The value challenge in the Telco world

More about Telco’s in the web 2.0 era, the British Ofcom has massively changed the market dynamic with its ruling about making it easier for customers to switch ISP.

By making it easier to switch ISP’s they have effectively removed the last of the vertical integration plays from the Telco.

The impact, well potentially quite profound. The average ISP will now have to up its service levels or value because the cost of switching is small now. How this will coexist in an environment where free broadband is fast becoming the norm is still quite an exhilarating strategic challenge. That is to say the costs of doing business are going up while your margins are plummeting.

So what are the plays??

Well you could embrace SaaS and deliver value that way, ie have someone else build, deliver and own the VAS part of the strategy. Sounds reasonable, a definite possibility. Effectively increase your value to the end users without increasing your cost base.

I think you might see acquisition activity. Scale begets margins if you properly consolidate the backend. You could also have the added benefit of disgruntled customers shifting from one of your brands to another….

Others are going to build out the content play, sure the ISP component is free but all your favourite channels will be tied to the provider (BskyB), that’s good tie in.

How about just delivering plain old good service? Retention is a lot easier than acquisition after all. Whatever the outcome, its going to be interesting to watch.

The parallels are there for other Telco strategic dilemmas too. Mobile number portability, becoming an ICT provider, becoming a utility….

    Posted by Paul 

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