customer data. This is a huge transition for telcos to move from an engineering mentality to actually serving the customer. All this places huge technical, skills and leadership demands on the organisation.
  • It is still difficult to operate at a pace within the telcos but they are gradually realising the new innovation paradigm. From the CIO perspective, running the network with a handful of suppliers, looks easy. The IT side, on the other hand, has literally thousands of suppliers. And, the CTO is the one person in the telco who understands the network.  Everyone thinks they understand how IT works or should work!
  • The shift to ‘X as a service’, along with changing suppliers relationships, is indicative of the shift in balance between CTO and CIO.
  • There has been a degree of complacency with the telcos and their suppliers. There seems to have been a ‘hand break’ on virtualisation because it represents the end of an era for so many parties both in inside and outside of the telcos. “Virtualisation is turkeys voting for Christmas. Having said that, it isn’t a straight route. In sailing terms, it needs a bit of tacking and jibing across the direction of travel in order to get to the end destination – and we need to learn to read the wind!”
  • Telcos have been guilty of not understanding the innovation agenda and where it has been coming from.

Transforming the telco into a digital business

  • Transformation is difficult because it was easy running a telco when profits were high, competition low and everyone knew their place! The commercial and technical leadership used to “rock up and run the business”. All of a sudden there are new competitors, margins are shrinking and innovation is coming from other places. This requires a different kind of leadership.
  • It is noticeable how many telco executives come from management consultancy, finance or law whilst the hyper scale companies are led by tech entrepreneurs
  • According to Phil, the role of the CIO is very much one of being a story-teller and explaining how things work to the different LOBs, OPCOS and levels of management. The CIO, in many ways, has a better end-to-end understanding of the way the business runs. This is because the CIO can’t get away from everyone asking him how everything worked. So, in short, a major problem exists at the top of telcos not understanding the way the business runs and not really understanding the art of the possible when it comes to technology
  • Phil believes that transforming a major telco is 3-4-year job and “anyone who tells you it is less is lying or have never done it before”.

The state of the market

  • On the consumer side, the risk of being marginalised is real. The motion for the debate was that we will buy our broadband from Google and Amazon in the future. We probably won’t even buy broadband directly, but included in services from a variety of companies, including the OTTs.
  • On the business side, there are enormous possibilities as business models emerge that require connectivity. One of the problems is that telcos think they should be running Facebook. The problem is that the money is in B2B, IoT and AI.
  • We need to build offerings into the emerging digital business models. Wholesale was the poor relation because its margins were considerably lower that the highly profitable retail and business service. As those margins ‘head south’, wholesale may well look more attractive!
  • Telcos run the risk being relegated to mere utility bandwidth. Does this mean we will be part of a much smaller industry in the future? Phil believes there will be a consolidation around the connectivity market with the leveraging of data providing the new impetus, innovation, and support for the customer experience. If the telco can give control back to the customer regarding their data, there is potentially a different relationship. Having said that, there is still a major role for the telcos to play in the digital world, society, and lifestyle whatever the ecosystem and relative roles.

Phil is now launching his retail career at Sainsbury’s. He suspects that the wafer thin margins of the high street will have the focus most definitely on the usage of data and building a clearer understanding of the customer and their behaviour. Perhaps he will bring these lessons back into telco in the future!

You can watch the full interview  from the Great Telco Debate here

Thank you Phil for your insight, openness and humour. The industry will miss you.

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An Economist’s perspective on the future of telecoms

Getting external perspectives always adds to the richness of the Great Telco Debate.  Mark Gregory, Chief Economist at EY in London and I discussed the economic realities of telecoms and the digital economy going forward. Here are the key themes that emerged:

