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The Three Steps to Digital Dominance

Jennifer Kyriakakis
5/27/2015
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Plenty of communications service providers (CSPs) are talking about making the transition to offer digital services. However, there's a spectrum of different strategies out there based on individual technology, business and customer requirements that must be considered.

So what are the main strategies we can expect to see emerging in today's fast-paced environment? And who are today's nascent digital leaders?

Broadly speaking, the CSPs that are leading the transformation to digital are those that are addressing unsustainable revenue streams, have listened to and are empowering their customers, and are launching digital services at a lightning-fast pace. In these changing times, it's these three qualities that will decide how well CSPs can compete on the digital playing field.

The three steps to digital dominance
Firstly, CSPs must have the ability to replace bad revenue with good, by creating a business model based on income from consumers' consented spend. This needs to replace the "bad revenue" that has historically been generated from overages and other unexpected costs, which commonly end in bill shock and negative press. (See T-Mobile Petitions Operators to Kill Overages.)

Although not totally disruptive, Google Fi took a step in the right direction by offering to refund consumers' unused data at the end of the month. However, while a refund enables consumers to pay only for the data they use, it forces them to constantly keep track of money owed to them each month and ensure they receive it. One wonders what limitations underlie Google's infrastructure to make this "after the fact" model preferable to giving customers real-time control over spending. (See Google's WiFi-First Mobile Service 'Fi' Is Here.)

The recent launch of the Dixons Carphone Warehouse 4G MVNO, iD Mobile, in the UK is more innovative because it promises to give instant account spend visibility and data usage control directly to customers from a mobile device. (See Introducing iD: The new mobile phone network built around customers and Dixons Carphone Strikes MVNO Deal With 3.)

Here, the uncertainty for consumers surrounding the monthly bill is replaced by proactive decision-making, where customers can decide in advance about purchases. Consumers know at any given moment what they're buying and can be confident of an accurate, up-to-the-second view of what they've used.

The second aspect of digital transformation is empowering consumers with convenience and choice. This focus is gaining momentum, as demonstrated by Salt Mobile SA (previously Orange Switzerland), which has rolled out different "flavored" plans based on customer "personas," and offers device, accessory, service and price options. Interestingly, each Salt Pack offers controllable service parameters that add a unique personalization twist to encourage further customer loyalty and spending, yet they are still simple to buy online with a few clicks.

The third quality that marks out a digital leader is the ability to unleash and roll out creative propositions in real-time. CSPs must deploy technology that enables them to rapidly offer personalized data packages that fit with different consumer lifestyles, rather than internal CSP accounting buckets. Subsequently, CSPs can capture share of market and wallet by reacting to consumers' demands. From the historical "inward" focus of protecting the network from usage that was tough to effectively monetize, digital leaders are now looking "outward" as they actively encourage more usage that can be closely monetized in real-time for both consumer and CSP benefit.

An excellent example of a CSP that has successfully addressed all the three strategies required to become a digital brand is Telstra Corp. Ltd. (ASX: TLS; NZK: TLS) in Australia. Telstra has upgraded its systems and is offering real-time data usage alerts and controls. This move has greatly reduced call center complaint traffic for data billing and has substantially reduced costs. Furthermore, it also clearly shows that customers will spend more when they are satisfied with their usage and charges and have real-time visibility and control over them; Telstra announced in its recent annual report that data service revenue is growing significantly, due in no small part to catering to individual customers, rather than assuming one size fits every data consumption requirement.

A technological evolution to enable digital services
So what does this mean for traditional, legacy BSS systems that have been in charge of customer offers, billing and service?

These technologies now need to be placed directly in the path of service delivery so that customers are intimately exposed to systems that only a short while ago would sit in the back office and perform batch-oriented bean counting, offline and out of the view of the customer. Now, these systems are on the frontline, handling the monetization of LTE and today's explosion in traffic, service design and pricing complexity, enabling instant transactions that affect customer experience and CSP revenues in a heartbeat. In order to compete, CSPs are reassessing their existing investments and seeking a cost-justifiable pathway to digital that gets the biggest bang for the buck.

There's nothing new about the concept of becoming a digital brand, of course, but many CSPs are choosing to launch standalone brands using the MVNO model, where sunk costs and reliance on existing systems is minimized. Some are finding that offering a personalized retail experience to customers is faster and cheaper if it is not driven at the parent MNO level.

Legacy BSS technologies are now being left behind with old businesses. Launching standalone digital brands on streamlined, real-time, self-service-based BSS will shed costs, customer service inefficiencies and time-to-market issues and will no longer be a "grand experiment." MVNOs and MVNO-like operations are capturing the digital market and in order to keep pace, MNOs are realizing that launching these self-sufficient, streamlined brands is a better way to compete than spending a lot of time and money trying to retrain their legacy assets. Watch for more of them in the near future.

— Jennifer Kyriakakis, Founder and VP of Marketing, Matrixx Software Inc.

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