More services, more convenience – for less money and delivered faster: More useful services, more convenience and connectivity everywhere please …. And of course this shopping list for services, for less money, delivered faster. This is what customers want from service providers. They want the value and convenience of the services without the complexity of the technology. A simpler, more relevant, relationship that they can trust. It also what service providers want from vendors. This is only going to intensify in 2018. We will see some game changes in how service providers and vendors do business. This will be driven, not just by a wish for greater efficiency from service providers, but by the changes that the move to digital is bringing about. Some of these changes and the impacts are discussed below as my top 5 industry predictions for 2018.
The slide towards free data services as subscription content takes centre stage: 2017 was the year of the content bundle. Service providers, wary of the heavy data cost of video decided that a good way to get people using content on their devices was to remove the fear of running out of credit and bill shock. So we’ve seen the launch of many zero rated content services. So far it’s working very well. A good example is Deutsche Telekom’s zero rated music and video service, Stream On. It has clocked up over 600,000 customers since launch with 100,000 new customers alone in the month of November. Service providers want people paying for content (via higher priced bundles, or as an add on). They don’t want customers having to worry about bill shock. This focus on content plus the clarification on zero rating and net neutrality in Europe and the repeal of net neutrality in the US will further drive data towards a commodity in 2018. Add in the free data services from MNVOs and the internet companies (check out Google Triangle) and the slide towards free data is well underway.
Emergence of more new business models and services – so new horizons and new partnerships: As data revenues become eroded, service providers will look to new business models and new services to generate revenues. Many have rolled out entertainment services. Others are already rolling out electricity services, banking services and home security offers. As more and more services are being managed by consumers via apps (mobile banking, remote heating controls, TV everywhere, etc) service providers are wanting to offer such services to their existing (and large customer bases). They want a share of their customers digital spend – not just their ever decreasing communications spend. As well as selling new services we’ll see new business models. These will include ad funded options for content and services selling anonymised data, as well as new partnership models, such as revenue share based on usage / revenue for content.
More digital first sub-brands: Service providers are finding that digital transformation is hard. Changing systems and processes is do-able –but not easy. Changing deeply embedded cultures, working practices can be harder still. Established service providers must look at some of the leaner green-field MVNOs and sigh with envy. Low prices, low cost base community based self-care, high NPS and lack of legacy kit and processes – it’s the stuff of good dreams. Now we’re seeing a lot of the large service providers adopting digital first sub brands. Start afresh – no legacy systems or culture and adopt a digital first: customer first approach. It wasn’t popular a couple of years ago, but service providers have discovered that “dragging the anchor” of transforming legacy architectures is incredibly slow and very expensive. As for the social worry about the impact on AI replacing jobs – this doesn’t effect the sub-brands, as they don’t have call centres to begin with. The digital first sub brand can be a sandbox for established service providers to build their digital service provider. If it works there, then over time roll the systems, processes and culture into the larger service provider. 2018 will be the year where we see many more digital first sub brands being rolled out.
AI driven automation: There will be significant progress in 2018 in the move towards automation. First it was networks and now it’s business systems and processes. The back end complexity of delivering the required simplicity of personalized digital services will be too much for many existing / legacy business systems. This is why we’ll see a move from business support systems to digital business platforms. The main difference is that these systems are automated, all real-time – but with the addition of a customer engagement layer that will be driven by AI. This uses rules, algorithms and a range of customer, usage and 3rd party data to intelligently and automatically provide functions such as next best offers / activity as well as contextual marketing.
Rise of innovative vendors as legacy guys struggle: For years dealing with the large network companies and IT players been the accepted (and safe) choice for service providers when buying BSS. The rate of change that we have seen in 2017 will be accelerated in 2018. This means that the legacy practices of many of the larger vendors will no longer be applicable to service providers in 2018. It was interesting to see that many of the telecoms systems awards in 2017 which recognise innovative solutions went to small /medium sized vendors. Also the recent Gartner Peer Reviews which reported on customer satisfaction on BSS players placed the small/ medium sized vendors streets ahead of the larger legacy players. Looking forward into 2018, the larger service providers will rely on “do it yourself” technology innovations and automation of business processes from innovative vendors, whereas the other service providers will likely rely on System Integrators to help them use these capabilities to help them benefit from these technology innovations.
2018 will be an interesting year. The decline in data ARPU, the need to be creative in opening new revenue streams and looking after customers with a digital first: customer first approach is changing the game for service providers and vendors alike.