  • Measuring productivity in traditional economic terms has been challenged by the Gig economy and its processes: ubiquitous connectivity is destroying traditional value such as in the taxi, hotel or retail markets but is creating new value as different parties are brought together on the exploding number of platforms for consumer and business use
  • ‘Digital’ was formerly about hidden components such as semi-conductors, servers and 3D printing. It’s now all pervasive and, from an economist’s perspective, it’s about how all industries work, the potential impact of technology and where value is created
  • The potential ubiquity of ultra broadband diminishes the relative value of connectivity since scarcity tends to create value
  • Telecoms is in the group of General Purpose Technologies (GPT) as described by Robert Gordon in his assessment of the impact of IT on productivity. It may be a disproportionately important enabler in a more digital world, but it is nonetheless an enabler
  • Telecoms (broadband) should have a relatively bigger role going forward but that depends on how it evolves and how it allows other industries to evolve
  • Telecoms first of all has to deliver its role into the digital economy as an enabler. Moves into content delivery and other services have been only variously successful
  • Telecoms must think about how it can enable other value chains rather than dominate them by underpinning new processes and allowing new apps to flourish.
  • Politics is becoming extremely important for the future of telecoms. Regulators have to get out of the mindset of capping prices if they are going to allow the telecoms industry to evolve into its new digital economy support role. The telcos have to be able to benefit in terms of value capture if they are going to be incentivised to invest for the future.
  • 5G is what some of the financial community are most worried about in terms of another big chunk of investment being required.
  • Digital skills are important as automation shifts the focus for human roles in the digital economy
  • As we look at Brexit some sectors are clearly going to be impacted:
    • Financial services and Life Sciences because of the regulatory environment.
    • Automotive could be impacted but this is still not clear
    • Telecoms does not appear to be in the high impact category.
    • Data protection will be a major focus given European regulation.
    • The labour force is the one to keep an eye on – digital skills and a more flexible work force capable of coping with the the dynamics of a digital market will be vital.

Here is the full interview:

Keep November 29th 2018 free for the next Great Telco Debate. If you have topics you think are shaping the future of the industry and would like to contribute as an ‘expert witness’ please drop me a line.

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What did the Great Telco Debate learn from MWC?

The Great Telco Debate may not be on the scale of MWC, but it is a year long process of analysing the telecoms industry from every possible angle to shape the programme for the event. MWC was a great opportunity to reconsider the topics from 2016 and draw from market developments. Using last year’s debate titles, here are my take-aways from the Barcelona jamboree.

  • Telco’s role in the digital economy: The jury is still out on the extent to which telcos can exploit digital. There are plenty of autonomous car examples but little new revenue upside for telcos – emphasising the need for ‘ruthless’ simplification of the business (Cisco)
  • Customer experience: Telefonica’s 4th platform does look like a refreshingly new approach to acknowledging peoples’ data and giving something back to the customers as well as improving overall service levels
  • Softwarisation of the telco: This is probably the most important aspect of this wave of industry transformation and there was plenty of evidence from open source virtualisation and edge computingto cloud the picture (Amdocs, HPE, Huawei)
  • IOT: The industry is finally realising that massive connectivity revenues are not likely from IOT, but the real demand will come from supporting different industry ecosystems via platforms and overall integration (Ericsson, Cisco)
  • 5G: It was fascinating that most 5G initiated discussions dropped back to a more robust 4G delivery to support video as well as overall data needs (Ericsson, T-Mobile US ,Telstra)

There is no doubt that telcos are acknowledging the reality of innovation coming from ‘Interpreneurs’ and suppliers, as well as from apps developers driving the telco to be more open and accepting of ideas ‘not made here’ (Orange).

Ironically, given the endless pursuit of innovation, the re-launch of the classic Nokia 3310 drew a lot of attention. Harking back to simplicity, fewer messaging options (no apps) and longer battery life, certainly grabbed peoples’ attention. However, I wonder if those writing about the old classic were more represented by the older generation rather than the younger, smart-phone raised app enthusiasts!

In terms of discussion topics for the Great Telco Debate 2017, doubtless other themes will rise to the surface. Security is one obvious elephant in the room, as is the role of telco in industries such as automotive and healthcare. Also, Artificial Intelligence will worm its way into every aspect of the market and promises many changes in performance, behaviour and outcomes.

Whether you are from the telco, supplier or analyst side or indeed any other interested party, please get in touch if you have ideas you think should be incorporated into the Great Telco Debate on 30th November 2017. I look forward to seeing you there.

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Telcos and the big data-driven opportunity

The big data opportunity for telcos is not a new phenomenon. Vast amounts of data have been generated both internally and externally over generations of fixed and mobile services for consumer, business and partners alike. Over The Top (OTT) players have come into the market and built business models on the amalgamated analysis of data being generated at the customer end from their search, social media and apps store-based activities.

