Time for telcos to lose their voices

As voice and data convergence gathers pace, firms should prepare to look beyond current revenue streams, argues David Blundell

Traditional voice revenue streams are set to disappear over the next five years, so telcos must look to a new business model to take them forward. The convergence of voice and data and a loyal customer base may provide the answer to those who have the vision to embrace the future.

Historically, telcos have enjoyed a monopoly that has provided them with a secure and stable business model, relying on classic voice traffic revenues.

However, times are changing, and telcos now face an unprecedented business challenge: convergence. The advent of the internet, and the pervasiveness of packet-switching IP network protocols, have enabled the development of networks that carry data and video, as well as voice traffic. These have brought voice traffic costs down to a minimum.

The result is that in five years’ time, voice revenues could be negligible. Unfortunately, many telcos still have to recognise that their core business is going to disappear completely. Brave chief executives and management boards should now be starting to focus on establishing new, profitable revenue streams. By accepting the situation, they still have time to generate the new business that they so desperately need.

The major challenge facing telcos is how to re-invent themselves.

All enjoy a significant asset: their loyal and valuable customer base. Unfortunately, it is an asset that has often been overlooked in recent years, and yet, this is precisely where their future lies.

In this era of customer relationships, organisations no longer want to maintain and manage 50 diverse suppliers that completely understand their business, and are able to facilitate and manage all of their growing converged IT requirements. Telcos, with their loyal and large customer bases, are in an ideal position to expand their portfolios and become the trusted service suppliers of choice to many, if not all, of their business customers.

Achieving this will require a new mindset and a completely revamped business model. Keeping ahead of the competition demands not only product innovation, but also the ability to leverage technology to drive down overheads. For example, the introduction of new electronic sales channels alongside a direct salesforce.

Some telcos are also re-examining their business processes to better exploit the online platform. They are introducing new go-to-market plans based on service delineation, designed to develop innovative internal and external marketing campaigns to attain rapid market awareness. Such new services are providing these forward-looking telcos with capabilities that are valued by their customers. They are reducing the cost of sale, and are enabling these companies to target a far broader market than they were able to do previously.

This is not to say that the existing voice business should be totally forgotten, but it should no longer be the main focus of the telcos. In five years’ time, the successful telco will be the one which today recognised the need to transform itself into an integrated customer-focused service company.

Those that are innovative in how they approach these challenges will gain a strong competitive edge in the convergent world that is emerging. They will thereby increase customer retention, drive revenues and enhance profitability.