What if everyone wanted more of your products than you could provide? What if they wanted it faster and in greater quantities and more often than ever? Sounds great doesn’t it? But what if they wanted to pay less than ever for larger quantities? What if they didn’t see value in paying for that product or service, just in the free tools and capabilities it enabled provided by other companies? What if you had to spend large amounts of capital to keep providing larger quantities of your product without seeing a proportional increase in revenue for those products?
This is exactly the world that telecommunications providers are living in today – their services (the network essentially) are in more demand than ever before and that demand shows no sign of slowing in the next 10-20 years as the world continues to ingest more data at higher rates than ever before in areas that have never before had connectivity. There have been many concerns expressed even this week at Mobile World Congress that the CSP could look like UPS, FedEx and DHL soon – providing nothing but the transport layer for the goods that flow through – in a situation where the customer expects the service to work perfectly and only when it doesn’t does the service provider cross the mind of the consumer.
In fact in quite a bold move on Monday this week Mark Zuckerberg, CEO and founder of Facebook stood up and told a room full of telecom providers they should be offering free data services, right after his company announced it had purchased What’s App and would be adding voice services for its 450 million users – which will further put pressure on telecoms in the EMEA region.
Is this necessarily a bad thing? Perhaps not, and there will most definitely be carriers who decide this is an acceptable role in their relationship with the consumer. As network virtualization and IP-based telecommunications services dominate they will bring with them the ability to drastically reduce cost and make this potentially a viable business model. But for many, if not most others, they are not content to cut cost and hope to find a niche to survive in and while some telecom providers like SingTel CEO Chua Sock Koong reject the idea of becoming a ‘dumb pipe’, they recognize the revenue declines in pure network services and are branching out to provide ‘digital life’ and extra value services for customers.
So if providers are going to grow in this new world order how do they do it? Monetize the network. I wrote a blog a year ago this week telling providers they were sitting on a gold mine – they just needed to figure out a way to mine it. Today providers are doing this in a number of ways today – providing subscriber data, enabling machine-to-machine connectivity and AT&T has announced that they will be seeking ‘sponsorship’ data for their network – where companies or events (NFL or FIFA perhaps) might sponsor all data of a particular event or contest over the AT&T network – providing some relief for the end customer.
Some real innovators like Safaricom in Kenya who is enabling their customers over their network to pay rent, make person to person payments and even register new births using an open platform that anyone can subscribe to services from allowing immediate access to their 30 million customers. This partnership with OTT providers puts Safaricom much closer to the value perceived by the customer of the services they receive.
So if providers are going to be offering all these new products and services how are they going to package them up and sell them? How can they manage orders of physical products, physical services and network services that could come from a variety of network partner participants and require different levels of billing, activation and membership? They need to invest in customer-centric insight and order management – a solution that is focused on the customer, not on the product or service-centric; because frankly they don’t know or want to anticipate what services their customers will demand next over their network or what partner will arise to provide it. The solution should have a hyper-focus on the customer; true customer insight, campaign and experience management, omni-channel and mobile first priorities, flexible ability to manage physical and virtual products and services, lightweight and cloud-based with inventory and capacity visibility and status across all fulfillment systems.
Microsoft CEO Satya Nadella recently summed up the situation for telcos perfectly: “Any organizational structure you have today is irrelevant because no competition or innovation is going to respect those boundaries.” The providers who move toward this digital service landscape will be nimble and flexible when presented with new challenges and competitors – and based upon the last 5 years – we know those challenges are coming, the question is whether this time we’ll be ready for them?
Mobile World Congress started this week — and again it will bring over 40,000 telecommunications CxO’s to Spain from all over the world.
Every year there seems to be a dominant theme for the industry as this iconic event dawns over the beautiful city of Barcelona. 2013 was the year of ‘Big Data;’ it was everywhere and on everyone’s lips. For 2014, based upon my experiences in the industry and perusing the exhibition booths here I believe the focus this year will be solidly on ‘Customer Experience.’
The continual increasing pressure of over-the-top (OTT) services providers, saturated markets and increasing costs to acquire new subscribers and the increased expectations of the connected consumer have forced communications service providers (CSP) to follow the retail world into the realm of extreme customer experiences creating what we at IBM call the Customer Activated Telecom Provider.
In the fall of 2013, IBM surveyed over 200 telecommunications CxOs from around the world and 9 out of 10 responded they need the ability to quickly deliver new offerings while 71% said they are more concerned with competition from OTT providers than other telecoms. As a result of this pressure, 65% are now focused on customers as individuals instead of segments and 82% are focused on digital and social interactions with customers while only 12% are focused on face-to-face interactions in 2014.
Close collaboration with customers is indeed a dominant focus for telecom executives at the start of 2014. Why? Because as an industry, we have finally realized the impact a customer can have on our organization. Over 60% of respondents said that customers already influence their organizations to a ‘large extent’ and as a result 4 out of 5 industry leaders are looking to ‘digitize’ their front office operations— the systems that touch the customer experience.
This year at Mobile World Congress telecommunications providers should be focus on delivering extreme customer experiences to differentiate themselves from their traditional and non-traditional competitors.
At CES (Consumer Electronics Show) this year one of the biggest pushes for manufacturers is the 4k or UltraHD television set, which at a resolution of 4096 x 2160 essentially has about 4 times as much information displayed than your standard 1080p (1920 x 1280 resolution) television set. If you have seen one in person you know that its very sharp and looks great - except there is very little content for it yet. However, at CES Netflix, Sony and others committed to delivering content in 2014 in the Ultra HD format.
