Incumbent telcos are now facing a paradox, explains a McKinsey report. On one hand, the demand for digital products and services is skyrocketing. At the same time, however, consumer behavior towards traditional telecommunications services is changing. Overall spend on traditional telecommunications services will decline in the coming years, even as communications continue to accelerate.
Competition from new over-the-top (OTT) providers is heating up. Just a few years ago, the report says, messaging, fixed voice, and mobile voice services from OTT players accounted for 9, 11, and 2 percent of relevant revenue. This year, shares could spike to 60, 50, and 25 percent, respectively. These services, McKinsey explains, are being built on innovative business models that allow OTT providers to sell them at much lower prices than telcos can typically afford. Experts are predicting that spend on traditional communications services will drop by 36 percent over the next ten years, “further pushing incumbent telcos to the margins of voice and data provision.”
Is Your Business Competitive Enough?
A survival of the fittest scenario is therefore developing, where communications providers are being forced to evolve and find new ways to drive profits in order to stay afloat. Fortunately, there are a few ways providers can capitalize on these industry changes to stay ahead of the curve. Consider the top three below.
Many businesses are migrating to VoIP to reduce costs and improve reliability. There’s just one problem: VoIP migrations can be costly, time-consuming, and risky. To compensate for these challenges, communications providers can drive profits by serving as both VoIP providers and advisors. What’s great, too, is that B2B partnerships exist which allow you to offer white label VoIP services while maintaining your brand image and core services as usual. Processes like VoIP quoting, billing, and integration can all be outsourced without having to disrupt your business.
Unified Communications (UC)
The next money-making opportunity is to go beyond VoIP and offer customers Unified Communications (UC). This involves centralizing disparate communications services like voice, fax, messaging, and presence into a single, secure hub that can be accessed over the internet. UC is spreading like wildfire among businesses of all sizes for its productivity-enhancing and cost-saving benefits. UC has been proven to make teams work more intelligently and it’s a must-have among distributed workforces.
Businesses are learning the hard way that digitizing and moving to the cloud can be risky and expensive. This is especially true for enterprises with multiple locations. The need for strong and reliable cloud communications is driving demand for Software-Defined Wide Area Networking (SD-WAN), which allows enterprises to manage, monitor, and control data traffic. SD-WAN is expected to grow at a compound annual growth ratio (CAGR) of 40.4 percent (2017 to 2022) and could top $4.5 billion.
Implementing Your Business Growth Strategies
One important thing to consider when approaching customers about the above technologies is that each will have a different perspective on issues like security, transport, and system management. For this reason, it pays to work with a complete communications provider that can offer a spectrum of UC solutions. By partnering with the right vendor, sales conversations become more of a consultation; all you have to do is listen to what the customer needs, and present the appropriate solution.
Perhaps the most important message to take away here is that the communications landscape is changing. The world is becoming increasingly digital, and this trend is only going to accelerate as the Internet of Things (IoT) continues to grow and we enter the era of 5G communication. Communications providers need to modernize in order to remain competitive.