In Developing Markets, it’s Digital or Bust

Robert Machin

Operators in fast-growing emerging economies are facing a significant loss of customers and revenue as a direct result of 4G rollout and increasing smartphone adoption.

If they are to fight off new digital challengers, operators must themselves develop ‘web native’ capabilities that will transform the experience they offer their customers and their own operational agility.

If they fail, they risk quickly losing business to the new competitors that the mobile internet is allowing in.

Bringing Agility to Prepaid Environments

The telecoms business model in emerging markets has traditionally been prepaid-led and has hinged almost exclusively on price and brand coverage. Differentiation between operators has been minimal, with most offering very similar propositions at marginally different price points.

4G and mobile internet are becoming prevalent in all markets, however, and capable and affordable smartphones are allowing subscribers easy access to highly competitive OTT services. To retain subscribers and sustain revenue in the face of this new competition, operators have to offer more than their traditional, hard-to-differentiate bundles of basic services.

Operators need to give customers an easy and accessible digital experience that takes advantage of smart handsets and allows greater engagement with the operator’s own services.

Today’s subscribers want more than the traditional ‘off the peg’ prepaid experience. They want to combine their own allowances of minutes, messages, megabytes and content in ways that reflect their personal lifestyles.

Customers want to interact with their services in more creative ways too — for example, to share data allowances with friends and family, or to convert their available minutes to megabytes if they’re running low on data.

Operators need to be more creative in enhancing the customer experience as well, advising customers on usage for example, recommending appropriate upgrades or tariff swaps, or perhaps allowing customers small amounts of credit to tide them over until payday (in the interest of maintaining loyalty and maximizing lifetime spend).

This kind of commercial awareness and flexibility has proven a winning formula with both online consumers and successful digital service providers. So, what’s stopping many telcos from following the same path?

For many, the simple answer is the limitations of their current business support systems (BSS).

Overcoming Limitations

The Intelligent Network (IN) platforms that are foundational to many telcos’ prepaid offerings were created as basic metering applications, managing customer balances with simple levers such as price per minute or message, balance rollovers and so on.

But what if charging was more agile, in terms of its functionality and ease of configuration? What if it allowed the operator to offer the customer freedom to combine services as they saw fit — not just choose between predefined packages? Or, let customers move credit between services or share balances with friends or family? What if it exposed transactions and balances to the customer in real time, allowing them to monitor and control their spend?

Functionality like this will helps operators stand out in the market, attract and retain customers and drive up spend and loyalty without sacrificing revenue. A digital monetization platform will let the customer engage with their services — and allow the operator to engage with the customer, to encourage their next purchase directly and discourage them from ever swapping that SIM card out.

There are other advantages too.

Cut Out the Middle Man

Direct customer engagement improves margins by cutting out intermediaries. It’s a win-win for both customer and operator — but it requires change. Investment in performance and functional agility is needed to make this vision a reality, but the savings realized by retaining margin mean that payback on that investment can be short.

Cut Out the Vendor

Traditional IN platforms and Online Charging Systems (OCSs) typically require considerable and costly vendor involvement to maintain and change them. Today’s operators, however, are buying solutions that work out of the box with a wide range of standard features, predefined service templates and functionality that can be further configured without lengthy and expensive vendor projects. Platforms, in other words, that are ‘operationally agile.’ Self-service isn’t just for the end customer!

Embrace Change to Repel the Threat

We think the future is bright for telcos in developing markets.

The consumer business doesn’t have to just be a price war over razor-thin margins. Instead, you can offer differentiated products and a better experience for customers that will drive higher, more sustainable revenues from your consumer business. You can repel the threat from digital insurgents by becoming a digitally transformed business yourself.

Read more on how MATRIXX and Tata Consulting Services (TCS) have collaborated to offer a transformative monetization platform that protects existing business while enabling new digital revenues.

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