There is a three-way battle for the customer brewing up in the telecom world and if you live in India, Indonesia or any other Asian emerging market, it is coming to your screen soon. The three combatants are Applications, Devices and Networks and here is the reason why each is battling to secure the customer’s heart (and wallet):
Applications (or apps): For smartphone and connected device users, the range and relevance of apps go a long way in defining the essence of their communication experience, in terms of utility, entertainment and quality of the experience. By using location, presence, contact syncing and other services, app providers are forever developing new ways in which they can be more and more central to defining your user experience. Think Uber, Alibaba, Flipkart and Google as a few examples of app providers engaging in winning you over. When telecom networks in Asian markets are taking communications to every corner, it appears to be apps which are taking multifarious services over these networks to the connected user. Think money transfer, ticketing and healthcare.
Devices: As devices become data-enabled and computer-like, they are becoming the user’s preferred choice of physical interface to the connected world. Users choose handsets wisely, upgrade often, personalise and show them off to their friends. Demand for greater handset sophistication in emerging markets is high. According to a survey conducted by PwC in India, 57% of low-income users aspire to purchase a phone that is twice as expensive as their existing one. They don’t have to. Smartphones sell at below $50 now, compared with three times the price as many years ago.
Chinese handset manufacturers such as Xiaomi and Gionee and Indian players Micromax have entered foreign target markets and in some cases have set up local assembly plants, helping them save on duties and facilitating local market customisation. With syncing tools to manage all the screens in your life, cloud storage and back up, personalisation options, camera-like imaging as well as high-density user interfaces, manufacturers are continuously producing gadgets to better control your user experience.
Networks: Perhaps the least seen and felt, the long-term evolution (LTE) network offers the opportunity to bring unseen richness, versatility and security to a user’s communication experience. More advanced than 3G networks, LTE (or 4G) enables a level of interactivity to give enriched communications such as image-sharing, video and file transfer, on-demand conferencing and live location-sharing during the voice call itself. This promises to transform how we interact with each other and network operators are banking on IP-enriched services to win back customer loyalty from the allure of delectable devices and addictive apps. Rich Communication Services (RCS) promise to do more than apps by integrating the apps experience into a more seamless one, with less sign-ons and more network support to give rise to better user features and interactivity.
Ironically, it is the telecom operators that are currently facing the biggest challenge to get ahead in this three-way war, and they also have the greatest amount of value to lose. I say this is ironic because when compared to app providers and device manufacturers, telcom companies have by far the most infrastructure, the longest and most established business history, sales and distribution tentacles that penetrate the deepest corner of every market, and by far the highest number of signed up customers. For most users voice services remain the most critical and often lifeline service.
But even the basic voice service of mobile operators is under attack now. Messaging offered through apps are taking off quickly, either due to the functionality offered from combining instant messaging and sharing images with calls (Whatsapp), or because such apps enable users to make international calls at little or no cost (Skype and Viber) if they are on a wireless data connection. Each country has unique reasons why one or the other service takes off: In India, Whatsapp is popular due to the popularity of image sharing, whereas Viber is a bigger hit in Myanmar and Bangladesh, perhaps because it operates better for voice calls at poorer bandwidths. Philippines remains, uniquely, a market where SMS remains a primary form of communication, but this may be expected to change as smartphone penetration builds from the current 30 percent to 50 percent and beyond in the next couple of years.
The emergence of messaging alternatives to SMS, and the expansion of messaging to take the holy grail of ‘minutes of use’ away from traditional network-based voice calls, is just one of the reasons why telcos are feeling under pressure in the battle for the customer’s heart and wallet. I will explore the other reasons in a few days’ time in a sequel to this article.
(I have completed my short sabbatical and look forward to re-energising ‘No Wires Attached’ so your comments are welcome.)