Cashing in on change

Patrick Bossert, industry lead for telecoms at Convergys, an outsourcer specialising in customer service and support, tells CommsMEA about the changing dynamic between operators, content producers and end users, and how incumbent operators in the Middle East can profit by adapting their business models to local trends.

You have said that telecom operators need to start behaving more like retailers. What do you mean by that exactly?

There is still too much network culture embedded in the typical telco organisations which have grown up running their own network, and not enough retail culture and retail focus. For example, most telcos still have separate care operations for their fixed-line voice, broadband and mobile services, so bundled customers are often passed around between lots of different departments.

That isn't really the hallmark of a good retail operation which puts its customer at the centre of the experience. Another strand of the telco-to-retail story is that there are a number of businesses that have moved into the media content and aggregation space - businesses like Apple iTunes, Yahoo, Ovi - that are effectively acting as music, games, and media brokers.

Where do these companies fit into the equasion?

These aggregators sit slightly further up the value chain from the telcos and suddenly, instead of selling through the telcos they have started monetising their service direct with the end consumer, which has taken away a big chunk of anticipated revenue from the telcos - and we have seen it really hurt them.

In Western Europe right now, although the data volume on the networks is growing up at double digit rates, the data services revenues for anything other than access for the big operators like Vodafone and Orange is growing at just 2%. Yet the investment they have had to put in place for the network infrastructure and portals they have built is phenomenal.

The need to start looking much more at the retail dynamic and how they work better with the aggregators to support the end customer in their local territory and local language to handle business aspects such as identity validation to handle payment processing on behalf of the aggregators.

Unless they start doing all of those things and really looking where they are in the retail chain, they're in for a very bleak future where really they just end up as commoditised bit-pipes.

We have seen that happen in Western Europe and I think the Middle Eastern market is slightly different in its dynamic because you have a far higher percentage of pre-paid customers.

At the moment, the financial control of the money stays very much with the operator, but there are a lot of lessons that we have seen in Western Europe that the Middle East operators and to a lesser extent the African operators do need to take into account when they are designing their future business models.

Are operators in the region learning the lessons of their Western counterparts?

There is a lot of interest in what has happened. These days it is rare to have a completely standalone telco. They are usually part of some parent group that has interests in Western Europe, and certainly it shows. At last year's Mobile World Congress, I would say the majority of meetings we had were with Middle East telcos that had come to talk to us about the need to transform their business in terms of being more customer-centric.

There is much better awareness and the companies are beginning to do the right things. This customer-centric transformation - putting care at the centre of things and then making sure that your billing and provisioning and all other processes work across different network elements to support that - is really important if you're looking to compete in the future.

What revenue drivers do you see in the future?

The operators have several things that the upstream content providers don't want to do. The upstream providers such as Apple, Nokia, and Yahoo are essentially wholesale businesses.

They are pulling together content to sell to global markets. They don't actually want to provide localised customer care. Those businesses are looking for local telecom providers to provide local market knowledge and share some of the value of the data they have.

Operators are sitting on a lot of valuable assets that they can monetise, not only with the end customers but also with the upstream partners as well. We see again from Western Europe that over the next five years this relationship between upstream aggregators and partners could potentially turn into a US$300 billion business in its own right.

How do you view services such as mobile TV?

So far mobile TV has shown limited success wherever it has been trialed. If there is less television infrastructure on the ground, and if the price points can be right, there is much greater scope for greater uptake, but I don't think mobile TV is necessarily going to be the thing that does it.

It's really back to operators acting as good retailers who understand what's going on in their market in terms of events through the year, specific cultural events. They find and tailor content, whether it's broadband or mobile delivered....they will tailor it to their local market.

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