business models of telco’s under pressure

One of the explicit outcomes of last week’s Mobile World Congress was definitely the quest of telco’s around the world how to adapt their existing business model to the rapidly changing behavior of consumers.

Telco’s are confronted with declining numbers in their traditional turnover being voice and texting. Most of them haven’t found an answer yet how to overcome this. Governments force telco’s to come up with more or less fixed billing for data whereas the growth of data is tremendous. Data is IP related and companies like Google and Facebook, using these are in the industry referred to as OTT (over the top). Telco’s tend to see these OTT companies as more or less immoral for not investing in the network but taking advantage of what they consider as their infrastructure.

As one CEO put it: ” we saw it (ip services) coming but were afraid to cannibalize our texting service!”. Guess what? Yes, the likes of what’s app, eBuddy XMS etc. came around anyway. As always the dinosaurs are inert to change and will become extinct if they fail to adopt to the new era.

Having said that I do believe that there are a lot of great opportunities for telco’s offering premium services for a better mobile internet experience, becoming trusted third party in (financial) transactions like Telenor is doing in Pakistan (http://www.youtube.com/watch?v=FAxkVtzt-lE) giving those other dinosaurs (banking) a hard time.

Everyone is convinced that data will grow even more rapidly over the coming years when smartphones become more and more available to almost everyone (with prices dropping under $50 in a few years). Imagine what will be happening if Google’s dream “an Android phone in every pocket” (Eric Schmidt) comes finally through! OTT or not this will happen…..

So even for Telco’s it is now time to adjust the business model or many of them will become extinct. At the MWC you could easily experience this struggle.

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