Is it finally time to reinvent the B2C model?
2022 is set to be a crunch year for telecoms. Communication service providers (CSPs) excelled in the race to keep customers connected in 2020-21, greatly advancing their digitization plans as they did so. However, they failed to reap the financial benefits of their efforts to keep businesses and people connected during the pandemic. Their challenge now is to quickly accelerate time-to-revenue and, before they can do that, they must locate new sources of revenue.
03 Nov 2021
Is it finally time to reinvent the B2C model?
2022 is set to be a crunch year for telecoms. Communication service providers (CSPs) excelled in the race to keep customers connected in 2020-21, greatly advancing their digitization plans as they did so. However, they failed to reap the financial benefits of their efforts to keep businesses and people connected during the pandemic. Their challenge now is to quickly accelerate time-to-revenue and, before they can do that, they must locate new sources of revenue.
While there is much focus within the telecoms industry currently on new revenue opportunities in the B2B and B2B2X markets, the drive to increase profitability will also require CSPs to press a giant reset button on their B2C solutions.
Success will translate into CSPs taking their rightful place within emerging B2C value chains, not just as providers of generic connectivity, but as aggregators of desirable capabilities that they can retail in the form of market-ready solutions to their existing customers. Doing so, however, requires them to be pragmatic. They don’t have the time, money, or expertise to develop all components of these solutions. Nor should they try, as taking this route has been a major cause of failure in the past.
Instead, they will need to combine their own unique capabilities with those of third parties – finding the win-win-win for themselves, their customers, and their partners.
In recent years CSPs have fallen short of their competitors for reasons rooted in the way they have always done business. Typically, they have focused on internal organizational goals rather than those of their customers, resulting in a poor understanding of customer needs and low levels of customer trust. The uncomfortable truth is that CSPs are often hard to do business with, in part because of their heritage of controlling all aspects of service creation and delivery.
Nevertheless, CSPs have many strengths they can leverage to create a compelling offer. OTT services are easy to buy and consume, but when things go wrong, they often lack adequate support – something customers only discover when in crisis. CSPs on the other hand have invested in extensive, round-the-clock, multi-channel customer support capabilities. When combined with their technical know-how this means they are in a good position to support customers through complex problems and might even be able to charge for premium support.
Likewise, their investments in billing & charging are also strategic, because charging for things online isn’t easy or cheap. And, in any case, customers are increasingly wary of the inconvenience and risk of having too many billing relationships to manage. CSPs are in a position to further strengthen their offering by providing additional features such as:
Figure 1 B2C solutions provision – CSP SWOT analysis
While there is much focus within the telecoms industry currently on new revenue opportunities in the B2B and B2B2X markets, the drive to increase profitability will also require CSPs to press a giant reset button on their B2C solutions.
Success will translate into CSPs taking their rightful place within emerging B2C value chains, not just as providers of generic connectivity, but as aggregators of desirable capabilities that they can retail in the form of market-ready solutions to their existing customers. Doing so, however, requires them to be pragmatic. They don’t have the time, money, or expertise to develop all components of these solutions. Nor should they try, as taking this route has been a major cause of failure in the past.
Instead, they will need to combine their own unique capabilities with those of third parties – finding the win-win-win for themselves, their customers, and their partners.
In recent years CSPs have fallen short of their competitors for reasons rooted in the way they have always done business. Typically, they have focused on internal organizational goals rather than those of their customers, resulting in a poor understanding of customer needs and low levels of customer trust. The uncomfortable truth is that CSPs are often hard to do business with, in part because of their heritage of controlling all aspects of service creation and delivery.
Nevertheless, CSPs have many strengths they can leverage to create a compelling offer. OTT services are easy to buy and consume, but when things go wrong, they often lack adequate support – something customers only discover when in crisis. CSPs on the other hand have invested in extensive, round-the-clock, multi-channel customer support capabilities. When combined with their technical know-how this means they are in a good position to support customers through complex problems and might even be able to charge for premium support.
