New business models of the ‘seamless’ communications service provider highlight difficult strategic choices

A new communications service provider (CSP) is emerging and it is smooth. Customers will be able to access consistent experiences across all channels, operations will be harmonious through integrated systems and processes offering personalised billing, servicing and selling, and platforms will be uninterrupted offering ubiquitous data, cloud services and new technologies to customers. This is the future of CSPs, however the proximity of this future in Australia is debatable. With the rollout of NBN not likely to be completed before 2020 and continued regulatory limitations, an ‘end state’ is not likely to be reached in the near future despite the industry driving to more customer centric experiences and operating models.

In a world of seamless customer experience, operations and platform integration a number of new communication service business models are likely to emerge. Some of the puzzles pieces that make up these models are already beginning to surface in telecommunications Globally and in Australia. In this post I briefly outline 2 potential business models in the the seamless world of CSPs.

1. The ‘Data Market CSP’ (Data as a currency)

When you strip away the complexity of telecommunications incrementalism, where customers are asked to purchase ‘contracts’, ‘plans’, ‘caps’ and ‘bundles’, in a seamless CSP environment you are just left with data. A kind of CSP provider could materialise around the business model offering a limited amount of data to customers across all devices. Each customer could buy a monthly share of data that could be used to download and upload content but also to trade with other shareholders. It would allow customers to use the data they need, sell the data they don’t, buy the data they want and gift to others. This is not Bitcoin, but one could forsee a situation where scarcity of data (at certain bandwidth) could become currency-like.

2. The ‘free’ CSP

Over-the-top (OTT) content providers are gaining prevalence globally and in Australia. Fetch TV and Tbox are examples of Australia’s OTT service providers with Netflix (up to 200k users in Australia), Hulu and Roku establishing footprint in UK and US markets. In a world where media and communications converge, a business model of ‘free’ data and access may exist in return for offering up your personal data or watching advertisements. Device makers and media companies alike are eyeing off this model as convergence accelerates globally. Amazon, Google and Apple each have mobile devices and OTT services which with access to data would open up the possibility of this model.

These are just two examples of business model possibilities in an ecosystem of seamless experiences, operations and platforms. Whilst these concepts may only materialise in the relatively distant future, they represent disruption in the industry’s well established value chains, legacy businesses and pose threats and create opportunities for new growth prospects. This change is almost unavoidable and leaves leaders of Australia’s CSPs with difficult strategic choices – How to position for growth but minimise reduction in legacy revenue? Who to partner with and who to compete with? What is the right level of infrastructure investment and in which infrastructure? Which services will our digital consumers engage with now vs. in the future?

For leaders of CSPs to make these choices with confidence it is critical that their winning aspirations or strategic intent is well defined. This intent should inform these choices but also be the driver of transformation in nearly every aspect of business to maintain differentiation and relevance.

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