Comment: Telcos should leverage consumers’ increasing demand for mobile data
Africa is witnessing rapid growth in the telecommunications sector, and the use of mobile telephones is at the forefront of this surge. While it was initially voice communication that drove the interest in mobile telephony, thanks to the increased accessibility of smartphones, the growing use of applications and consumption of content is seeing a shift to data being the driver of the Telco services surge. This shift in user needs and demands is driving the success of over the top (OTT) service providers in Africa. Unless traditional Telco’s’ start evolving their business models and service offerings to capitalise on this shifting customer expectations & changing market demands, it will become increasingly difficult for them to remain profitable, competitive and relevant.
The surge in demand for smartphones is an expected progression following the vast number of innovative, lifestyle enhancing applications (apps) developed specifically for the African market. Mobile money in particular has gained significant traction in East Africa due to tangible social benefits. For example, an Oxford University study shows that the implementation of Mobile Money to effect payment has significantly improved service provisioning of water in Kenya. This has led to increased revenue collection as families were able to pay for water in micropayments without travelling long distances each time to do so, and subsequently there was also a decline in service disconnections thanks to fewer missed payments. Another example of mobile enabling business and making life easier is that of M-Farm, a mobile application that provides a trading platform for farmers and buyers to access real-time local produce trends and prices, and to come together online to transact and communicate. In fact, mobile trade and payment applications have been so successful in countries like Kenya that a recent study conducted by GSMA shows that Sub-Saharan Africa continues to account for the majority of live mobile money services, at 52%.
Mobility is a growing trend and many companies are looking into developing their own apps to drive customer ‘stickiness’ and better connect with their market. This in turn will drive the way data is used, enabling innovative Telcos to start customising their product offerings in line with market demand, tailoring them around data and data-enabled services. Some service providers are calling upon telecommunication regulators to draft policies that will either obstruct or curb over the top mobile data service providers, effectively protecting their own revenue streams. But smart Telcos are taking advantage of the new opportunities created by this amplified mobile data usage trend. They are increasingly mining the backend data trail left by these mobile data users to understand their personas better, tailor products and services in-line with demands of these personas and also ensuring they realise high ROI on their marketing spends by release more targeted campaigns.
The opportunity for revenue growth for Telcos in this application driven climate lies in their ability to transform their service offering on the back of the growing mobile data surge. Telcos sit at the heart of data networks and services and, as such, have a full view of the possible opportunities. They are best positioned to leverage the data generated by mobile use and are able to spot trends as and when they happen. With this ability, they can pre-emptively entrench themselves with their customers, building and providing the platforms, services and even applications that will grow their customers and, in turn, themselves. The added bonus of having the tools to mine sensor and user data for information further enables trend prediction and customer centric service offerings.
A host of industry specific, value adding services can be built around the content and information traversing various networks.
For example, retail chains can track their global inventory and enable automatic stock ordering when stores run dry. Branchless banking via mobile phones becomes viable for businesses as well as individuals. Amenities can be paid efficiently and conveniently via an application, ensuring improved service delivery. Wearable technology opens up a world of possibility, from healthcare monitoring to granular sports tracking. And what do these all have in common? The expansive networks provided by Telcos enable this! But furthermore, Telcos can position themselves as more than just data pipe providers – they can become integral partners for innovation.
In order to do so, Telcos need to start thinking laterally, positioning themselves as enablers of a range of cutting edge, data driven services, rather than merely the platform on which to build them. They need to re-evaluate their mobile products and design them around the data needs of their customers. In line with this, they need to create more agile and flexible commercial models, catered perhaps even to individual needs rather than having static one dimensional product offerings. Types and quantities of data required differ from customer to customer, and in our price sensitive market, getting the product bundles and pricing options correctly targeted can also be a key differentiator.
Telcos must be poised for innovation, reducing their dependence on legacy processes and systems which can hold them back. There are several ways in which a Telco can create an atmosphere geared for innovation: they can enable innovation to grow organically, which can be a lengthy process; they can purchase an agile company that focuses on innovation and drive it from there; or they can leverage a knowledgeable, experienced partner to develop innovative systems and interfaces, and enable dynamic, adaptable service provisioning. A suitable partner much have the tools to enable Telcos to leapfrog to a position of innovation, allowing them to be digitally empowered and capable to leverage considerable knowledge and skills in everything from Internet of Things (IoT) to Cloud Services, Analytics & Big Data and even Artificial Intelligence platforms.
Data prices are levelling out, and like voice, will be commoditized. Telcos therefore need to be creative in their approach to service provisioning, or get left behind in the wake of more innovative players. Telcos simply must position themselves more effectively, adapting and leveraging the growing trend of mobility by offering products that encourage or enable innovation. By doing so, with the right partners, they can better integrate with their customers, becoming the joint architects of emerging technology rather than a component of its construction, and thereby securing their position in this ever-expanding market instead of being consigned to the trash heap of irrelevance.