Telcos have missed an opportunity: they had some of the pieces of data in place to address some of these issues, but perhaps neither the telcos nor the market were ready for it. The emphasis for telcos was on internal measures and network-centric KPIs. The focus now has to switch to look at all their data generation points. They need to build a unified view of all activity to improve both the performance of the network as it comes under more and more pressure. But, most importantly, they need to underpin the new business models emerging which include OTT-based services as well as telco-centric ones. This is an inversing of the telco approach: Putting the customer and partners first, and using that insight to help shape the network to ensure all information flows satisfy all parties. That is not to say that the network is not critical. It is, but the emphasis should be on what the network is enabling rather than on the technology of the network itself.

Telcos must step back; gather network-centric, service-centric and customer-centric data into a suitable architecture. This will allow for the interrogation, validation, and extraction of value from the data for all stakeholders. ICT assets exist outside of the telcos themselves to allow this to happen, leveraging both the compute and storage capabilities of the cloud, as well as the algorithms and the data scientists who can work their magic with structured and unstructured data.

Data sources will include the core and edge of the network, the disparate customer, applications and content being consumed as well as the proliferation of social media and comment flowing around the use of broadband, applications and content in both personal and business lives.

The advent of the Internet of Things (IoT) adds another layer of complexity to the data puzzle, but it also allows the telcos to bring their sovereign national assets to bear in building the support mechanisms essential to help drive digital business transformation.

The need has also shifted from a retrospective requirement looking at old data records to a real-time need for insight into customers’ behaviour and the opportunity to adapt service offerings to suit every occasion. In this way, the leveraging of data becomes an essential component of the telco’s contribution to the ecosystem. Sharing some of the data with partners will doubtless become part of emerging offerings. As connectivity approaches ubiquity, it is the insight and knowledge of what is being done by people, households, businesses and ‘Things’ that becomes the fuel feeding the economic engine. As noted above, telcos missed the initial opportunity around data analytics. Let’s encourage all parties to work together to make sure that they don’t miss this next even more exciting wave.

Talend asked Lewis Insight to take a look at the telco and the data opportunity. The resultant independent paper can be found here.

The telco big data opportunity is one of the debate topics we will introduce to the Great Telco Debate in London on November 15th 2016. To find out more, see last year’s highlights and register visit www.telcodebate.com

 

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The growing influence of independent analysts

Having worked with many of the leading analyst firms over the last 3 decades, it has been fascinating to work as an independent over recent years. More and more independents seem to be springing up either from an analyst or vendor background. Most vendors and service providers are happy to invite ‘us’ alongside the well-represented analyst firms to their product and strategy events as well as to major industry conferences such as MWC and CES. Not surprisingly, given our industry experience and lack of corporate constraint, we are generally more outspoken than many of the representatives of the establishment.

Industry events provide opportunities for analyst colleagues from all sizes of organisation to meet. and share thoughts. Out of some such discussions came the project I have been running with Amdocs Network Solutions Division, where different independent analysts collaborate to produce high-level papers each covering a key topic within the sector. The client gets the benefit of working through a single point of contact, whilst the independent analysts get a streamlined route into a client and the broader market to present their thoughts and opinions. And, through this collaborative approach, our combined knowledge and experience (amounting to over a hundred analyst years), the quality is excellent. Luckily, the technology at our disposal also allows us to build flexible teams to address issues despite our very different backgrounds and locations.

Initial papers have been:

What’s the CTO’s role in the digital boardroom – Marc Dowd and Chris Lewis

App-aware networks vs. network-savvy apps – Dean Bubley and Chris Lewis

The evolving supply chain and its implications for the CTO – Tony Poulos and Chris Lewis

Why 5G won’t be enough – Caroline Gabriel and Chris Lewis

Future papers already in the pipeline include Telcos and the SME, and the impact of the OTTs on telco business and network models.

