As a result of the changing landscape in the telecom market, traditional business models of operators are coming under increasing pressure. The key question telecom players therefore currently face is: where and how can revenue be boosted through the monetization of products and services? According to a new white paper from consulting and IT-services firm Atos Consulting telco’s theoretically have no need to worry, in the coming years they will be confronted with massive monetization opportunities, the result of 10 key technological trends. The key to success lies however in the manner with which digital strategy & execution are aligned to ensure the value is captured from today’s all-connected consumer.
In the white paper titled ‘Digital Transformation in the Telecom Market’ Atos Consulting presents a vision on the future of the telecom industry*. In their view, to remain competitive telecom players will have to transition their business model from the current approach (focus on voice, text and to a certain extent on data) to a new model centered around capturing the real value of data. “Data will become the new liquid gold in the industry,” says Michel van Buitenen, telecom expert at Atos Consulting and Head of the Dutch Telecom & Media Market. “With the huge amounts of data at hand, telco’s face the opportunity to initiate a digital transformation journey from a pure-play service provider to a data-driven ‘spider-in-the-web’ player in a larger service delivery chain. Operators can develop a strong profile as broker and trusted partner that safeguards the privacy of consumers.”
Based on this vision, the consultants have identified 10 key technological trends that will bring along the largest monetization opportunities. What stands out is the fact that the majority of ‘gamechangers’ find themselves outside the traditional domain of telco’s, such as in healthcare, banking or the energy market. “This demonstrates the fact that telecom operators will have to open their horizon and explore greenfield areas for new revenue opportunities,” states Van Buitenen.
An overview of the 10 largest technology-driven revenue opportunities for telco’s:
The market for health monitoring and e-Health is growing rapidly across the globe, the consequence of the rat-race to lower health costs and at the same time improve service and safety. For operators, the opportunity lies in becoming a trusted third party for providing communication services (apps, tools) or as an infrastructure provider facilitating data flows.
The rise of ‘smart’ or ‘connected’ cars in the automotive sector is another mega opportunity for the telecom industry. In 2012 the market was worth €13 billion, by 2018 the smart cars sector will have more than doubled to €29 billion. For telecom players the opportunity can be found in providing the telematics to the industry – the network that facilitates the communication flows between car devices and external networks.
Similar to smart cars, homes are expected to develop to a situation where all electronic devices, ranging from TV’s to lights and washing machines, interact with each other. Currently valued at €13 billion, the smart home market is forecasted to grow to €25,6 billion in 2020. Operators can earn money by working together with energy suppliers or electronic device producers, building systems to capture, transmit and monitor data flows.
Personalized online experience
Online retailers are drastically using geographical and behavioral data to personalize content and advertisements on any kind of device to consumers. For telco operators there are two massive opportunities: sell their assets (information on customers such as location-based data) and work together with content producers on new affiliate revenue models.
Between 2012 and 2016 the mobile payments industry is expected to grow from €110 million to €440 million. With the rise of mobile payments, so too does the demand for telecom infrastructure products (eg. Digital Wallet) or services. Telecom operators can expand their business models to payment alliances with banks or other payment operators to deliver these services.
Personal Travel Information
Similar to the retail sector, also the travel and tourism sector is trying to customize its service portfolio to the demands of customers. To do so there is a large need for data, so that restaurants can for instance know who is hungry, hotels can know who is around and in search of lodging and attractions know how to best market to tourists. The opportunity here is indirect for telecom players – they could act as a data provider and form alliances with organizations within the tourist sector, with profits based on a percentage per transaction.
Automatic identification is another area which is expected to boom in the coming decade. After successful identification with a smartphone or fingerprint, relevant data about the owner can be shared across a secure channel. Applications include digitally signing documents, decreasing the waiting time at airports by automatically filling in forms and checking into a hotel without the need to enter any information. As the smartphone is considered as the heart of the concept, telecom operators find themselves in a strong position to capture value. This could be either on a mobile subscriptions basis for consumers (premium service) or through an affiliate marketing approach with organizations.
The consultants from Atos also foresee a possibility for telco’s to enter the cloud sector. As the demand for secure and remote storage will boom in the coming decade, telco’s can leverage their data infrastructure and close contact with customers to offer cloud services as a premium.
With the introduction of GSM, online calling, VOIP and other alternatives, the market for voice has changed dramatically. In the future a new market will arise, one where clients are advised on the smartest (=cheapest) way to call, independent of the provider or infrastructure used. Telecom operators are likely to be the frontrunners in the development of the ‘smart calling’ market. Most likely is that it is offered as a standard service to customers and that revenues are earned from providers, who benefit from smart routing calls.
The introduction of smart meters in the housing and real estate sector is quickly changing the way consumers and business manage their energy efficiency. The key opportunity for telco’s can be found in the bundling of smart mater services with smartphones – picture a smart meter which can be controlled from outside a home by a smartphone. Operators can exploit this opportunity through several models, yet with all households falling in-scope it represents a huge potential revenue stream.
“Atos Consulting can support operators during their digital transformation journey and enable them to reposition themselves. Integrating social, mobility, analytics, and cloud in their business model will be key,” concludes Van Buitenen.
* The vision builds on a scenario planning research launched last year, in which the Atos Consulting forecasted data as a digital currency to be most likely scenario.