Telecom operators (telcos) have long had a bad reputation of customer (mis)management, abusive prices, overall poor service and rigid mindset. This can be partly explain by their business model. Having invested billions into a fast-changing infrastructure, they want their money back. Be it at the expense of consumers who in any case have little choice to join often similar looking carriers.
Things have changed a lot with smartphones, apps, and data. The startup economy, with its creative and ultra agile innovation, are making the best of consumer experience. They overwhelm physical networks with data use, and make the most of the consumer wallet with beautifully designed services that actually make jobs for us (and for them).
South-East Asia telcos are in the same situation as anywhere in the world, but with a more fertile background. Philippines is the SMS capital of the world. Singapore has the highest smartphone penetration in the world. Thai have more simcards than people, and Indonesia is seen as the next big regional giant with 1.5 million more middle-class users every year.
Telcos face many challenges, among which:
- the rise of OTT apps (over the top), meaning any app or service that provides a product over the Internet and bypasses traditional distribution, such as Hulu, Netflix, Skype, and more locally, messaging apps such as Whatsapp, Kakao, Line.
- rising cost of acquisition, with Singtel for instance putting aside $1.6 bn for acquisition in the coming years (to be compared to the cost of in-house innovation)
- different mindset, fueled by a business model that is not understood by users or startupers
All hope is not lost, and there are a few remedies telcos can use to avoid the dumb pipe effect:
- create/nurture an innovation ecosystem. Innovation is open to anyone, telcos included, and most of them are now leading companies in innovation funding. Singtel has its own incubator, Innov8, to name only one. It’s a good connector.
- share the distribution channel, still a strong propriety of telcos. Their ability to reach users, per mail, SMS or other means, is still unparalleled. This is an asset to share with new ventures in the form of partnerships
- Make ventures travel and adapt to local markets, are telcos have big user base, and can help startups localize better, they can also help open markets.
Thanks Echelon 2013 for this great panel, and speakers Srihathai Prammanee (AIS, Thailand), Edgar Hardless (Singtel Innov8, Singapore), Chen Chuan Loo (Singtel Digital Life, Singapore), Thomas Clayton (Bubble Motion), Marina Kacaribu (Telekomsel, Indonesia), Peter Bithos (Globe Telecom, Philippines)