Euphoria before the end? Telcos have to make new quality promises to customers

Comments from the WMC Barcelona by WSA Chairman Peter A. Bruck for Medianet

BARCELONA. 2015/03/05

The discussions at the WMC moved between euphoria about the technological future and panic in the sight of multiple cannibalisations of the present. The Telcos business cakes are munched on by several sides, if not eaten up already. While Apple shows its special disregard through absence at the world’s biggest sector meeting to those who made the computer company with the designer touch to the iPhone Leader and with it to the world’s most expensive company, application kings like Facebook’s Founder Mark Zuckerberg, Google’s  SVP Sundar Pichai or Executives of Twitter and Pinterest (also called Over The Top Company’s  or OTTs) at least attend to sugar-coat their part in the business model murder. Because in the end they know that their reach of billions of mobile users are the key for umpteen billions of advertising revenues that they are drawing in yearly with the highest data intelligence.

The telcos offer these internet companies the infrastructure of their businesses and that for the most without any kind of cost replacement.

But the panic in the sector stems not only from this, the sector is attacked also from other sides.

For a start there are the Hofers and REWE’s of this world. When supermarket chains turn into telco providers, they use the closeness to their customers and their brand to lure consumers from the inherent companies.

The formula of this introduction lecture to the Marketing BA: guarantee consumers best prices that are easily structured. Transferring numbers is easy and one can comfortably switch between all his numbers. Plus a developed store structure, with a shop at nearly every corner.

The consumers are addressed target group adapted. Who does not want to phone with Hofer, but prefers something more adventurous and aggressive, goes to RedBull mobile. There you can also “happily stream“ music, when you want, what you want; and a Newsletter about events and apps. Consumer tie is here implemented complexly and successfully. This hurts every telco.

The panic is caused also from a different side: the business with the connections. Every coffee shop, every train and airport, every sports arena and every shopping mall offers already today Wi-Fi access: enabling calls, texting, surfing and more.

The pain of the telcos grows the more WiFi “Hotspots” are offered. Recently the USA market offers mobile devices, that use this trend effectively.  “Wi-Fi First” means mobile devices and services, that use Wi-Fi as prime network. Mobile networks are only used to close dead spots. This solutions have enormous cost advantages for the consumer and open the doors for completely new business models. The MSO’s and Wi-Fi providers herewith win the fight for attention of the end user and provide themselves with extra means of income through Extraction of higher values of every participant.

“Wi-Fi First” has the potential to unsettle the tops of the providers of communication and with that to topple the whole telco industry. A recent study’s result in the USA showed that 9 from 10 humans are at least 19 hours a day around Wi-Fi access.

How bad the future of mobile providers could look is imaginable, when Wi-Fi connection get plugged into TV cables. The American Wireless Broadband Alliance already calculates that Cable Wi-Fi is always closer to the customer than mobile providers and already surpassing the cellular accessibility of connectivity. From 2011 to 2015 the sum of 5,8 billion connection points has been quintuplet.

Even worse for the telco industry will be, if Google does, what was hectically discussed in the halls of the WMC Congress: Google plans the bulk purchase of the connections of2 mobile phone providers and wants to offer its customers the dependent on place and speed better solutions. 

The Americans call this development of new business practices and models disruptive: this can mean either bothersome, splitting or ripping. The telcos have to decide the meaning for themselves. They solace probably lies in the development of their customer relations: Closeness and clear added value will decide.