Likewise, their investments in billing & charging are also strategic, because charging for things online isn’t easy or cheap. And, in any case, customers are increasingly wary of the inconvenience and risk of having too many billing relationships to manage. CSPs are in a position to further strengthen their offering by providing additional features such as:
- aggregated insight for customers into their spending
- self-service capabilities, so customers can order new products and adjust service parameters easily and without the requirement for CSR intervention
- controls that go beyond content to help customers manage what they’re spending
- support for personalized offers.
Figure 1 B2C solutions provision – CSP SWOT analysis
Promising B2C solutions
CSPs around the world are developing B2C services that take a fresh approach to customer service and partnering. These new services are underpinned by investment in more automated and agile operational systems that make it possible to pivot to address opportunities as they’re identified, and which bill for services beyond connectivity.
Partnering with publishers for smarter gaming
Having bought Time Warner for $85 billion in 2018, AT&T changed tack in 2021. It announced it was divesting WarnerMedia to Discovery in a $43 billion deal, and Playdemic - the mobile games studio behind Golf Clash - to Electronic Arts for $1.4 billion in cash. While the money will be used to pay down debts, AT&T is not exiting the gaming market – it’s just changing the way it participates.
In June 2021, it announced a tie up with Google to provide its wireless and fiber customers with a free six-month subscription to Stadia Pro, combining 170 gaming titles with AT&T’s fast, reliable, and secure connectivity. Instead of trying to own everything, AT&T is demonstrating its willingness to partner with gaming companies, emphasizing what it can bring to the table in the form of faster speeds, lower latency, more bandwidth and both broadband (AT&T Fiber) and cellular networks (AT&T 5G) to enable gaming at home and on-the-go.
In 2022 customers will be charged a $9.99 subscription as well as being offered a discounted Stadia Controller and a Chromecast Ultra bundle. AT&T expects to innovate the offer by adding edge computing and network slicing in due course, to reduce latency even more. This type of collaborative model has the potential to drive up demand for AT&T’s new network investments, as well as laying the foundation for future revenue streams for both AT&T and its partners.
Securing the digital household
As households become more deeply connected to the internet due to the proliferation of smart devices, as well as the consumption of more online and cloud services, they need help in ensuring that their digital lifestyle is safe and secure. An increasing number of telecoms companies are partnering with third-party providers of security software (such as Akamai, Allot and F-Secure) to create network-based security solutions. These substitute for legacy device-based B2C security packages (such as those provided by Norton and Kaspersky), adding considerable additional advantages for households.
For example, delivering the solution through the network means all devices connected to the home network are automatically covered, while the CSP can ensure end-to-end security across the wide area (cellular or fiber) network, as well as the local area network inside the home. Existing capabilities such as parental controls can be added into the mix, with the solution charged as a subscription to existing bills and resulting in a recurring uplift to ARPUs of $2-5 per month for a basic service.
Telefonica launched its Movistar Secure Connection service (Conexión Segura) in November 2018, partnering with Allot and McAfee to offer a solution that secures the household, homeworkers, and small businesses. It has been extremely successful, with double digit growth in the consumer sector and a tripling of the number of SMBs using the service in 2020.
CSPs can build more value incrementally by creating more comprehensive solutions that encompass WiFi optimization; the management of smart home devices (with automated fault fixing); insurance against outages or cybercrime; household, or business continuity services (combined with a meaningful SLA); and differentiated quality of service to ensure devices within the home are running as expected.
Reinventing quad play
While the telecoms subscription model for content (so-called ‘quad play’) is well established in mature markets in Western Europe and North America, and offers customers convenience, it also limits the market for content to a certain type of customer. In mobile, prepaid markets such as Africa, there may be no bill to attach a subscription to, and with African customers paying some of the highest data charges in the world, they might not be able to afford content services even if they do have a subscription. Even in mature markets, some customers might not want to pay for a service bundle – preferring to select their own content to stream on an ad hoc basis.
