The changing role of operators
As we speed toward the end of another year – and another decade, depending on whether you started the old one in the year 2000 or 2001 – it's always tempting to look back to see how far we've come. Just 10 years ago, the communications industry looked starkly different to what we see today.
Back then, Google was a brand new company – no Gmail, Google Voice or Google Earth yet – and Apple was known mostly for its Mac computers with iTunes and the iPod still a year away. And in 2000, Mark Zuckerberg was a high school student who couldn't have foreseen what a phenomenon his Facebook would become just a few years later.
These three companies, and many other non-traditional players, have turned our industry on its head. Where once communications was all about the network and connections that make it possible to place phone calls and access the Internet, today it's all about the services that run on top of that infrastructure.
Historically, operators defined the limited number of services that consumers could pay for. But today and for the foreseeable future, most services will be offered by new generation service providers, some of whom may be operators who also own and operate network infrastructure, but the vast majority will be dedicated independent service providers who have a laser focus on the service niche they are exploiting.
These service providers will be offering a bewildering array of new services, and importantly using a brand new set of innovative business models. Unless operators fully absorb this fact and begin to do something about the new reality, they'll be destined for a slow decline into becoming low-margin bulk carriers of traffic.
Looking to the next thing
It's no big secret that none of the traditional telecom services are generating the revenues we'd all hoped for. And the future won't be so much about communications for communications' sake; rather it'll be more about communications 'enabling' life. For example, taking the technology our industry has created and applying it in radical new ways into industries such as the automotive industry, healthcare services, security, utilities and much more.
In most parts of the world, healthcare is not only expensive but also hugely inconvenient. The communications industry can enable healthcare services – like wirelessly pulling information from a patient's diabetes or heart rate monitor – to both reduce the cost and reduce the time inconvenience of healthcare. But they also have to learn from the lessons of delivering entertainment services such as music and video.
Much of the value in these industries has been destroyed in their movement into being online. So service providers have to enter this $6 trillion market in such a way that it doesn't destroy the value in the delivery of existing healthcare services.
Of course third-party service providers are already able to offer these types of services directly to end users, and are doing exactly this without having to partner with operators. Providers and content developers can already directly access end users, so operators have to turn the tables and prove their usefulness to continue to survive.
In the past, the operators essentially owned the value chain; not anymore. Today they have to earn their slot in the chain, and that success will be closely watched by the rest of the industry. Becoming more useful to third-party service providers needs to be the watchword for operators in the future.
One way they can do this is by leveraging all the valuable customer data they own and doing more than just storing it in servers where it doesn't do anybody any good. They need to bring in analytics and data mining functionality to really look at the information and use it to improve customer experience, help the service provider to improve targeting of their products and services and deliver on new business models such as focused advertising.
But at the moment, operators have a huge amount of data and are essentially just sitting on it. In general, no one is looking at it, or if they are doing some sort of analysis it's in an incredibly myopic way for very tactical purposes. But no one is really looking at the bigger picture and searching for patterns or other interesting aspects to the data.
This treasure trove of information is a key to operators remaining relevant in the age of Google and Facebook. But if they just sit around thinking no one can touch them because they own the network, think again. If the operators continue to let their customer data stagnate, and don't focus on becoming indispensible to other players in the value chain, they'll just be writing their own epitaph.
Martin Creaner is president of TM Forum
This article originally published in TM Forum’s Inside Leadership newsletter