Objectively speaking, among participants in the transformation, emerging online media, such as Facebook, were not born with a silver spoon in their mouths, and they revolutionized the industry.
Traditional media like News Corp. have competitive pressure as well as an opportunity for expansion. As long as the industry grows in size, upstream vendors like Intel have a stable yield. The telecom industry, however will go along with the revolution and see the traditional voice communication market gradually diminish or even vanish. The telecom industry only plays a supporting role in this revolution. Some people argue that as a vested interest group, the telecom industry is even acting in resistance to the revolutionaries.
Fortunately, most astute telecom operators have realized that revolutions once they begin are often irreversible trends. By conformity and adaptation, operators can evolve and gain or regain the leading position.
The first order of business is consolidation. Against the backdrop of globalization, local operators are not in a position to compete with the industry titans. Eventually, they will either turn into mere conduits or be acquired. Telecom giants must keep expanding through mergers, and control more users, thereby gaining the foundation to compete with the service titans and even become new service integrators.
What are the operators' advantages?
Powerful networks and a large number of subscribers can shape operators' commanding positions.
Operators should fully exert their advantages to expand new services. The operators' monopoly in basic networks mainly comes from resources such as licenses, which are subject to rigorous regulation by world governments.
In the USA, Google has been promoting network neutrality, with considerable results. In Europe, the EU persistently requires governments to force operators to open basic networks. The Unbundled Local Loop (ULL) has seen rapid development in every country, showing that in the long run it is not feasible to control users merely through network connections. Operators must seek a new commanding position.
The neutrality and openness of networks have become the emphasis of regulation. As a result, operators have to look for a commanding position at the terminal and service sides.
Regarding terminals, operators can control users through custom terminals, including home gateways and portable devices. However, operators cannot force subscribers to use these terminals.
There are two ways to popularize custom terminals: One is to learn from Apple by attracting users with an outstanding terminal experience. However, this is not the strength of most operators presently. The other way is to learn from Google by providing free terminals and making profits with service revenue. This model is currently recognized and widely adopted by many operators. The control point does not lie on the terminal side, but on the service side. The terminal is just the network extension and the presenter of services.
Operators have powerful resource advantages: On the one hand, they connect a large number of households, which constitute a huge market and excellent marketing channels for service providers. On the other hand, through long-term operations, they have enterprise connections and experience in integration. They can provide end users with better business experience in specific fields. To fully utilize these inherent advantages, operators need to build an open platform to create a win-win environment.
Apple sets a good example for building platforms and designing business models. Operators can deploy and develop new services with the ample cash flows generated by voice services and provide subsidies for terminals with more and better services. Indeed, whether an operator can survive and even become a new giant of service integration depends on whether it can cultivate a new business model before its cash flow dries up.
In short, operators should fully leverage their advantages in legacy networks and large subscriber bases to press ahead with the deployment of new services and build their brand and image presence as a service integrator to terminal users.
Also, they should build an open platform, utilize their long-term operational resources and experience to integrate more and better services and provide desirable services to end users. By doing so, operators can gradually move their commanding positions from network connections to their own exclusive services or the services with the best user experience.
When competing with other service integrators, what strategy should an operator adopt to exert its advantages?
As mentioned earlier, the recipe for success lies in the ability to gain as many partners as possible, to provide varied services together for users. In addition to owning a subscriber base and attracting partners, an operator should be able to provide powerful support for numerous service providers at least in the following four aspects to reinforce its core position.
Market expansion: Due to their small size, the long tail providers are unable to conduct independent marketing activities, giving operators a unique advantage.
First, most value customers of operators are real-name customers, unlike Google's anonymous and even nameless customers. Second, only operators can obtain data on user behavioral patterns, which is a huge advantage over other competitors.
Hence, operators are in a position to help their partners promote their products and recommend suitable products to the right customers. They match massive services to millions of users. This is the service integrators core competitiveness, yet most operators have been asleep at the wheel and have not collected, collated or utilized the data.
Application delivery and service: Many applications, such as home security protection, health and medical care, do not merely involve information distribution and interaction, but require hardware deployment and maintenance as well. The long tail providers find it hard to provide delivery or services in a large area and operators with massive service teams can help them and profit as well.
Brand support: The long tail providers lack branding power and a strong credit rating. When users purchase their services, a guarantee is needed. Operators with long-term operations experience and a good credit and credibility rating can play the role of guarantor. This means that operators must qualify suppliers and control risk.
Billing and settlement: Similarly, when users pay for a service, they usually will not trust an unknown service provider. A third-party, reputable platform is needed for completing settlement and payment actions. This is where operators'existing mature billing platform can really shine.
The upsurge of convergence has brought not only opportunities, but unparalleled resource advantages to operators. However, whether an operator can go with the flow and thrive in the new environment depends not only on reformulating strategy but also on timely and effective implementation.