In the past, CSPs took the attitude that if a customer could not afford to pay a pre-designed price point for a content bundle, then they were not a customer the CSP wanted. Today, in both developed and developing markets CSPs are taking a different view. In developed markets CSPs now see all money as good money – Amazon has proven that unbundled, ad hoc purchasing of content can be a successful model and they’d like to share in that success. In developing markets such as those in Africa, there is strong demand for content as mobile networks expand and smartphone usage increases. This has seen the creation of local content production resulting in the emergence of Nollywood, Afrobeats and a nascent gaming sector. But there’s also demand for international content, offering a lucrative new market for content producers in North America and Europe.
The key to unlocking this demand is for African operators to find a way of making content more usable on mobile devices and simultaneously more affordable. MTN, Orange and Moov are doing this by partnering with StarNews Mobile, which acts as a middleman between content creators and mobile operators in the Ivory Coast, Cameroon, Congo, Nigeria, and South Africa. For example, the company brought US-based Black & Sexy TV’s shows to African viewers, doing a revenue-sharing deal with MTN whereby MTN zero rates the data usage. This enables customers to stream channels and episodes without eating into their data packages. Instead, they pay weekly via integrated micropayments, later clicking on a link sent to notify them that episodes they’ve paid for are now available. If they can’t afford or don’t want that week’s content, then there’s no obligation to pay.
This model points to how content can be repurposed to reach a wider audience. Innovation coming from creating smaller chunks of content sold at lower price points that create new revenue streams for both content providers and CSPs themselves. Opening up the prepaid market to content provision not only helps operators in developing markets create new revenue streams, but also reduces the risk of content fraud by providing legitimate ways to buy content. Importantly, it enables access to sectors that haven’t previously been monetized, such as the mobile-centric youth sector (Generation Z) and those who are not credit worthy or cannot afford large content bundles.
CSPs have a range of ways they can innovate their B2C models to unlock new value and move beyond connectivity. But if they approach this market in the way they have in the past, they will significantly reduce their chances of success. Instead, they need to focus on what they do well or can uniquely add to the proposition and combine this with the expertise of others to get to market faster with compelling propositions.
CSPs around the world are developing B2C services that take a fresh approach to customer service and partnering. These new services are underpinned by investment in more automated and agile operational systems that make it possible to pivot to address opportunities as they’re identified, and which bill for services beyond connectivity.
Partnering with publishers for smarter gaming
Having bought Time Warner for $85 billion in 2018, AT&T changed tack in 2021. It announced it was divesting WarnerMedia to Discovery in a $43 billion deal, and Playdemic - the mobile games studio behind Golf Clash - to Electronic Arts for $1.4 billion in cash. While the money will be used to pay down debts, AT&T is not exiting the gaming market – it’s just changing the way it participates.
In June 2021, it announced a tie up with Google to provide its wireless and fiber customers with a free six-month subscription to Stadia Pro, combining 170 gaming titles with AT&T’s fast, reliable, and secure connectivity. Instead of trying to own everything, AT&T is demonstrating its willingness to partner with gaming companies, emphasizing what it can bring to the table in the form of faster speeds, lower latency, more bandwidth and both broadband (AT&T Fiber) and cellular networks (AT&T 5G) to enable gaming at home and on-the-go.
In 2022 customers will be charged a $9.99 subscription as well as being offered a discounted Stadia Controller and a Chromecast Ultra bundle. AT&T expects to innovate the offer by adding edge computing and network slicing in due course, to reduce latency even more. This type of collaborative model has the potential to drive up demand for AT&T’s new network investments, as well as laying the foundation for future revenue streams for both AT&T and its partners.
Securing the digital household
As households become more deeply connected to the internet due to the proliferation of smart devices, as well as the consumption of more online and cloud services, they need help in ensuring that their digital lifestyle is safe and secure. An increasing number of telecoms companies are partnering with third-party providers of security software (such as Akamai, Allot and F-Secure) to create network-based security solutions. These substitute for legacy device-based B2C security packages (such as those provided by Norton and Kaspersky), adding considerable additional advantages for households.
For example, delivering the solution through the network means all devices connected to the home network are automatically covered, while the CSP can ensure end-to-end security across the wide area (cellular or fiber) network, as well as the local area network inside the home. Existing capabilities such as parental controls can be added into the mix, with the solution charged as a subscription to existing bills and resulting in a recurring uplift to ARPUs of $2-5 per month for a basic service.
