Telecoms, Mind the Gap

Much has been talked about all the opportunities telecoms have missed during the last decade. Telecoms, Mind the Gap image 271989Telecoms, Mind the GapControlling the infrastructure of the Internet, the industry was not able to fully monetize their strategic advantage. Instead, they had ultimately done little more than conceding the playing field others grew their business upon. The OTT-players became the real innovators and profiteers in the age of the internet. They filled the innovation gap telecoms had left widely open. When thinking of communication today, not only young people might rather think of Whatsapp and Facebook than voice calls or SMS.

At the same time, one must not forget that telecoms used to be the greatest leaders in innovation, reliably connecting billions of people all over the world. It’s easy criticizing them from today’s perspective. As a matter of fact, telephony once was and still is a real cash machine, but at the same time a stagnating and declining business. In addition, huge and costly investments into next generation communication’s infrastructure are necessary to stay competitive. Being stuck between a rock and hard place, telecoms are desperately looking for an exit. But when it comes to innovation, they find themselves no longer sitting in the driver’s seat.

Somehow, the situation reminds me of the Chicago Bulls in the 90’s: The team had won three championships in a row but in 1994/1995 was kicked out in the conference-semifinals. If their era had ended here, the Bulls would have gone down in history as one of the better teams in the game. Instead, they went on to win another three-peat and become the greatest team in NBA history. Telecoms had their 1994/1995 moment in the last decade. Now, they need to decide whether they are the innovators of the past or the builders of tomorrow.

How tomorrow could actually look like was discussed at a workshop with the telecommunications special interest group of DSAG (a German-speaking SAP User Group) in late June of this year. At the event, industry experts representing the leading service providers in the German-speaking market as well as industry experts from SAP gathered to discuss the future of the industry and how to innovate in the telecom business. It turned out to be not as bleak as one might have expected.

At the workshop, several opportunities were discussed that would leverage the unique set of assets telecoms have at their disposal. As an example, mobile technology was considered to offer huge business opportunities s that may eventually turn out to be bigger than the ones missed during the age of the Internet. Ideas which gained special attention and were estimated to have great business potential are proximity marketing and mobile wallet.

Proximity marketing

Proximity marketing could be the new marketing strike. Telecoms already own all the assets to successfully provide location-based marketing services. It gives consumer facing companies the ability to send highly targeted offers to consumers depending on their current context and profile. For telecoms, who not only have the technical capabilities in their network but even more a direct relationship to any consumer and holder of a mobile phone, the innovation seems to be specially geared to them. They can use consumer insights in a most trustful way, addressing concerns about data privacy protection.

Mobile wallet

The idea of bringing your money on your phone to provide a mobile shopping experience at the supermarket, the gas station or the restaurant is nothing new and already in the process of being implemented. It’s a consumer-friendly application and a huge opportunity for telecoms to stronger engage with their subscribers. As a side effect, the stickiness of such a service is expected to be an effective means to reduce churn. The moment appears to be favorable, as retailers and consumers show great interest in this kind of service. As an example, Starbucks recently reported that more than 10% of all payments in the U.S. for lattes and muffins are done via a mobile phone since the company introduced their mobile payment service a year ago.

Interestingly enough, the workshop has proven that telecoms are actually far more open for entering a new path in innovation than expected. Surprisingly, even in a market regarded to be most mature and conservative such as the German-speaking countries, telecoms are happy to picking up new ideas to monetize, mobile technology in particular. It appears that the timing is right as there is demand for innovative services with consumers and businesses while on the other hand; the required mobile solutions are available. This means a great chance for telecoms to reinvent themselves while staying true to their traditional values as a trustful keeper of consumer relationship and drivers of innovation.

An inevitable discussion

Talking about mobile commerce, it didn’t take long for the obviously hot topic to come up: what is the benefit? This particular question is being controversially discussed in the media; however it was surprising to see that not even the present industry experts and telecom leaders at the workshop could agree on a consistent opinion on the topic. A discussion between rather conservative voices and innovative speakers arouse – about the potential, but also the concerns on mobile commerce.

For retailers, consumer insight is obviously of huge interest: knowledge about a consumer’s interest and behavior is a precondition for them to optimize their business and to meet their costumers’ needs and preferences. For telecoms, who already have detailed insights at store, it is a great business opportunity, even more as they can assure data privacy protection. And for the consumer, whose data is being anonymized and only used when it actually benefits him, it’s a way to simplify and enhance his daily life in such a way both consumer value as well as data privacy protection would both be appropriately addressed.

Especially in markets that are highly aware of data privacy such as Germany, one should acknowledge that only telecoms are enabled to ensure data privacy in mobile commerce services. They have been trustful with consumers’ data for decades. If not telecoms, who else could have the best possible starting position to offer a secure mobile commerce service?

Now is the time to decide who will play the field. Sooner or later, consumers will forget about how important their private data is to them, and adopt the service from whoever offers it first. Would you want your data to be used by OTT-players like Facebook or Whatsapp instead?

This is the chance for telecoms to get back in the game. Maybe they should learn a lesson from the Chicago Bulls.

If you are interested in enterprise mobility and/or telecoms, follow us on Twitter @AHebestreit.

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