Risks of Retaining an Operational/SIM-Centric Focus
2017.09.15   |   2 pages   |   NextGen Strategy Reports

Author:
Jon Newman


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Issue : Risks of Retaining an Operational/SIM-Centric Focus

The one-to-one relationship between mobile customers and the MSISDN is breaking down.  If MNOs fail to address customers holistically, they risk losing customer relationships and ownership, while digital players move into position as preferred supplier.  According to Global Webindex, consumers each owned an average of 3.64 devices by mid-2016 and this number is increasing.  Network operators that persist in a SIM-centric approach will not meet the needs of digital-age consumers and will be replaced by customer-centric players, being relegated to connectivity provision in the process. 

 

Analysis, Inferences and Implications

A previous MWP report, Moving From SIM Centricity to an Account Focus (June 2017), examined the development of an account focus in the MNO community and should be read by those concerned by the issues raised here.

In the digital age, the rules of engagement have changed for network operators.  Where a focus on the network and operational efficiency was a competitive differentiator in the Telco 1.0 world, the new world requires a focus on the customer in ways that are inherently difficult for a traditional MNO to address.

The combination of capital intensity, the change from a supply-limited to a demand-limited market environment and the changing nature of the digital customer add up to a scenario where agile digital players, with no infrastrucuture or legacy business, can usurp customer ownership, previously a product of network ownership and operation.  However, headwinds for change are strong for MNOs.

  • Stakeholders in a capital intensive business are most concerned with the return on capital achievable – management that suggests moving away from that focus is prone to replacement.
  • A combination of regulation and OTT service provider development means that customers have much greater choice and need only basic data connectivity from their network in order to meet all their needs.  In markets where multiple, high-quality networks are ubiquitous, non price-based differentiation is almost impossible.

Customers have multiple devices and needs based on membership of groups (family, peer, work) as well as their individual requirements.  Digital natives have very different behaviour and needs than the previous generation of analogue natives.  A few MNOs (notably T-Mobile in the US, with its Digits rate plan that allows single users to have multiple numbers, with each number accessible across multiple devices) are showing signs of having recognised that shift.  McKinsey estimated that as much as 25% of mobile voice (the source of staple MNO revenues) may be carried by OTT players as soon as 2018.  The potential for revenue cannibalisation has never been higher and persistence of a SIM-centric approach may be the greatest risk factor established MNOs face, as they will be unable to compete with digital players at a service level until they put a holistic customer view in place. 

 

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Companies: T-Mobile, Global Webindex, McKinsey, Ovum, WeChat, LINE, KakaoTalk, Facebook, WhatsApp,

Countries: World, Europe, Asia

Keywords: Supply-limited, Cannibalisation, Telco 2.0, Digital, Customer-centric, OTT, Digital identity, SIM, Digital natives, Telco 1.0, Demand-limited, Agile, Porter, Capital Intensity, MSISDN,

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Issue : Risks of Retaining an Operational/SIM-Centric Focus

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Analysis, Inferences and Implications

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Supporting Research & Analysis

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Moving From SIM Centricity to an Account Focus
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MNOs have traditionally focused on the SIM as the main customer identifier.  As levels of multi-device ownership have increased and operators have identified diversification into new service areas as an essential component of future growth, the SIM no longer providers a sufficiently complete picture of customer relationships and the potential for future business. MNOs need to develop broader account views of their customers, using all the data at their disposal in a consistent and consolidated manner, so they can add ...

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