Telco 2.0™ Research

The Future Of Telecoms And How To Get There

Telco-Driven Disruption: Will AT&T, Axiata, Reliance Jio and Turkcell succeed?

 

Summary:  To find new revenues, some telcos are competing head-on with the major internet players in the digital communications, content and commerce markets. Although telcos’ track record in digital services is poor, some are gaining traction. AT&T, Axiata, Reliance Jio and Turkcell are each pursuing very different digital services strategies, and we believe these potentially disruptive moves offer valuable lessons for other telcos and their partners. (Dealing with Disruption, June 2017)

Telco driven disruption

  

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Below is a short extract from this 49 page Telco 2.0 Report that can be downloaded in full in PDF format by subscribers to the Dealing with Disruption Stream here. To find out more about how to join or access this report please see here or call +44 (0) 207 247 5003.  

Introduction


The latest report in STL’s Dealing with Disruption in Communications, Content and Commerce stream, this executive briefing explores the role of telcos in disrupting the digital economy. Building on the insights gleaned from the stream’s research, STL has analysed disruptive moves by four very different telcos and their prospects of success.


In the digital economy, start-ups and major Internet platforms, such as Alibaba, Amazon, Apple, Facebook, Google, Spotify, Tencent QQ and Uber, are generally considered to be the main agents of disruption. Start-ups tend to apply digital technologies in innovative new ways, while the major Internet platforms use their economies of scale and scope to disrupt markets and established businesses. These moves sometimes involve the deployment of new business models that can fundamentally change the modus operandi of entire industries, such as music, publishing and video gaming.


However, these digital natives don’t have a monopoly on disruption. So-called old economy companies do sometimes successfully disrupt either their own sector or adjacent sectors. In some cases, incumbents are actually well placed to drive disruption. As STL Partners has detailed in earlier reports, telcos, in particular, have many of the assets required to disrupt other industries, such as financial services, electronic commerce, healthcare and utilities. As well as owning the underlying infrastructure of the digital economy, telcos have extensive distribution networks and frequent interactions with large numbers of consumers and businesses.


Although established telcos have generally been cautious about pursuing disruption, several have created entirely new value propositions, effectively disrupting either their core business or adjacent industry sectors. In some cases, disruptive moves by telcos have primarily been defensive in that their main objective is to hang on to customers in their core business. In other cases, telcos have gone on the offensive, moving into new markets in search of new revenues.


Increasingly, these two strategies are becoming intertwined. As regulators use spectrum licensing and local loop unbundling to fuel competition in connectivity, telcos have found themselves embroiled in damaging and expensive price wars. One way out of this commoditisation trap is to enhance and enrich the core proposition in ways that can’t easily be replicated by rivals. For example, BT in the UK has demonstrated that one of the most effective ways to defend the core business can be to bundle connectivity with exclusive content that consumers value. This report analyses four very different variants of this basic strategy and their chances of success.


Note, the examples in this report are intended to be representative and instructive, but they are not exhaustive. Other telcos have also pursued disruptive strategies with varying degrees of success. Many of these strategies have been described and analysed in previous STL Partners’ research reports. Digital transformation is a phenomenon that is not just affecting the telco sector. Many industries have been through a transformation process far more severe than we have seen in telecoms, while others began the process much earlier in time. We believe that there are valuable lessons telcos can learn from these sectors, so we have decided to find and examine the most interesting/useful case studies.

     

    ...to access the other 48 pages of this 49 page Telco 2.0 Report, including...   

        • Executive Summary
        • Introduction
        • Strategy One: Aggressive Acquisitions
        • AT&T - how will engineering and entertainment mix?
        • Strategy Two: Fast and Fluid, build a portfolio
        • Axiata places many digital bets
        • Strategy Three: Leapfrogging the legacy
        • Reliance Jio - super-disruptor
        • Strategy Four: Building an elaborate ecosystem
        • Turkcell goes toe-to-toe with the big Internet ecosystems

    ...and the following figures...   

          • Figure 1: Figure 1: The largest pay TV providers in the US in September 2016
          • Figure 2: Fullscreen Entertainment – free to AT&T Wireless customers
          • Figure 3: AT&T’s television customer base is shrinking
          • Figure 4: But AT&T's Entertainment Group has seen ARPU rise
          • Figure 5: Celcom Planet’s 11Street marketplace caters for all kinds of products
          • Figure 6: XL has integrated its commerce and payment propositions
          • Figure 7: The Tribe video-on-demand proposition majors on Korean content
          • Figure 8: 4G was designed to deliver major capacity gains over 3G
          • Figure 9: Vodafone’s view of spectrum holdings in India
          • Figure 10: Reliance Jio is offering an array of entertainment and utility apps
          • Figure 11: Reliance’s network is outperforming that of rivals by a large margin
          • Figure 12: Vodafone India has slashed the cost of its mobile data services
          • Figure 13: Vodafone, Airtel and Idea account for 72% of the Indian market
          • Figure 14: The performance required for Reliance to achieve a ROCE of 18%
          • Figure 15: Digital services have become a major growth engine for Turkcell
          • Figure 16: Downloads of Turkcell's apps are growing rapidly
          • Figure 17: Turkcell TV+ is gaining traction both on and off network
          • Figure 18: Turkcell’s ARPU is growing steadily
          • Figure 19:Turkcell is seeing rapid growth in mobile data traffic

       

      ...Members of the Telco 2.0 Transformation Stream can download the full 49 page report in PDF format here. For non-members, to find out more about how to join or access this report please see here or call +44 (0) 207 247 5003. 

       

      Technologies and industry terms referenced include: APIs, big data, business models, content, digital commerce, digital services, location based services, mergers and acquisitions, mobile advertising, mobile commerce, mobile marketing, mobile payments, personal data, strategy, telco strategy.