NEW YORK-Notable by its absence amid the current merger mania in telecommunications is convergence across industry lines between transmission and content providers, according to a new study by Price Waterhouse L.L.P.
“Competition didn’t happen in the way people expected after the [Telecommunications Reform Act of 1996], and expectations may have been overly high,” said Jennifer Taylor, senior partner in Price Waterhouse’s Entertainment, Media and Communications Group, San Francisco. “We haven’t had a major battle of long-distance and local companies, and there’s been a real slowdown if not a dissolution between carriers and content providers.”
Price Waterhouse predicts that the local telephony war will “begin in earnest” next year. But the study says the surprise in the equation is this new competition initially will be between local telecommunications companies, wireless services providers and cable television companies over high-speed data services rather than voice and video communications.
Another anticipated development that hasn’t happened yet is the “killer application” for Internet usage, “which has exploded,” said Taylor, one of the authors of the 1998 Price Waterhouse Entertainment, Media and Technology Forecast. “Instead, we got hundreds of little apps, and this has blown away the concept of a mass consumer in telecommunications.”
Wireless services also are undergoing dramatic and rapid expansion in customer base and use, largely due to the advent of personal communications services.
“The explosion in personal communications service has had a major effect on wireless,” she said. “It has opened up markets and has had a major impact on pricing, products innovation and services.”
The outlook also is positive for expanding satellite communications, geared to “global mobile executives.” Satellite service providers will be well positioned to deliver on the promise of immediate voice, video and high-speed data anywhere, anytime through PCS devices.
While competition from new carriers is expanding the customer base and use in wireless telecommunications, the fact that “the concept of the mass consumer has gone by the wayside” means telecommunications companies still have some serious homework to do.
The 1998 Forecast stressed the necessity for communications companies to transition from the traditional customer service mentality, which had multiple organizations focusing on selling, servicing or provisioning. Instead, what is needed is a consolidated, enterprise-wide approach to managing the market and the customers.
“Increasing customer retention by 5 percent could translate into as much as 50 percent growth in earnings-if it’s the profitable 5 percent,” Taylor said. “Communications carriers increasingly are recognizing the immediacy of the need to expand their share of profitable customers, manage less profitable customers so they become more profitable and simultaneously reduce the costs of acquisitions.”
Key aspects of effective customer management include effective collection, retention and mining of customer data and using that information to deliver services based on the needs of individual customers, the report said. Among the biggest challenges communications companies face is educating their customers about new service offerings and empowering employees to be creative in solving customer problems, often through systems that reward employee initiative.
