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What Telecoms Must Change to Avoid Disruption

August 12, 2015





In recent years, we’ve seen the shakeup of many industries with the rise of the Internet, cloud computing and mobility. Books, music, retail…the list goes on.

One industry that hasn’t yet had its revolution is the telecom industry. Sure, there is VoIP and cellular now. When you stop to consider that most phone calls still use the public switched telephone network (PSTN), however, and many of the billing and bundling packages that get consumers so frustrated, you realize it won’t be too long before the telecom industry has a shakeup. There’s no version of Amazon or Netflix for the telecom industry yet, but it is only a matter of time.

Telecom firms don’t have to accept inevitable decline, of course. The way to stave off a telecom version of Amazon is by evolving. This is the order of the day for telecoms, whether they realize it or not. Over-the-top players such as Skype (News - Alert) and WhatsApp threaten telecoms, but really these services are only canaries in the coal mine. Worse will be on the way if telecoms don’t adjust.

There are many adjustments that telecoms must make, but four adjustments they should start making today include embracing Wi-Fi calling, kicking the habit of contracts, getting rid of their storefronts, and untethering phone numbers from the devices that use them.

American are bathed in Wi-Fi 80 percent of the time, studies show, and it is only a matter of time before that figures converges at near full coverage. While the argument for Wi-Fi calling might not be strong for telecoms in the short-term, since it plays against the networks providers have worked to build, in the long term telecoms must embrace this more efficient means of transmission or their competition will.

A second change that must occur is the move away from bundling services. Again, in the short term bundling benefits telecoms quite a bit. The problem is that consumers are getting used to a la carte for music, television and services of all kinds. If telecoms don’t get the message, they are setting themselves up for a competitive disadvantage.

A third change that probably will need to occur is the elimination of the telecom storefront. Most service can now be done online or over the phone, and with the move toward unsubsidized cell phones there is even less reason for physical telecom stores. Expect innovative firms to start cutting service costs by reducing their customer-facing storefronts and the costs that come along with them.

Finally, telecoms must recognize that phone numbers are now like social security numbers, not like home addresses. They need to be attached to the person, not the device they are using at the moment. Telecoms are already seeing this from the VoIP world, and with over-the-top services. Savvy telecoms need to jump out in front of this trend and untether telephone numbers from particular devices.

Time will tell if the telecom industry will adapt, or if it will be taken over by some innovative firm in the future. But making some early adjustments like those above will slow down the process at minimum.




Edited by Maurice Nagle
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