Telefonica launched its Movistar Secure Connection service (Conexión Segura) in November 2018, partnering with Allot and McAfee to offer a solution that secures the household, homeworkers, and small businesses. It has been extremely successful, with double digit growth in the consumer sector and a tripling of the number of SMBs using the service in 2020.
CSPs can build more value incrementally by creating more comprehensive solutions that encompass WiFi optimization; the management of smart home devices (with automated fault fixing); insurance against outages or cybercrime; household, or business continuity services (combined with a meaningful SLA); and differentiated quality of service to ensure devices within the home are running as expected.
Reinventing quad play
While the telecoms subscription model for content (so-called ‘quad play’) is well established in mature markets in Western Europe and North America, and offers customers convenience, it also limits the market for content to a certain type of customer. In mobile, prepaid markets such as Africa, there may be no bill to attach a subscription to, and with African customers paying some of the highest data charges in the world, they might not be able to afford content services even if they do have a subscription. Even in mature markets, some customers might not want to pay for a service bundle – preferring to select their own content to stream on an ad hoc basis.
In the past, CSPs took the attitude that if a customer could not afford to pay a pre-designed price point for a content bundle, then they were not a customer the CSP wanted. Today, in both developed and developing markets CSPs are taking a different view. In developed markets CSPs now see all money as good money – Amazon has proven that unbundled, ad hoc purchasing of content can be a successful model and they’d like to share in that success. In developing markets such as those in Africa, there is strong demand for content as mobile networks expand and smartphone usage increases. This has seen the creation of local content production resulting in the emergence of Nollywood, Afrobeats and a nascent gaming sector. But there’s also demand for international content, offering a lucrative new market for content producers in North America and Europe.
The key to unlocking this demand is for African operators to find a way of making content more usable on mobile devices and simultaneously more affordable. MTN, Orange and Moov are doing this by partnering with StarNews Mobile, which acts as a middleman between content creators and mobile operators in the Ivory Coast, Cameroon, Congo, Nigeria, and South Africa. For example, the company brought US-based Black & Sexy TV’s shows to African viewers, doing a revenue-sharing deal with MTN whereby MTN zero rates the data usage. This enables customers to stream channels and episodes without eating into their data packages. Instead, they pay weekly via integrated micropayments, later clicking on a link sent to notify them that episodes they’ve paid for are now available. If they can’t afford or don’t want that week’s content, then there’s no obligation to pay.
This model points to how content can be repurposed to reach a wider audience. Innovation coming from creating smaller chunks of content sold at lower price points that create new revenue streams for both content providers and CSPs themselves. Opening up the prepaid market to content provision not only helps operators in developing markets create new revenue streams, but also reduces the risk of content fraud by providing legitimate ways to buy content. Importantly, it enables access to sectors that haven’t previously been monetized, such as the mobile-centric youth sector (Generation Z) and those who are not credit worthy or cannot afford large content bundles.
CSPs have a range of ways they can innovate their B2C models to unlock new value and move beyond connectivity. But if they approach this market in the way they have in the past, they will significantly reduce their chances of success. Instead, they need to focus on what they do well or can uniquely add to the proposition and combine this with the expertise of others to get to market faster with compelling propositions.
Innovating B2C offers will require CSPs to have agile business support systems that can pivot to unlock new revenue opportunities and which enable product managers and marketers to quickly and effortlessly refresh offers. The easy-to-use self-service that today’s independent customers increasingly demand will be supported by accurate product catalogs, streamlined business processes and high levels of automation. Equally important will be CSPs’ ability to personalize and contextualize offers, which will be powered by the timely availability of rich, accurate and holistic data.
Footnotes: (1) The Paradox of Choice reflects the idea that the more choices someone has, the more anxious they become that they might make the wrong choice. This slows down decision-making and might make the chooser abandon the process altogether.
Footnotes: (1) The Paradox of Choice reflects the idea that the more choices someone has, the more anxious they become that they might make the wrong choice. This slows down decision-making and might make the chooser abandon the process altogether.
