Vishal Jain, Partner, Deloitte Touche Tohmatsu India LLP
2017 was an interesting year for the telecommunication sector in the country. We witnessed all stakeholders in the telecom value chain play a part towards redefining the fortunes of the sector. Telecom has now become an integral part of the operating model of many businesses and making it an important part of our lives, which necessitates it to be called a utility rather than a service. This article highlights some of the events that influenced the sector this year.
Driving Customer Behavior to an Advantage
As tariff wars continued, the customer was once again the king. The new entrant offered freebies that were happily lapped up by our data-hungry country. Incumbents followed suit and everyone latched onto a mobile screen. Even though such offerings are not financially prudent, the strategy right now seems to be who blinks first. The second half of the year did see some sense returning back to the market, however it’s still early days, and subsidized tariffs are expected to continue in the near future. Not all players could survive the tariff war and casualties started showing. Few operators decided to change their focus to specific technologies. Two major operators in the country decided to tread the remaining journey together by announcing a mega merger. The current leading operator decided to increase investments and evaluate acquisition of smaller operators.
Though pricing remains the prime deciding factor for the customer, operators came up with innovative propositions to differentiate – such as fastest network, bundled offers with premium handsets, device protection along with insurance cover. However one common thread that bound everyone was 4G and data.
The need of the hour for operators is to redefine their business models. Operators would undertake transformational programs on two fronts – one to enhance customer experience by introducing more digital interaction points and second to introduce new business models focusing on new revenue lines. The focus shall be to introduce new B2B and B2C models with telecom as the backbone so that operators can monetize their infrastructure. Other sectors can leverage the telecom assets for their benefit and also obtain targeted insights for better customer experience.
Emerging Technologies Transforming the Telecom Outlook
Everyone and everything is now digital – starting from mobile wallets to entertainment to government services. People are now accessing everything on their mobiles. This has not only fueled the growth of the telecom industry but has also accelerated the digital ecosystem development. Connected cars, connected devices, smart homes, Internet of Things (IoT), Machine to Machine (M2M) communications; everything today seems to be connected to the Internet. While this may not be a new trend, the pace seems to have picked up with smart voice based assistants/ speakers entering into common man’s lifestyle. The acceleration of 4G rollouts by the telecom operators saw a faster adoption of 4G enabled smartphones, resulting in India being one of the fastest growing handset markets. While we saw companies launching phones at the lower end of the price spectrum to cater to the masses, we also saw an aspirational demand for premium smartphones.
These two factors, i.e. new age communication technology along with massive computational power, have given rise to many emerging technologies – Artificial intelligence, virtual reality and augmented reality, robotic process automation, M2M communication etc. 2018 will see even greater adoption of such technologies in the fields of healthcare, education, entertainment etc. This will necessitate the quality of service (QoS) parameters to be relooked beyond customer delight i.e. a must have for the success of other businesses.
Smart city initiatives, digitization of workplaces, government organizations, rising usage of sensors and smart devices in day to day lives has created a significant opportunity in the IoT / M2M space. 2018 is expected to bring new developments in terms of regulation, technology, etc. in the IoT space leading to new and innovative business models.
Expanded Responsibility of Cyber Security
As we become an interconnected world, reliance on data and availability of telecom infrastructure becomes critical as it also increases the attack surface. The focus shall be to build systems and processes to safeguard all the touchpoints in the data lifecycle. Telecom service providers need to have a robust threat monitoring infrastructure – not only for their systems but also to provide services to other companies where they provide connectivity solutions. The ownership and accountability of security has expanded beyond telecom service providers’ environment, as they not only provide connectivity to other sectors, but it’s the same infrastructure that can be leveraged by the attackers.
Regulation Attempting to Keep the Pace with Trends
The telecom regulator and the government did not surprise many when the decision to reduce interconnect usage charges was made. While it did leave the incumbent operators gasping for breath in an already challenging business environment, there seemed to be some respite in place as a considerate approach for phasing out spectrum related payments was adopted.
The Supreme Court also ruled that privacy is a fundamental right. This sparked off a debate in the telecommunication world as well, with the regulator asking for recommendations from all the players in the ecosystem.
With the New Telecom Policy (NTP) coming into the picture, 2018 is expected to be a year of regulatory reforms for Indian telecom sector. NTP 2018 is expected to focus on new technologies and enable the Digital India initiative of the government. The government is also expected to focus even more on digital literacy to further empower the citizens of the country.
Getting Talent Ready for Convergence
Once considered as a sector for hub for employment across different levels and geographies, the consolidation in the industry has reversed the career aspects of many telecom professionals. Experienced professionals with specialized skills have started evaluating other options to continue their career progress. These business professionals will need to prepare themselves for new business models aligned towards extending products – OTT, B2B, managed services, etc. There are specialized technical skills required for secure enablement of products using emerging technologies – IoT, analytics, RPA, blockchain. In fact, the existing telecom professionals are appropriately placed to explore application of digital enablers in the legacy operations so as to get the most value in terms of productivity, profitability, and customer experience.
Indian telecom sector has set some exemplary benchmarks of operating in low margins and complex regulatory environment, and with future reforms and technological developments the sector will achieve new heights. The trends seen in 2017 shall continue – in fact some of them shall pick up pace. Some sort of peace and stability is expected to come in the sector as operators put a stop to declining tariffs in a bid to strengthen the bottom-line. Consolidation in the sector is also seen as a step in this direction. In fact, in order to shore up revenues, we could see symbiotic sharing models emerge between operators.
The launch of the first Indian Mobile Congress which made India the third country in the world to hold its own flagship telecom event – with participation of the top brands from the larger converged eco-system – demonstrates the importance of India in the global telecom ecosystem. The telecom sector is the lifeline of the Digital Drive in the country and it will witness significant regulatory and policy changes as well as technological transformations in the near future.
To conclude, the current year had some interesting turning points in the telecom sector, which have triggered a next era of the sector, with focus on customer retention through targeted offerings – both on pricing and convergence. With the advent of digital technologies and cross-sector collaborations, the telecom service providers need to widen their enterprise play, and other aspects on operating environment, cyber security, and regulations need to be redefined, to make the ecosystem more resilient.
With telecom impacting all aspects of our daily lives, is it pertinent to say that telecom is now a utility service provider?