Win Win strate­gies for telcos and their ecosys­tem play­ers

In­no­va­tive pric­ing, prod­uct fea­tures, bundling with in­ge­nious rev­enue share ar­range­ments are pos­si­ble.

Voice&Data - - CONTENT -

In­no­va­tive pric­ing, prod­uct fea­tures, bundling with in­ge­nious rev­enue...

In a pink pa­per op-ed piece 10 years back, I had be­moaned the fact that the In­dian telcos were in fear of un­der lever­ag­ing their ecosys­tem, and would be bought to their knees with their en­gi­neer­ing-cen­tric ap­proach ‘we will build, and they will come’ model of tele­com growth.

Ten years later VAS as a per­cent­age of their rev­enues is still a small pro­por­tion. It is about 10%. It should have been 50% after more than 20 years of be­ing at it! Even though voice trans­mis­sion was ex­pected to re­main the cor­ner­stone of wire­less business, the growth rate of non-voice was ex­pected to out­pace it five-fold dur­ing the same pe­riod (Booz, Allen & Hamil­ton, 2004)! This has not hap­pened in In­dia at least.

Why is this so?

First, the shift from a mar­ket par­a­digm dom­i­nated by rapidly com­modi­tiz­ing prod­ucts viz. voice-SMS (com­fort zone) to a par­a­digm of mul­ti­plic­ity of data and other ser­vices (un­charted zone – where cer­tainty of de­mand is un­even, though up­side po­ten­tially sig­nif­i­cant) is not an easy one. Wire­less car­ri­ers to­day need to make seis­mic not sub­tle changes in their mind­set. Hav­ing en­gi­neer­ing cen­tric DNA has seen its sun­set years. Nor is bring­ing in FMCG man­agers. Tech­nocrats – with nim­ble and keen un­der­stand­ing of tech­nol­ogy, and hav­ing done so within con­sumer busi­nesses is the new right stuff.

Cur­rently, rev­enues ac­crue from con­nec­tion, whether it is time or vol­ume-based fees. Com­pa­nies charge con­sumers to ac­cess their great­est as­set: their net­works. Be­cause rev­enues have thus far been de­rived from charg­ing rent for use of net­works, car­ri­ers have been em­broiled in bru­tal com­pe­ti­tion on pric­ing, and net­work qual­ity. This time could have been bet­ter spent on forg­ing third party (renters) col­lab­o­ra­tion with third party part­ners to al­low use of net­works as a vir­tual dis­tri­bu­tion chan­nel. This means closer in­te­gra­tion and com­pe­ti­tion amongst spec­trum own­ers, hand­set man­u­fac­tur­ers, con­tent own­ers, soft­ware ven­dors and ap­pli­ca­tion de­vel­op­ers. For e.g. OTT/ twice- over- OTT seem both a threat and op­por­tu­nity. I look at it more as the lat­ter. While OTT play­ers have clearly ben­e­fited in round one. Telcos need not feel short-changed. That is in­deed the lay of the land. Telcos and OTT to­day have be­come closely in­ter­twined, where the lat­ter can’t do with­out the telco, and vice versa. In­no­va­tive pric­ing, prod­uct fea­tures, bundling with in­ge­nious rev­enue share ar­range­ments are pos­si­ble. I can think of sev­eral ways to ex­tract monies from cur­rently popular OTTs with­out up­set­ting the ap­ple cart, and thus lead­ing to en­hanced rev­enues for both. This is based on the premise that telcos are not the only ser­vice

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