Where should operators focus service innovation efforts?

Becoming more innovative is a clear strategic goal for most operators but it’s also true that translating intention to action can be problematic. Currently, many are fixated by the solutions offered by alternative providers, which appear to offer a template for future innovation. This is misleading. Emulating such offers isn’t the right approach and will not necessarily produce rewards. Instead, innovation can be found in other directions which are more closely aligned with current operator offers.

As operators search for innovation, much of their attention is obviously focused on the services that they can deliver. In particular, they have been challenged by the rise of alternative offers. However, in today’s digital economy and with the rise of millennial attitudes, there is a risk that services are confused with applications. What does this mean?

Of course OTT providers have had an impact on operators’ businesses. However, in evaluating their impact and deciding what they should do, operators are not necessarily making the right comparisons. Simply concluding that they have to follow and copy such providers isn’t necessarily the right answer. Yes, it’s true that revenue decline in areas such as messaging is attributable to the rise of competitive services, but a certain amount of revenue decline should have been anticipated – prices cannot remain high forever and there are limits to growth, for example. OTT offers are different, in many ways, which means that they are not necessarily the right model to consider as operators seek new paths for innovation.

In the case of, for example, a typical OTT messaging offer, the user is tied to the application, which undergoes periodic evolution, through the addition of capabilities. The opportunities for innovation are varied, as features such as emoticons, picture sharing and so on can easily be added. But it is not a classical service in the sense that it’s a continuous, real-time offer. It’s a best-effort solution with which users engage intermittently. Certainly, it has characteristics representative of a service but it’s not the kind of service with which operators are familiar.

Crucially, user expectations are that they should be free – monetisation comes from other forms of interaction through the portal of the application. Ironically, recreating the dreaded walled gardens for which operators were so criticised some years ago. Certainly, people, particularly millennials, like apps, but the usage of them is different from classical operator services. In this context, should operators be seeking to innovate by emulating such applications, which have unfamiliar business models, uncertain revenue generation potential and new forms of customer interaction?

Wouldn’t it be better to attempt to innovate in more familiar areas? It seems the answer is yes, at least according to Arthur D Little. In a recent report “Innovation Quest for Telecom Operators”, jointly published with Match Maker Ventures and the Telecom Council, Silicon Valley, it’s clear that delivering enhanced communications offers in the B2B domain are a significant priority.

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By focusing on more familiar territory, the opportunities for innovation can be more easily identified and more closely match existing capabilities. Take voice, for example. Voice is a real-time service that has QoS characteristics. Operators are already taking steps to enhance it, through the addition of HD capabilities and more, but that doesn’t necessarily offer incremental value or revenue.

However, voice as a service can be supported with other capabilities, such as the efficient management of call delivery and contextual information. These enrich the service and make it more attractive to customers across different segments. Yes, evolution of consumer offers can be expected but the target there is moving fast and it’s moving through the medium of applications. On the other hand, network-based business voice services offer a more attractive and approachable target because business users view services differently from application focused consumers.

Business users will pay for services that deliver the necessary capabilities and qualities and offer more potential to secure a return from investments. That’s why operators “with historically stronger footholds in the B2B sector have proclaimed the B2B segment as their future”, according to the report.

This means a clear focus on a given, easily identifiable market, with investment in evolution of existing offers must be a priority before other opportunities can be explored. Delivering effective network-based Unified Communications, potentially enhanced through interaction with third party solutions (that are developed elsewhere) provides a much easier target to reach than emulating something that is, essentially, free to use and is less of a stretch than, for example, launching a mobile insurance service. If you’re concerned about how to extend your B2B offers, then you should talk to us. We’ve decades of experience in helping operators from all over the world achieve this, so get in touch and find out how we can help you target your innovation in the right direction.

B2B Communications, B2B Offer, OTT

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