Several years ago, the combination of four specific technologies'Social, Mobile, Analytics and Cloud, or SMAC'was touted as a 'perfect storm' that threatened operators' very existence, re-shaped consumer expectations and also provided opportunities for growth.
Today, the mobile industry is experiencing a new perfect storm that is being shaped by the collision and interplay between four new technologies: Internet of Things, eSIM, Digital Identity and Blockchain. At CSG, we are calling this perfect storm 'The Intersect of Things' and it will have a profound impact on how operators do business in the next decade.
Internet of Things: By 2025, the GSMA predicts there will be more than 25 billion connected devices worldwide. This includes everything from smartwatches to smart cars to smart streetlights. The challenge of identifying and managing individual devices within a networked M2M ecosystem or a smart city is providing the catalyst behind trend number two: eSIM ' embedded/virtual sim cards.
eSIM: In M2M applications, eSIM makes it possible to maintain and calibrate a network containing thousands of IoT devices ' which may be spread out over an entire metro area ' from one remote location. While eSIM is a lifesaver for CSPs offering M2M connectivity, eSIM is also anticipated to create a seismic disruption for mobile carriers when paired with mobile phones.
With a virtual SIM card, mobile phones no longer need to be tied to just Verizon or AT&T with a specific plan. Each SIM card can have multiple carriers and multiple data plans. Apple and Google have started outfitting their newest smartphones with eSIM cards and the global eSIM market is expected to grow at a CAGR of over 90 percent from 2019-2025.
Digital Identity: Digital Identity allows consumers to verify their identity on one device to access services on multiple devices. The next link in the perfect storm chain, a digital identity is needed when SIMs are being managed remotely ' a reality of tomorrow's e-SIM world. Growth in mobile digital identity could surpass 800 percent by 2024, with mobile likely to be the primary source of identification for over three billion people.
Blockchain: With digital identity comes concern over security. This is where blockchain comes in. Blockchain is decentralized and far more secure than most other identity management models, because each transaction or interaction is independently verified. According to Deloitte, half of executives polled say their company is working on blockchain identity solutions. And blockchain is already being adopted at a country level for citizen identity, from Estonia to the United Arab Emirates to the United Kingdom. Blockchain in these countries is now powering smart cities ' a fundamental area of IoT.
As these trends converge in the next decade, there will be a self-fueling cycle between IoT, eSIM, digital identity, blockchain and back to IoT that increases the industry impacts of each of these trends and provides a catalyst for a more empowered digital citizen than ever before.
Digital Customer Experience 2.0
Tomorrow's digital citizen will have absolute freedom of choice and access to any vendor, any plan, any device, anytime and anywhere. This provides a catalyst for customer experience on steroids as companies will need to compete based on the strength of their customer experience and value propositions.
In this new landscape, MVNOs have the ability to rise to a position of power. Given their ability to be vendor-neutral, MVNOs are able to position themselves as a mobile data super aggregator – offering eSIM-equipped smartphones that allow consumers to seamlessly switch between carriers and plans at will.
Think one step further and MVNOs could leverage the power of eSIM, Digital Identity and Blockchain to create a consumer exchange where consumers are able to buy and sell data from each other if they have surplus data or run low at the end of the month.
This 'data eBay' will also empower consumers roaming in foreign countries to buy data from the local subscribers in that country more cost effectively than purchasing official plans or incurring charges.
This kind of consumer coup d'tat might seem far-fetched, but it's already beginning. Keepgo ' a mobile broadband service provider with 119 operators signed up as MVNOs across 105 countries ' is already selling eSIM phones with Digital Identity and Blockchain built in. As new incumbents like GoogleFi double down on their MVNO services, the future of consumer offers and how consumers view their role in the connectivity equation will rapidly transform.
How Telecom Companies Can Win With Customer-Centric Business Models
Mobile operators can support customers' freedom of choice to switch between plans and explore new business models.
Alternatively, operators can focus on B2B. In a 2018 TM Forum survey, nearly three quarters of respondents said they expect to be generating more than half their revenue from B2B services in the long term. Either way, both paths will require a fundamental change in how telecom companies serve their customers, which in turn implies a fundamental change of business model.
Finally, there are three principles telecom companies should consider to transform their business models and ride out the new perfect storm:·
Be customer obsessed. Business model transformation succeeds when it's focused on customer pain points and how they can be solved. Take Marriott's lost wallet service, which turned a common problem into an exceptional experience. In order to achieve this, companies need to better understand and anticipate their customers' needs.
Simplify complexity. It might be hard to believe, but Netflix was initially scoffed at for its simplistic business model. Companies like Southwest and Netflix have thrived because they simplified the offerings that incumbents had traditionally sold. They also avoided the technical debt of their predecessors with lower hardware and software operating costs.
Connect the company. Companies say the biggest challenge they face with respect to collaborating effectively is culture, followed by structure (silos and legacy systems). Aligning around a common goal'a business model focused on the customer'will connect every part of the business, from technology to finance and beyond.
This article was first published inside the latest edition of Disruptive Telecoms, a TelecomDrive.com initiative