There’s a problem though, 1 hour streaming at the NetFlix UltraHD data rate of 15Mbs is going to come in at a whopping 16GB of data consumption. A standard HD movie stream today would only account for 4.5GB of data in that same hour.
Most customers today have virtually unlimited bandwidth for their broadband services since providers like Comcast in the US say that their customers only average 8GB - 10GB of data consumption each month and so they never really pay attention to their overall bandwidth usage. There are those out there (I’m one of them) who have cut their cable ties and are essentially steaming from Netflix, Apple and Hulu a lot. My last few months of consumption for a family of 5 is averaging around 400GB per month.
The problem is that Comcast only includes 300GB of data each month and they charge $10 per 50GB of data over the limit. For most users this has not been a problem in the past but as more and more people with Smart TVs, AppleTVs, Rokus, Chromecast, etc. it is going to become a bigger problem for everyone.
At 15Mbs my family of 5 can consume less than 20 hours of programming each month before we start getting penalty charges from Comcast.
Why? Because all of the sudden, anyone who is streaming 4k movies from providers like Netflix or Apple is going to quickly see what those of us who have cut cable are already seeing - notices from internet providers like Comcast telling us that we use too much data and they plan to start charging for it.
So be careful when looking at that new Vizio 4K UltraHD television set selling for under $1000 because the real cost for that television is going to depend upon how much content you plan on streaming to the set over the next few years.
What is Fox Sports 1? According to their website FAQ it is ‘FOX Sports 1 is a new national 24-hour multi-sport cable channel being launched by FOX on August 17, 2013’. The short answer though is that it is ESPN, ESPN2 or ESPNU from the guys at Fox.
For those in the know, and especially those of us who have cut the cord from traditional cable, dish and IPTV providers due to the ever increasing costs and the inability to purchase only by the content I want to watch, the loss of ESPN is one of the main hurdles to cord cutting.
Broadcast isn’t a problem if you live in an area that has Over-The-Air (OTA) signal reception or Aereo as a service but ESPN is a real problem since the network is so large and features so many top games on its cable-only networks.
ESPN requires users to have a current account with a cable or IPTV or dish provider in order to stream their content live to a phone, tablet or tv receiver (Roku, AppleTV, etc). This is a real sore point since I, and most of my cord-cutting companions would gladly pay ESPN the $6-10 per month required to watch their networks - including the commercials! - so I could catch my favorite sports.
Now, fast forward to Fox Sports 1, who is going to be severely behind from the get-go and needs every advantage necessary to increase viewership (which can almost exclusively only come from stealing ESPN eyes). They have a golden opportunity to capture the online, ala-carte, cord-cutting enthusiasts by offering something their chief competitor is unwilling to offer.
So what do they do? They copy ESPN. Their FAQ states ‘When FOX Sports 1 launches in August, we’ll also be releasing FOX Sports GO, a groundbreaking mobile sports experience for iPhone, iPad, Android devices and web. The app will offer more than 1,100 live games and events from across FOX Sports, FOX Sports 1 and FOX Sports’ 22 regional sports networks. It will also have scores, highlights, news, stats and analysis. Access to games and live events will be free to fans who receive their video programming from a participating cable, satellite or telephone company.’
Snooze. Really Fox? You just missed a golden opportunity to become an innovator but instead the new network just attempts to imitate the market leader it is trying to compete with.
It has been almost 10 days now that Time-Warner customers in the New York, Los Angeles and Dallas have been without CBS content. While some of those customers are turning to antennas or alternative services like Aereo where available, most appear to just be waiting on the two media monsters to duel it out.
CBS’s networks include the Showtime and TMC premium channels, as well as Flix and Smithsonian, which are all currently blocked from Time Warner Cable customers.
In looking through the dialogue back and forth between the companies there was a small concession offered by Time-Warner that could have completely changed the media consumption game, but CBS showed once again that most large media content providers still have zero desire to actually make their content available directly to the end consumer without mandating large bundling requirements.
Time-Warner Chief Executive Officer Glenn Britt told CBS CEO Les Moonves that he would resume CBS programming if stations are made available individually to customers. Subscribers could then choose which channels they wanted at a separate price for each, and the money would go directly to CBS. “This way, rather than our debating the point, we would allow customers to decide for themselves how much value they ascribe to CBS programming,” Britt said in the letter.
CBS immediately called the proposal a “sham” in a follow-up statement. “Anyone familiar with the entertainment business knows that the economics and structure of the cable industry doesn’t work that way and isn’t likely to for quite some time.”
To date, no significant provider of popular content in the United States has made available their content purely ala-carte (save the adult premium channels) via a cable company or direct to the consumer via the PC, tablet or smartphone. HBO does provide this service in the Nordic region of Europe and ESPN does the same for packages like college football in Europe. However, they refuse to offer the same services to US customers.
The cable companies and media providers are eventually going to have to come to terms with the fact that consumers are more and more looking to pay for the content that they want to consume and are not interested in subsidizing hundreds of channels full of C- quality reality shows and home shopping infomercials.
Moonves and CBS had the perfect opportunity to become known as the leader in the new marketplace and let their content stand on its own providing their customers with flexibility and ease of use light years beyond their competitors. Instead they decided against thinking outside the box and leading a revolution to instead pull back into the turtle shell and just keep fighting for the same tired system we have been living with for the last 30 years.
Soon a brave content provider/owner or Internet innovator is going to take the lead (Jeff Bezos, Mark Zuckerberg or Mark Cuban please help!) and when they do the dam is going to burst. When it does CBS will be forced to go along as well becoming a follower instead of an innovator.