The speed at which our digital and hyper-connected world is changing has diminished the longevity of many businesses. According to a recent article published at the American Enterprise Institute, the lifespan of Fortune 500 companies half a century ago averaged 75 years. Nowadays, the same companies barely make it past 15.
The telecommunications sector is paradoxically one of those most affected by the reduction of a company’s lifecycle. Despite being in a strong positions to capitalize on the opportunities offered by the new digital economy, the entire sector is immersed in a crisis that is affecting both its identity and its revenues.
How can telcos survive as well as thrive in the digital era?
This post is also available in Spanish.
The diminishing role of telcos in the new digital economy
Many agree that an initial crisis among telecommunications companies was provoked by the launch of the first iPhone in 2007. It led to a reversal of traditional roles within the industry: operators, who traditionally dominated the market as bandwidth providers, became mere utilities, while service companies started to take up the reins of leadership.
At present, it is estimated that only 20% of the revenues generated by digital business end up in the pockets of telcos, while the remaining 80% is held by companies like Facebook, Whatsapp, the Apple Store, Google Play or by companies such as Salesforce on the B2B market.
To make matters worse, telcos diminishing share of the digital pie has coincided with the decline in traditional business products such as voicemail or SMS, leaving these companies in a compromised position.
Advice to ensure telcos to not miss the digital transformation bandwagon
Despite these difficult circumstances, it is clear that telcos still occupy a privileged position in a digital age that prioritizes greater interconnectivity, and are therefore well within the reach of lucrative opportunities.
To start capitalizing on them, here is a list of 5 recommendations taken from a wide range of literature on the subject:
1. Accept that the market has changed
Telcos must acknowledge that for years their sector has been governed by complacency and conservatism that characterizes industries with little competition and sustained income growth. Facing a changing business climate while ignoring challenges and failing to alter current cost structures will ultimately lead to failure.
2. Satisfy the digital consumer
Telcos must also consciously search for new business models in the same way as many digital startups are doing, simply because they better meet the needs of customers today.
The consumer has come to occupy the center of the digital economy and therefore meeting and exceeding their demands must be at the forefront of any company’s strategy. Telcos must offer an optimized user experience as well as sell cheaper and more flexible products that are available through any channel or device at any time.
These new digital businesses may arise from emerging technologies such as wearables, e-health or home automation, just to name a few examples that are listed in the Internet of Things, or otherwise from as-yet undiscovered innovations.
3. Rethink business relations with key suppliers
The hunt for a portion of the digital pie seems to have been implicitly waived in recent years in favor of using Amazon, Apple and similar companies. It therefore must be accompanied by a redefined relationship with vendors of devices, content or software. Telcos need to be open to the fact that these companies can offer, for example, packages that include a connectivity component.
4. Pay greater attention to legislation
Local governments and supranational institutions like the European Union are seeking to encourage more and more competition in this particular sector. It is therefore highly likely that they are going to increase regulatory pressure on telcos to expand their accessibilty and reduce prices.
5. Maintain data privacy and security
The way in which issues related to privacy and data protection are addressed will become increasingly important, since privacy as a concept is becoming completely redefined. Therefore, data security should be an absolutely priority for businesses, particularly given the rising number of cyber-attacks in our digital age.
Among the solutions that telcos can employ to better meet the demands of their digital consumers, one that particularly stands out is the digitizing of contract management. By removing the use of paper from a business transaction, the customer’s experience is radically improved. The time needed to print, sign and send the scanned contract by post or mail is saved. Processing times are reduced as are the company’s costs, both in terms of transport and storage.
If you want to know how Signaturit can assist in the digitization process, feel free to try our electronic signature tool (14-day free trial). For more information, you can download the whitepaper below or call us on +34 935 511 480.
This post is also available in Spanish.