3 February 2017 -- Singapore -- Threats that Asian telcos face from new OTT entrants and examples of potential new revenue opportunities from their small-medium business customers.
Globally, the enterprise and consumer market segments have occupied the mindshare of telecom carriers in the main. Often, that large base of small-medium business customers has been overlooked as being deemed too complex to address beyond traditional telco services of voice and data.
Enterprise customers are inevitably major consumers of voice, data, storage, and colocation telecommunications capabilities.
Consumer customers are major consumers of mobile voice and ever increasingly data.
Small-medium businesses are often treated more like consumer customers while their expectations are closer to enterprise customers.
In the recent past, many reputable management consulting companies have published learned papers clearly articulating the need for telecom carriers to shift their focus to the SME segment.
While the potential of the SME market segment is large it is unique in its requirements, sitting mid-way between Enterprise customer expectations and Consumer customer expectations. SME’s are always looking for cost-effective business communication solutions that are simple to deploy and support. It is a very complex segment and is made up of a wide variety of customer types from individual entrepreneurs with simple needs at one end and large companies with a diverse range of telecommunication needs at the other end. As a result, the hands-on requirements of the SME segment and the associated costs have proved to be a major deterrent for appropriate investment into this sector.
However, with emerging technologies and disruptive innovation, this landscape is rapidly changing. In the last ten years, the nature and size of competition have dramatically changed and the telco’s traditional hegemony of these markets is under threat.
Within the Consumer segment (business-consumer market), the market penetration of Over-the-Top (OTT) and related neo-communication technologies is rapidly bringing to an end the attractiveness of this sector from a telco perspective. The rate of growth and margins attainable from this segment by telcos are in decline.
Likewise, within the Enterprise segment, many new OTT entrants have emerged challenging legacy telecommunication voice and SMS services making provision of data services the main game. These OTT players are rapidly diversifying their services, providing viable alternatives to traditional telco services, and are disrupting markets. For example, mobile instant messaging providers are adding voice services and mobile payments capabilities to their platforms thus threatening telcos traditional foundation revenue streams.
To survive and grow, telcos must focus on the hitherto under-serviced SME segment where they still have a customer base – there is no choice.
This paper discusses the broader challenges that confront Asian telcos and provides opportunities to create new value-added services that take advantage of their customer base and network infrastructure.