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CSPs must evolve their business models and the way they operate to be profitable in the years to come. This is likely to be front and centre of conversations at MWC as it has been in recent years.
February 26, 2018
Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. Francesco Venturini, Global Industry MD for Communications & Media at Accenture, explores the potential opportunities for CSPs to become multi-sided platform providers.
Communications service providers (CSPs) have started to make their chosen play for future growth: multi-sided platform provider, mobile only, vertically integrated service provider or pervasive network platform provider. MWC will provide the opportunity for discussions about the technology investments they must make but one of the key things to be looking at is how to create and apply intelligence into the platform business.
Traditional growth is eroding at an alarming rate. The World Economic Forum Digital Transformation of Industries analysis found that operators’ share of the global industry profit pool is forecast to drop to 45% in 2018 from 58% in 2010. The decline is steepest in Europe, but there’s no pretty picture anywhere around the world. The internet giants are rapidly taking market share, embedding themselves into the traditional telecoms domains: the hand and the home. CSPs urgently need to reinvent themselves.
They must evolve their business models and the way they operate to be profitable in the years to come. This is likely to be front and centre of conversations at the show as it has been in recent years.
There is tremendous opportunity to create new business models. The challenge facing operators is how to get there. We’re on an S-Curve as an industry right now. We’re coming down from the peak. While there are still some opportunities within the traditional core business models, the real opportunity comes from finding a new S-Curve to navigate.
Multi-Sided Platforms could be the new opportunity
One new model that offers CSPs a huge opportunity is to become a multi-sided platform provider. Owning the platform requires a massive leap to new technologies – API-driven, agile and open platforms with strong identity management capabilities – and a totally different approach to competition than most CSPs have had in the past, becoming the central digital provider of many services from OTT to home security but also enabling them to enter new value chains or new industries altogether. The ecosystem needs to be customer-centric and open to work.
The benefit for the operators is that it takes them out of the race to the bottom on pricing for commoditised services, but can use their core strengths as a springboard to maximise investment in new services.
We are already seeing fierce competition for this space but it’s not yet clear who the winners in the ecosystem will be. Large incumbent businesses have plenty of advantages from trust to brand, data and capital to become a vital part of the ecosystem but it depends on whether they will reinvent their business models quickly enough.
In digitally driven future ecosystems, the operators who own the data and therefore can be the first touchpoint and define what a customer gets and when and how, will have the most power so players must move at a much faster speed across a broader horizon than ever before if they are going to keep up with the other players.
To create, sell and deliver not only these new services, but the full multi-sided platform successfully, data is the fuel. CSPs must embed intelligence at the core of their business to enable vast amounts of data to be processed and deliver insights at speed. This “brain” becomes a new sustainable competitive advantage. As it learns about the customers in the ecosystem and their propensity to use new services, its microservices architecture and AI capabilities enable it to quickly shape and validate new ecosystem services in an omnichannel environment.
This puts the CSP in a leading position because it empowers them with data such as identity, quality of experience, security, billing relationships – and allows them to monetize that information by leveraging it with partners across the ecosystem, who in turn, can use it to better enhance the services they offer.
In a digital future that’s evolving at an ever-accelerating pace, CSPs possess a crucial advantage: a primary and trusted relationship with the customer. Aligned with embedded intelligence, they have the potential of disproportionate power over the whole value chain – which can be used wisely to reinvent themselves and win in the new digital landscape.
Francesco Venturini – Managing Director – Global Communications & Media Industries: With more than 15 years’ experience in broadcast, Francesco leads Accenture’s Communications & Media industry practice. He is at the forefront of helping Accenture’s clients to create new and winning strategies for growth. Francesco is also renowned for driving new platform-based solutions to support Communications & Media clients in their adoption of innovative new technologies to scale new growth curves.
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