People are sceptical about the independence of analysts. Some firms, and indeed individuals, have been that ‘gun available for hire’ to promote particular companies or technologies. Obviously, someone has to pay the bills. In this project, the topics are agreed upfront but editorial control remains with the analysts. Since Amdocs Network Solutions Division is using the papers and accompanying videos to help raise their awareness at a high level with the world’s CSPs, there is no product pitch, no axe to grind – just an opportunity to provide high-level content to potential customers to make them think about the future of the telco and its role. So the client benefits from the papers and their thought-leadership, whilst analysts get a platform to demonstrate how they are able to compete in a market dominated by a few major players and a very long tail of small companies.

Whether you are an independent analyst with experience of the telco sector, or a company working in the telecoms industry, there might be an opportunity for us to work together. Take a look at the papers and think about topics that you think could be addressed in a similar way.

Add to this the Great Telco Debate www.telcodebate.com (London on November 15th 2016) as a platform for the independents and more open, wide-ranging discussion around the future of the telecoms industry. Attendees love the format and honesty of debate. In 2015 we used analysts as a panel to sum up the different debates and interrogate their joint wisdom on the future of the industry! Nowhere else do attendees get the contrary perspectives on offer from such a wide variety of industry stakeholders.

Long live the independents!

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Are telcos losing pole position as digital disruption impacts demand and supply?

A client recently asked me to present on the top 5 disruption themes in the industry. A pretty broad brief given that I have covered almost every aspect of the industry over the years of being an analyst. So, I had to find a framework within which to identify the disruptions. The following evolved:

  1. Demand is taking over from supply in shaping the telecoms market so the start point has to be the demand side.
  • The individual: how do individuals see the telecoms piece of their digital lives?
  • Households: is the household a market and if so, who is the domestic CIO?
  • Business: what is driving business’ use of telecoms services?
  • Society/government: how is telecoms fitting in with the increasingly joined up whole public sector play?
  • IOT: Cuts across all the segments above, throwing a whole new light on the demand side with its mix of personal, household and business/industry connections. How will this fit and who will provide these business process services?
  1. Supply has to face this massive shift in demand with several constraints:
  • Firstly the flat if not shrinking market for telecoms services in terms of revenue. This is especially acute in the highly regulated European markets but it is increasingly true around the world.
  • Secondly, the revenue position belies a massive uplift in volumes and complexity of traffic. The more granular networks have to cope with video but also with complex series of loops including our personal, business and society links that may be private, open to public scrutiny or part of a 3rd party business process such as in the healthcare sector.
  • It is not that the role of connectivity is lessened, but that it is being absorbed into much broader business activities. The clear end-to-end nature of the early telephony systems has been replaced by either ‘end’ being variable, virtual, and dynamic and often via cloud-based 3rd party application. The connectivity provider may get the blame for poor performance of an application despite there being many steps in the process beyond their control.
  • The disruption on the supply side in terms of investing in the long term suitability of the networks to cope with this new age demand means that NFV , SDN , small cells, WiFi, shorter application development cycles and a generally more agile approach to business all add up to a short term need to increase budgets to get over the investment hump of removing siloed, legacy networks and services in favour of simpler more adaptable fixed and mobile services.

Given the pressures on the connectivity front, telcos are, of course, tempted to shift up the value chain towards the applications that really make different industries tick. And, the IOT also represents new territory to ‘conquer’. Neither, in my opinion, are that easy to achieve. The business applications players are already well versed in the industry-specific apps and that also translates for the major integrators when it comes to IOT in specific industries.

The answer is to adopt a much more open stance towards partnering with other specialist players and accept a supporting role. As ever, the caveat is that every country market is different. Some telcos will continue with prime contracting with a strong business, retail and/or media presence, but all players should seriously consider a multi-channel approach to the customer and let the customer choose.

And, by the way, there is little sympathy for the telco from outside. It is often perceived as having taken high profits over many years and neglecting to invest for the long term of the industry. Outsiders see the telcos as fair game when it comes to exploiting them in the digital marketplace. Customers, of course, see the benefits of their app-based worlds across their different devices as either part of their hierarchy of needs or just their basic human right.

Policy has to ultimately rebalance this demand and supply issue. If telcos are not incented properly to build future-proof networks then the politicians won’t be able to use broadband and digital inclusion as just another thing to throw around during election times.

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