3 tips for communications service providers in Singapore to find the right business model

The last 10 years have seen a rapid transformation of a variety of industries due to the digital revolution—it’s clear now that everything that can be digital will be digital in the very near future. In a market like Singapore where both businesses and consumers are active adopters of digital technology, the impact of this digital revolution on business has been remarkable, especially on companies directly impacted by the delivery of digital-based services, and more specifically communications service providers (CSPs).

Today’s CSPs are not only faced with the challenge of rapidly transforming their business operations to deliver enterprise-grade digital services, but they are also challenged by ensuring service reliability, security and scalability as the digital service ecosystem is poised to grow by leaps and bounds over the coming years.

For CSPs, the time for action is now. Preparing their business operations today for the momentum of the digital wave can enable CSPs to grow in the face of shrinking SMS and messaging revenue, help them partner with emerging over-the-top (OTT) players, maintain a strong customer base and be an active part of what promises to be a vibrant digital economy.

Evolving beyond the traditional
In order to find the right business model to operate in today’s economy, CSPs need to first look beyond the traditional. In a recent digital services survey of over 150 executives from global service providers, TM Forum, a global, non-profit industry association, found that company culture is a significant inhibitor to innovation.

It’s true that the traditional and inflexible nature of the vertically-integrated telecom sector makes it challenging for service providers to build strategic partnerships. However, putting the right processes in place to evolve beyond the traditional will open up avenues for CSPs to encourage innovation and cultivate partnerships that will enable business models that facilitate and monetize a vast range of digital services.

While adopting a particular strategy for digital services is very much dependent on individual CSPs, the sheer diversity of requirements expected for digital services is one of the main challenges of embracing the digital revolution. That is why success requires focus, vision and radical thinking, including focusing on a set of core competencies: security, customer experience management, big data analytics, revenue management and partnership lifecycle management.

Finding value in partnerships
Because digital services have fragmented value chains, they demand cooperation among multiple ecosystem players for solutions that are brought to market. However partnerships are difficult to establish for a number of reasons cited by TM Forum’s survey respondents (see Figure 1), including: partner identification, establishing relationships with developer communities and the lack of control over the value chain. But the benefits of partnership far outweigh the challenges. For example, partnering with popular OTT providers allows CSPs to capitalize on offering premium content, which will play an increasingly important role in the consumer market in coming years. Integrating premium content creates an opportunity for CSPs to improve users’ experiences and benefit from innovative services cultivated by partnerships and collaborative efforts. 

In addition to consumer markets, partnerships provide means of extending the market and revenue streams for CSPs across a variety of market segments, such as consumer, small to medium and large enterprise and in particular in the M2M market where solutions are applied to a wide range of services, including automotive, transportation, healthcare, retail and energy.

Indeed, CSPs must develop partnerships in order to play a lesser role across a wider variety of markets. As partnerships become more commonplace, traditional CSPs will shift their businesses from being product-centric to retail-centric and the shift will enable two-sided business models that bring players together to facilitate and monetize digital service innovations.

Devising a strategy
Devising a strategy for digital services requires extensive experimentation and creation of business models and service offerings that may not necessarily have been executed before. Equally important to finding the right business model is finding the right way to execute these strategies. The overarching learning points from companies such as Google and Skype, companies whose names are synonymous with the services they provide, is that their success hinged on finding an easy way for people to do the things they wanted to do, catering to the mass market. Innovation is not about finding a billion dollar idea: it is about being able to consistently provide services that make things simple for customers, and understanding that a good idea is not necessarily a ‘big’ idea. 

At the heart of all the considerations around innovation and broadening the scope of offered digital services remains the core activities of CSPs. Some communications service providers, such as SingTel Optus and Telefónica Digital, have opted to create separate business units to deal with digital services and core activities.

Most importantly, whichever way CSPs turn in the digital world, they should keep focused on the crucial ingredient of success which is maintaining an open and agile approach to innovation and integration. Specifically, CSPs need to focus on building a scalable business platform able to deliver an agile and constantly evolving set of products, services and support multi-partner business models at the lowest possible cost; and opening up their existing capabilities securely and globally.