For some years, we have been saying that "voice is noise," and that is true from a bandwidth consumption point of view. And, again, it's true when service providers around the world bundle voice service with data and include, for example, 1,000 minutes when you buy a certain amount of data; then voice becomes noise.
Consequences of "all-you-can-eat packages"
A consequence of selling those “all-you-can-eat packages” is that there is little room for revenue growth. Returning to revenue growth means increasing the value provided beyond connectivity.
Look at this picture from Strategy&Research and Analysis, showing ARPU growth in the world. To cope with this situation, service providers try to increase the number of subscriptions. However, so far this strategy has not been entirely successful, and most service providers today face declining top lines.
This situation is why it is time to re-invent voice service. To return to growth, the industry needs to provide more value than just bandwidth.
Digital disruption and its effects on revenue and earnings
How can you grow the top line when the offerings are mostly around selling bandwidth and the modus operandi in the market is around "all-you-can-eat packages"? Or how to add value when the prime competitors for customer wallet share are Over-the-Top companies—such as Facebook, Tencent, and Alibaba—as well as some of the largest companies in the world—for example, Apple, Google, and Amazon? The digital transformation the world is undergoing will redefine many value chains.
A recent McKinsey survey estimated the impact of digital entrants. In that study, McKinsey found that globally, digital disruption is shaving 30% off incumbent revenue growth and 25% off growth in earnings before interest and taxes (EBIT). The situation for high-tech companies is even more severe.
So, rather than sit idly and witness the erosion of one of your most important revenue streams, you need to act proactively. However, the most common strategy of incumbents is…wait and see…
Re-inventing voice service requires that you innovate the meaning of "voice," because voice will be a key telecom market trend in the coming years.
The book Design-Driven Innovation, written by Roberto Verganti, a professor at the School of Management in Milano and is connected to business schools such as the Harvard Business School, discusses how innovation is changed by focusing on the meaning for costumers. The industry talks about philosophies such as market pull or technology push. What Roberto Verganti explores is generating offerings that consumers don’t expect but that they eventually love. This is called design-driven innovation: "design" means “making sense of things.” People don’t buy products but meanings.
Innovate in the meaning
A radical change in meaning and technology is what gives you a strong differentiation from competitors in the market.
How to innovate meaning for telecom
So, the question is really this: How to can you innovate meaning for telecom in general and for voice service in particular? In the webinar me and Mariarosaria talk about innovating meaning, we're talking about creating demand. So the idea is to inform consumers what they need but have not yet discovered.
Sound risky? Not really, if it is done in the right way. That is why we in the webinar propose many small steps, not a giant leap. Each step, or service, should require very little, if any, capex. Focus should be on becoming cash flow positive within a month or two after launch.
When we in the webinar are talking about innovating in the meaning, we mean the development of a new meaning for a consumer segment, the introduction of new business models, and the redefinition of the value chain.
In the picture below, some applications are listed that work for some segments in some markets. What is important to understand is the need to develop unique offerings that create the right demand for the targeted segment in a certain market. So, the examples below are more of a general nature, and serve as an introduction to the concept. All but one of the examples below can be done purely with limited systems integration work.
Examples—innovate in the meaning
The services listed above as well as more information about innovation in meaning are described in an on-demand webinar.
You can also follow our other discussions about enhancing voice services solutions.
Mariarosaria Romano is Marketing Manager for Communication Services, at Ericsson Business Area Digital Services. Her primary focus is Marketing for Regulatory Solutions and she is exploring new concepts for a smart marketing, co-creating services in a wider ecosystem.
Mariarosaria has been working for Ericsson since 1993, starting as SW designer. In her enthusiastic journey with Ericsson, Mariarosaria has taken different roles in different technology areas: Competence Manager, Product Manager, Pricing Manager, Marketing Manager. She loves innovation and her passion is the “engine” for creativity in products/patents, processes and events.
Mariarosaria has a Master of Science in Electronic Engineering at University of Naples Federico II, the oldest public university in the world.