How Telcos are Transforming from CSPs to DSPs
Communications service providers (CSPs) worldwide are battling a fast-evolving landscape of stagnating revenues from traditional services, growing customer expectations, and cut-throat competition from agile and well-funded OTT entrants. This resultant tightening of revenue and cost squeeze is motivating CSPs to seek new strategies to cut costs and reignite growth.
It could be said that several CSPs are surviving by incrementally improving their core business. But to kick-start sustainable growth and thrive in the digital age, it may be necessary to pivot to some other high-potential areas.
According to PwC, 5G will enable $13.2 trillion of global economic output by 2035. The coming 15 years are predicted to deliver an essential shift in how we live, work, and relate to one another. And the COVID-19 pandemic has only accelerated the transformation. For consumers, this will mean faster data speeds and universal high-speed access through services such as fixed-mobile broadband. These opportunities hold some growth potential for CSPs.
But the great news is that CSPs have immense opportunities to reinvent themselves for the new age by transforming themselves into Digital Service Providers (DSPs).
A DSP is a service provider that has advanced from offering just the exclusive telecom services to offering broadband access, content, services, and mobile apps to its consumers.
How can CSPs make a shift to being DSPs?
Growing as a DSP means putting customers at the heart of all initiatives. Most telcos visualize the customer experience as a series of touchpoints – discrete interactions between the customer and various parts of the business, like product customer service, sales, and marketing. However, a customer’s whole experience is really the big picture to focus on.
Only by considering a customer’s entire journey from beginning to end can telcos genuinely comprehend how to improve their services. What would a perfect journey feel like for the customer? What processes would enable that? How would they interconnect with social, mobile, and cloud technologies?
The objective is not to digitize multiple elements but to deliver a superior holistic customer experience. Let’s see how could telcos achieve this:
Telecom Analytics – Providing Actionable Insights for Enhancing Customer Experience
Leveraging all the data sources, internal and external, can facilitate telcos to get a 360 customer view and their requirements. The data-driven method will help them stand apart from their competition with targeted, personalized, and high-value services.
Network operators can leverage analytics to reduce customer churn, make superior marketing-spend decisions, enhance collections, and improve network design. For example, customers at risk of attrition can be recognized even before considering doing so, facilitating telcos to target retention efforts, trim spending, and maximize impact. Also, telcos can improve their marketing spending by leveraging advanced analytics to divine acquisition and retention triggers at granular levels of advertising channels instead of depending on predefined percentages or instinct to assign ad budgets. In collections, telcos can even use analytics to identify customers risking default and improve outreach for those worth retaining.
Digital Advertising – Identifying the Growth Engine
Digital advertising spending is powered by the exponential growth in the consumption of online content, mobile apps, and video. Advancements in data-driven audience analytics tied to the extensive adoption of automated advertising trading platforms enable advertisers and publishers to make real-time decisions to drive better performance of marketing campaigns.
Telcos must tap into the growth opportunities offered by digital advertising. There is an opportunity here to diversify their revenue base by becoming a part of promising high-growth digital business models. Joining the digital advertising ecosystem as impactful ad delivery channels empower telcos to grow beyond their core services and geographical reach. Advertising can become a revenue engine for telcos because of the available opportunity to monetize valuable customer data. Telcos can power content innovation, personalization, conversion, and long-term sustainability.
Telcos can place their validated customer data and behavior-centered analytics as a means to distinguish and provide added-value to both advertisers and publishers. They can marry premium content with customer data to power advertising sales. Telcos can also profit by capitalizing on open-architecture advertising platforms and becoming enablers for businesses, providers, and other ecosystem participants. Advertising revenues can be leveraged to fund free new OTT services, driving customer loyalty. Telcos also can transform the competitive landscape of digital advertising by creating horizontal data and advertising technology partnerships across geographic boundaries.
Digital technologies have made it simpler than ever for consumers to engage with businesses, yet tougher for businesses to track, manage, and enrich those interactions. The exponential rise in multichannel access builds a case for impactful customer-relationship management (CRM) systems—not just to track consumers’ digital footprints but also to decrease costs, improve consumer satisfaction, and enhance brand advocacy and differentiation. Digital CRM can help telecom operators accomplish greater cost efficiency and consumer satisfaction.
Utilizing AI-driven chatbots, online forums, social media channels, and knowledge-bases of frequently asked questions, for example, costs the average telecom company less than the typical call-center, while providing customers with a convenient, accessible source for answers and advice.
The Bottom Line
It is the need of the hour for CSPs to evolve beyond legacy systems and reshape their business models to stay significant and profitable. However, the road to becoming a digital service provider from a communication service provider is laden with growing challenges. OTT players with their transformative technology-powered platform-based business models will put CSPs under immense pressure. CSPs will have to respond by introducing innovative services, in areas like mobile money, machine-to-machine services. Forming a sustainable partner ecosystem by catering to data as a service and launching alternate monetization avenues will also help enhance revenues and allow the telcos to maintain a competitive edge.
Most CSPs still have a way to go before their DSP transformation is accomplished. But as key enablers of our connected world, they’re in a critical position to cash in on the digital economy’s flourishing monetization opportunities.