In today’s increasingly competitive and digitalized world, telcos strive to remain relevant, but various challenges abound in both B2B and B2C segments. B2B customers, for example, can have a difficult relationship with their telcos across countless portals and assisted channels, creating unnecessary friction in the relationship. This friction affects the selling of new products and services, driving up a higher cost of sale/cost to serve and potential retention/up-sell challenges.
From a B2C perspective, telcos increasingly struggle to provide a personalized experience, anticipating consumer needs and providing relevant offers and services supported by a truly digital customer service experience. Alas, telcos continue to under-index as service providers. In some markets, telcos have the industry’s lowest recorded net promoter (NPS) scores and the highest customer effort (CES) scores.
Another issue affecting telcos is that their consumers and business customers perceive them as purely connectivity providers. This attitude significantly diminishes their value in the market, affecting the opportunity to elevate their relationship to one of a trusted service provider for all digital consumer lifestyles and business needs.
These challenges underscore the need for telcos to move from mere connectivity providers to solution-driven partners. There are four popular business models telcos can use to achieve growth and relevance: ServCo, NetCo, DigiCo and TechCo. Within each business model, telcos can independently innovate and differentiate themselves from competitors.
ServCo
A ServCo provides all customer-facing business operations, working with one or more NetCos—potentially DigiCo and TechCos as well. A ServCo manages marketing, sales, billing and customer care and shapes consumer and business propositions that they market and sell, typically mobile, broadband/fiber, TV and digital lifestyle, smart home and security/storage solutions for consumers.
For business customers, a ServCo will provide high-speed Internet connectivity, secure (software-defined) networking across the enterprise, private 4G/5G networks, cloud and data center services, Internet of Things (IoT) solutions, unified communication solutions, cybersecurity solutions, consulting and systems integration, M2M and mobility management solutions, industry solutions such as mobile payment, FinTech solutions, SaaS and PaaS solutions.
NetCo
A NetCo operates the network infrastructure, including mobile, broadband, fiber and satellite networks. Their core business is building, maintaining and operating the network infrastructure, including towers, base stations and data centers. NetCos will typically lease networks to other communications service providers as wholesalers or manage the provision and repair of customer connections to the network. They might also have a parent company (who provides ServCo services) and even have competitors to whom they provide connectivity services, subject to the regulatory conditions of each market.
DigiCo
DigiCos are much closer to providing new digital services and platform-based offerings. They have a broader ecosystem of partners (content, advertising, cloud services, banking payments, IOT solutions, etc.), which allows them to create and enhance new commercial relationships with their customers, moving from monthly usage billing scenarios to creating new commercial outcomes.
TechCo
TechCos create new go-to-market models moving into broader systems integration services. They provide more platform-based ecosystems, including Cloud, IoT, digital content management and AI-driven analytics. They are much closer to the customer experience, providing digital marketplaces, API access to services and enterprise application solutions. TechCos also focus on industry 4.0-specific solutions across smart factories, smart metering, connected healthcare and broader use case applications.
Telco strategies: Delivering differentiation and value
While NetCo and ServCo dominate, telcos continue expansion into new areas to create differentiated value propositions. This diversification has led to three key strategies telcos are leveraging to stay competitive and, innovate and better meet the needs of their customers. These strategies revolve around leveraging existing network assets while expanding service portfolios and enabling new technologies.
- Strategy one: NetCo and ServCo
For this strategy, the telco will build core fixed and mobile network infrastructure, simultaneously focusing on customer experience and portfolio solutions across B2C and B2B segments. From a NetCos perspective, they will monetize infrastructure by creating a wholesale layer and leasing assets to other service providers. A ServCo will focus on personalized customer experiences through data-driven insights and a strategic communications product portfolio. The result of strategy one, if properly executed, is efficient infrastructure monetization, stronger customer engagement and loyalty through improved experience personalization and reduced operational costs.
- Strategy two: Portfolio diversification
The second strategy involves telcos expanding their service offerings for both B2C and B2B markets to stay competitive and meet diverse needs. For B2C, the telco will create partnerships for network consumption (e.g., gaming and connected home equipment) and explore bundled services like security and home management solutions. For B2B, telcos will develop industry-specific edge solutions, such as IoT, blockchain, cybersecurity, cloud transformation and connectivity solutions. This strategy can help telcos expand service offerings, leading to new revenue streams and enhancing customer loyalty through hyper-personalized services while accelerating time-to-market for new, diversified services.
- Strategy three: Technology enablement
In the third and final strategy, telcos will digitize their core processes, retire legacy systems and focus on automation to reduce costs and improve customer experience. For example, a telco might implement AI-driven automation for customer service and back-office operations. It could also retire outdated technology and help modernize through NetCo strategies. Likewise, a telco could use technology to digitize and streamline the customer experience with hyper-personalization. When done correctly, this strategy will enable telcos to lower operational costs and improve digital customer experience with faster, more personalized service. Likewise, it will create scalable infrastructure ready for future tech developments.
Ensuring the success of these strategies
In today’s rapidly evolving telecom landscape, telcos must adapt to new business models to compete and differentiate in the market, diversifying their service portfolios or embracing technology enablement. By optimizing customer experience, expanding industry-specific solutions and leveraging AI and automation, telcos can generate significant value for both B2B and B2C customers.
Of course, implementing these three strategies can be quite a complicated and expertise-heavy endeavor. As such, telcos should consider a partner that can provide end-to-end support to help implement these strategies, whether optimizing network operations, creating personalized customer journeys or modernizing legacy systems.
