INSUBCONTINENT EXCLUSIVE:
Dieter GerdemannContributor
Dieter Gerdemann is a partner with global management consulting firm A.T
Kearney in the Communications, Media Technology Practice
More posts by this contributorFor the past decade, telecommunications companies around the globe have been grappling with falling average
revenues per user equaling stagnant growth rates.While particularly mobile operators have enabled increasing prosperity in third-world
countries, new ways of working and fueled entirely new markets, much of the wealth created has landed on the books of companies that we look
upon with increasing discomfort: Google, Amazon, Alibaba, Tencent and others
And as if this was not enough, the very ingredient — ubiquitous connectivity — that has served as lubricant for the disruption of entire
industries is now on the verge of being disrupted itself.While many expect finance or healthcare to be next on the list of global serial
disruptors, and technologies like wearables, blockchain and AI are cited to be the nails in the coffins of these industries, small players
have cooked up the ingredients that could well marginalize today’s prevailing telco business models globally
There are three ingredients that could make that happen…Lack of customer trustAmong the top 100 most trusted brands globally, you will
find companies of almost any industry, except telco
You will find our serial disruptors, big brand consumer packaged goods, car manufacturers — even banks, payment companies and healthcare
But you won’t find telcos
In their battle for growth, telcos globally have largely alienated their customers for the sake of managing yield and
profitability.Furthermore, simple customer engagement processes are often broken, and telcos have struggled to achieve a high quality of
service with zero defects, high responsiveness and a great customer experience on even their most relevant customer interactions
They have broken the trust equation with their customers.
An existing trusted relationship is hard to disintermediate. Why is that
relevant Because trust is an important ingredient in disintermediation, à la Uber or Airbnb
Uber has put trust and ease into the car-hailing business, while Airbnb has put the trust in-between guest and host
On the flip side, an existing trusted relationship is hard to disintermediate.However, the telco-customer relationship, as global brand
indicators show, is ready to be disrupted
Perhaps even more so than the bank-client or doctor-patient relationships.Liquid infrastructureWhile telcos are grappling with fixing their
customer front ends, becoming more nimble and responsive to customer needs and putting “greatness” back into the overall customer
experience equation, small startups (and large telco suppliers alike) are creating what is known as “liquid infrastructures.”In
today’s cloud-based world, global network traffic is exploding while traffic patterns, with globally scaled and load-balanced cloud-based
back-ends, are becoming more and more fluid and less predictable
Likewise, decreasing enterprise assets actually connect to the enterprise network directly.The internet of things (IoT) is creating
massively distributed architectures with globally roaming assets that need to seamlessly blend into critical enterprise applications
So, enterprises are challenged with creating more flexible network infrastructures that not only connect their various operating sites, but
also create reliable connections to public cloud service providers, while connecting remote and mobile IoT assets to the core network
And all that while accommodating massive shifts in traffic patterns depending on the day of the week, time of day or reconfigurations
happening at service providers.Liquid infrastructure promises to provide a solution for such challenges, and it’s not a concept telcos are
capable of, or offering, in the market place as of now
It is players like Waltz Networks, a venture-backed startup from San Francisco, that are disrupting the market place by providing solutions
for the completely self-managed, liquid infrastructure that can handle today’s network demand.Envision such an offering as a global OTT
service and you have a recipe for a serious contender to the global enterprise telco services market.“On the fly” mobile accessRedtea
Mobile is another such interesting disruptor in the telco space
Imagine your IoT assets are roaming around the world globally
Which telco would you go to in order to buy a data plan, plus device management, which enables you to provision and deprovision your devices
globally and on the flyTelcos globally have been struggling to come up with competitive offerings that make managing such global asset bases
That is firstly because none of the globally leading telcos can offer a truly global network — be it of their own or partner assets
Secondly, given multiple telcos are forced to collaborate if they want to offer a global virtual mobile data service, long-standing roaming
agreements often stand in the way of economical pricing models
Telcos are not yet willing to sacrifice existing global roaming revenue at the expense of a potentially growing global IoT mobility data
market opportunity.
Companies are better off disrupting than being disrupted. Despite these challenges, however, the demand is
While global mobile traffic was 7 exabytes in 2016, it will skyrocket 700 percent by 2021
That’s where Redtea Mobile comes into the picture
With Redtea Mobile’s technology, you could imagine someone buying regional capacity with enough associated international mobile subscriber
identities (IMSI), the unique numbers assigned to mobile phone users, around the globe at wholesale prices, bundling this capacity as a
global mobile IoT data service, and reselling it to enterprises globally to fuel their IoT devices.The way Redtea Mobile’s technology
works is that it can reprogram eSIMs on the fly from the cloud, so a device that operates on one mobile network in one country can be
reprogrammed to another network on the fly once it crosses the border.Both Redtea Mobile and Waltz Network enable the disintermediation of
telcos, cutting out the expensive middle man
In the scenarios described above, the end-customer relationship would likely not reside with the telco, but with a service provider smartly
repackaging core telco services with new technology into an over-the-top (OTT) service that completely marginalizes the telco to a pure
infrastructure provider — much like the Uber drivers or the Airbnb property owners
And, as my first argument suggests, it is unlikely that many customers will bemoan the demise of global telcos as customer-facing service
providers.So what can telcos doEnough cases have proven already that companies are better off disrupting than being disrupted.True, telcos
have one strength that is impossible to beat — they own assets that are hard, in most markets impossible, to replicate
However, while telcos will not vanish entirely, they run the risk of being completely marginalized
To prevent that, they should drive disruptive change of their own
While small companies are innovating, telcos could be at the forefront of deploying those technologies across their infrastructure and of
developing new and innovative offerings that disrupt their prevailing products and business models on top of those technologies.Will this be
enough to win No, telcos will still have to fix the trust equation with their customers, become more responsive, etc.But if telcos rely on
their stagnant existing revenue streams and are too timid in embracing disruption, they are likely to continue their slow path toward the
ultimate horror scenario of many telco executives: that of becoming a dump pipe.
