Digital Transformation in the Telecommunications Space

Digital transformation in the telecommunications industry is the digitalisation of services offered by telco companies such as text messaging and calling, offered through various competitor apps such as WhatsApp, Facebook and WeChat. The introduction of these apps is a threat to the telecommunications industry not only because it offers direct competition, but also because these competitor companies are often driven by strong customer relationships and brand loyalty. It is much more difficult for a telco to build brand loyalty through services considered “traditional” today with the onset of apps that have grown to be more popular.

To overcome this, telcos must engage their customers to build loyalty and improve services to outdo those offered by competitors. One way to do this is by providing services that are likely to build brand loyalty such as smart home and e-health services that allow the customer to do more than make calls and send messages.

Netherland’s KPN introduced the Asian social networking app – ‘WeChat’ to its network. This partnership enabled their customers to use WeChat’s payment app, buy tickets and make hotel reservations. It has also enabled the network to cater to over hundreds of thousands of Chinese visitors – the country of WeChat’s origin. KPN started their transformation by digitising their business. They consolidated backend systems and unified the digital layer. The process started at the front end and worked with cloud technology and open-source software. [1]

Furthermore, telcos must use traditional services for non-traditional outcomes and applications in IoT settings, such as by building partnerships with health insurance companies to offer e-health services or with home electronics manufacturers to offer connected home services. Hua Liang, Chairman of the Chinese Information and Communication Technology company Huawei, estimates that in 2025 digital services will be 20% of the revenue of the telecoms industry.  [2]

Many telecommunications companies already offer unlimited data plans to attract customers, however, telcos will now need to take a step further by offering a specialised customer experience, flexibility in plans and personalised services. This will further meet consumer demands and build a loyal customer base.

Turkcell, a Turkish mobile phone operator, say they have been changing from ‘being an infrastructure player to being a real digital operator.’ Their decision to begin a transformation journey began when they analysed their customer consumption pattern.

Their average customer spends 3.5x more time on the internet, music, and television viewing than making phone calls. To capitalise on these customers who comprise of about 70% of their total customers, Turkcell launched a digital arm – Lifecell – similar to the social networks, WhatsApp and Facebook. They even developed their own search engine – Yaani. Today, 20% of their customers are on their own e-commerce platform. By not being afraid of data growth, Turkcell has diversified their source of revenue. LifeCell’s core suite of nine digital apps has been downloaded over 80 million times, serving more than half of Turkcell’s customers. This transformation has allowed Turkcell increase revenues by over 50% in the last two years. [3]

Some of the ways telcos can maximise their chances of success in the age of digital transformation are through data analytics, machine learning, and better software. Data analytics, for example, can be used to collect information about network usage patterns to create solutions to future problems like network overloading. Combining this with machine learning, telcos can begin to predict when their network is likely to be overloaded and adjust their capacity in a precautionary manner to offer the best service. Better software will also increase network performance and improve efficiency, even by using existing hardware, allowing companies to save costs and improve profitability in the long-run.

Deutsche Telekom has launched a Pan-net unit that is designed to transform its national operations outside of Germany. Their services to be transformed “started with easiest, such as messaging and voice over Wifi”, and on the business-to-business side, it started with secure cloud services before moving on to cloud-based customer premises equipment. They now have 160 million unique users. [4]

DT in the Telco space is pushing even hardware makers to embrace the change. Finnish mobile hardware seller Nokia has partnered with Infosys to help enterprises digitalize business and operational processes for communications, media, and entertainment companies. This strategy helps Nokia of expanding its customer base outside of the traditional telco sphere, as this will help them diversify into the smart education market, leveraging wireless broadband, cloud and IoT technologies to create digital education solutions. [5]

A business transformation centered around enhancing the customer experience always wins. The telecommunications industry is no exception. Data explosion, soon to be introduced 5G, cloud computing, Augmented Reality, Artificial Intelligence, are all redefining customer engagement and usage of telco networks.



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