By Sathish Gopalaiah
Telcos today are at the forefront of all consumer technology enablement and an integral part of every household. Almost none of the innovation in applications that organize our lives, reconnect us with friends, simplify shopping, banking or increase our productivity combined with the connected devices, sensors, etc. would have been possible without the evolution of telecom operators over the decades.

Telecom operators have evolved from providers of mobile analog voice to enablers of digitization for consumers and enterprises through 5G and IoT.

We have entered the 5G era in 2020, where telcos are aiming to not only serve consumers but also enable digitalization of enterprises while connecting billions of physical devices to the internet (Internet of Things – IoT).

Intensifying competition from “new competitors” for telcos
With technology progression, telcos’ revenue and profit margins from core services are seen to come under pressure due to intense competition from OTT (over-the-top) providers such as Facebook, Google and Amazon. Some of the key threats to core telco services include: OTT VoIP’s substitution of voice calls, OTT messaging’s (such as WhatsApp) substitution of SMS, and subscription video on demand’s ongoing substitution of pay TV. According to Deloitte’s Digital Media Trends Survey, more respondents have at least one streaming video subscription than a traditional pay TV subscription.

Consumer demand for an increasingly digital lifestyle
Consumers and households now own a combination of smartphones, tablets, wearables, and other connected devices. Deloitte’s 2019 Connectivity and Mobile Trends (CMT) survey shows that an average US household has 11 connected devices, including seven different smart screens on which they view content. About 28% consumers are using smart home devices such as connected thermostats, cameras and lighting. Consumers are increasingly demanding customized self-service and omni-channel offerings – mobility solutions, home solutions, entertainment content, and mobile banking/health.
How telcos are diversifying and driving all aspects of our lives

Telcos are diversifying to reach different aspects of consumers’ digital lives
In order to drive growth while combating the threats from new competition and catering to changing consumer demands, leading telcos have diversified to offer digital services such as mobile payments, ecommerce, financial products, digital advertising, smart homes, etc. A key differentiator for telcos continues to be the ever-increasing base of smartphone subscribers, who are increasingly using their apps to engage.

Telcos are seen embarking on a transformation to become an end-end digital platform to cater for a majority of the daily requirements at customers’ fingertips.

We are likely to witness a spurt in telcos partnering with other established digital / social media players to unlock significant value. The “phygital commerce” strategy combined with a digital payment feature is expected to drive new revenue opportunities and customer stickiness. The Indian market has already seen this partnership taking shape.

The COVID-19 driven work from home requirements are likely to drive digital enablement through customized enterprise business services and home connectivity solutions.

Telcos can leverage 5G to unlock monetization potential in the enterprise segment
5G has the capability to enable data services to be provided at gigabit speeds and offer low latency and high reliability to support new types of applications, connecting devices and objects through Internet of Thing (IoT). It is expected to fuel the development of innovative business models across multiple sectors ranging from transport, health and manufacturing to logistics, energy, etc. Enterprises broadly have the following key options to leverage 5G:

i. Connect to a public 5G network

ii. Set-up a private 5G network either by purchasing own infrastructure and telco providing operational support, or by building and maintaining its own 5G network

For many of the world’s large enterprises, private 5G is likely to become the preferred choice. To succeed in 5G driven B2B monetization, telcos should consider targeting micro markets, by training micro market experts and developing a consulting mind set to approach B2B services.

Telco 2030 – new operating model for the future
Telcos would inevitably have to transform their operating models to drive growth through new digital services for consumers and 5G offerings for enterprises. A sustainable telco of the future would need to master both ‘customer relationship’ and the ‘technology excellence’ through strategic investments in network infrastructure and future technologies. Three key levers for telcos to achieve the next-gen operational excellence are:

i. Drive automation (~80%) in all customer facing and internal processes

ii. Leverage flexible system architecture and virtualized networks to minimize opex

iii. Customer-centric organizational structure, supported by cross-functional teams and an agile augmented workforce

In summary, a paradigm shift towards embracing innovation, strategic alliances and technology adoptions driven by agile ways of working to enable providing world–class customer experience are expected to be the success mantra for telcos.

(The author is a Partner at Deloitte India)