- 16th April 2018
- Posted by: Manolis
Facing falling revenues, telcos would need to find new revenue streams in order to stay competitive.
Telcos are facing a difficult period today. Despite the growth in mobile phone usage, many telcos have reported falling revenues over the last few years. With the growing popularity of over-the-top applications such as WhatsApp and Facebook Messenger, revenue from traditional services such as voice, SMS and roaming have shrunk.
In order to arrest this decline, telcos have reacted by spending more on marketing and advertising. Last year, telcos in the US spent over $6 billion on digital advertising in an attempt to move the needle forward to increase sales and reduce customer churn. However, advertising alone is not sustainable in the long run. The slide in revenue is expected to continue for the next few years, with revenues projected to drop by $80 billion in 2018. In order to stay competitive, telcos would have to look for alternative revenue streams. Here, we identify three new revenue streams for telcos to explore beyond 2017.
Powering the Internet of Things (IoT)
Connectivity between devices is an integral part of today’s technology. With over 50 billion devices projected to come online by 2020, the demand for connectivity services for these devices will only increase. This market is expected to be worth $19 trillion globally by 2020 and telcos are in a good position to capitalize on this opportunity with their existing infrastructure in place.
From environmental detectors to infrastructure monitoring, the list of devices that require data connectivity grows exponentially every day. Some devices may require transmitting several bytes intermittently, while others require sending large streams of data with low latency. Telcos can explore offering a range of data connectivity services to hobbyists and engineering companies developing connected devices such as these.
Providing data as a service
According to 451 Research, an advisory firm based in New York, the global market for data as a service is estimated to be worth $24 billion and is projected to increase to $79 billion by 2020. Marketers and advertisers that are looking for insight into consumer behaviour are driving this demand, along with government agencies that are tackling issues such as urban sprawl and traffic congestion with data-driven solutions.
To take advantage of this demand, telcos need to move away from traditional services and think of themselves as a data warehouse offering insight to other organisations. These insights can be tailored to different clients according to their needs and delivered directly to applications through customized data streams. As fresh data is always in demand, data as a service may even replace traditional voice, SMS and roaming services as the main source of revenue for telcos in the future.
Moving into mobile commerce
With the boom in smartphone and tablet ownership, mobile commerce has followed suit. Globally, mobile payments are expected to grow to $13 trillion this year. With more consumers making transactions on mobile devices, telcos are well positioned to play a key role in enabling mobile commerce.
Acting as a digital wallet for consumers, telcos can facilitate mobile transactions between buyers and sellers through near-field communication enabled phones. For buyers, transactions online and offline could become as simple as scanning a barcode on a poster for any item, anywhere and at any time. Telcos can monetize data collected from mobile commerce by offering insights into customer segments to sellers who want to optimize their advertising campaigns to increase conversions and sales.
Although revenues from traditional services are falling, new revenue opportunities for telcos still exist. Data as a service, IoT data connectivity and mobile commerce are the new green field opportunities that telcos must explore in order to maintain a competitive edge. With existing infrastructure already in place, telcos can also explore new and innovative ways to monetize data that they have to create alternative revenue streams.
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