Are We Letting App Developers Take Over the Telecommunications Industry?

Posted on: March 3rd, 2014 by NewNet

Mobile operators have to keep their eyes on a lot of different moving components within their business – it’s a challenging job that requires one foot in the present and the other in the future. My observation is the area that gets the most focus is the one with provides the most sizzle, and becomes the concentration because there is an underlying belief that sizzle brings new customers.

It’s unfortunate that in the size and growth of telcos that the marketing department, acquisition department and retention department became groups of people that not only rarely talk, but also are often located far apart from one another. Looking at the big picture, these operators could see that the time, effort and money spent to win a new customer over far exceeds that effort and funds that are needed to keep current customers happy.

Messaging is one of these areas – perhaps lacking in sex appeal (so hard to sell into the marketing team) however its demonstrated benefit to retain customers is being overlooked.

Operators have been waiting to see how the messaging world will evolve and decide when the time is best to get in the game. The time is now. Over the top messaging apps like Viber and What’s App are not only securing users, but engaging investors and are now being acquired. Facebook was willing to acquire 450 Million subscribers at an average cost of $43/customer. Viber’s investors were willing to lose about $30 million per year in order to accumulate 350 million users (in three years) and generate a paltry $1.29 Million in revenue. What cost are operators willing to pay retain those customers on their brand? The Answer: apparently nothing. In fact some want to partner with the enemy, somehow figuring if you can’t beat them, you should join them in an unholy alliance.

The game has changed.

OTCs have rallied themselves into a position where they are being bought and sold on the premise that someday their system will have a means to monetize. These apps are currently reducing mobile operator revenues, providing customers with alternate messaging options, and are widening the telecommunications industry. A large subsection of the telecommunications economy is being driven by a group of people that include few mobile operators.

So why are the operators waiting on the sidelines? By sitting back they are letting others plan their future. Operators should be spending their money on winning customers back, and trying to catch up in an industry that they once led. Operators must begin to invest without a guarantee of an immediate return because that is the game their competition is playing.

If these obstacles aren’t overcome, mobile operators will soon find themselves phased out in an industry that has evolved around them. What I want operators to understand is that the rich features of RCS, including VoIP/WiFI calling, Video sharing and true interoperability can help retain customers without costing millions in development and execution costs. Even better if they follow the lead of China Mobile and do it in with an all IP network with natively embedded solutions right on the handset without crazy pricing plans, consumers will never have the need to defect.

Having worked in the telecommunications industry for years, the team at NewPace built rcsConnect knowing the obstacles to development and implementation. Our RCS provides a range of options that can move an operator from a hosted, off site customer test, to a system that is integrated in house and adapted to meet current needs.

So I ask, why would you wait on the other guy to take the lead, when with some guts and very quick moves you can retake your position at the head of the pack?

— Brent

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