In recent articles describing the ecosystem of digital products & the market dynamics, I have primarily focused on manufacturing companies. Earlier today, I was asked about the impact on other industries, specifically telecommunications.
Interestingly, telecommunications start with manufactured products of industrial nature and/or consumer products. The combination of hardware and software (digital services) makes the complete solution for the customer. Often, the hardware options are the foundation of digital services growth—offering 5G upgrades is one example. Is there another way for Telcos to offer digital services and expand market share?
There are about 1,000 telecommunication providers globally. Most provide consumer (B2C) and/or Business (B2B) connectivity services; this is their core revenue stream. Growth, therefore, comes from adding new customers or increasing services to existing customers. Is there enough to drive the growth investors expect?
Most have to decide their strategic objectives. Is it to manage growth and reduce costs to meet the needs of their investors? This may be the most common model. However, many telecommunication companies seek more growth by adding new products. They are redefining their ecosystem.
Starhub is one of the largest multinational telecommunication companies in APAC. Its recent report outlined a faceted growth and cost management plan; see here.
This possible strategy assumes a key component: the ecosystem’s monetization model. By defining the ecosystem and mapping the market dynamics, any telecommunication company can build a monetization model that maximizes customer engagement.
As we build the total ecosystem monetization model, the foundational metrics are as follows:
| Projected | Downside | Upside | |
| Projected *Dollar-Based Outcomes | Plan | Risk | Opportunity |
| (-) Recurring Costs | Plan | Risk | Opportunity |
| (-) Variable Costs | Plan | Risk | Opportunity |
| (=) Net Value Creation | Retained Earnings & Growth | ||
Within the ecosystem, we alter the model for each digital service or part of the ecosystem. The addition of “sentiment” measures valuable services.
| Ecosystem Sentiment | Projected | Downside | Upside |
| Sentiment Impact Score: – Customer Unfilled Demand – Strategic Capabilities – Competitive Differentiator – Innovation | Plan | Mitigation | Unique Differentiation |
The Telecommunications Ecosystem Market Monetization Model
* Dollar-Based Outcomes
- Consumer affordability
- Ability to pay electronically (still many potential consumers don’t have credit cards)
- Expected exchange modeling
(-) (Sentiment Impact Score + Recurring Costs + Variable Costs)
- Consumer Wants: VOD, Music, Sports, Social, etc.
- Consumer Needs: Lifestyle
- Monthly fees
- Usage fees
(X) Lifetime Value
- Contract value
- Lifetime Value (churn & market exchange prediction)
= Long Term Ecosystem Customer Value
I believe that the ecosystem is more significant than most telecommunications companies measure. In short, there is unmet consumer demand for many products and services. However, the only way to address the opportunity is to expand the focus of the market-based ecosystem. This would involve creating a “market inside the ecosystem” of interchangeable products for the consumer. This would redefine the total market opportunity by relying on measurable market dynamics.
In the Subscription Economy, many services for consumers and businesses alike are available but undersubscribed. In short, there are services with a high sentiment score that would increase the total ecosystem monetization opportunity for every telecommunications company.
The challenge is the cost of offering multiple services and the consumer’s ability to acquire many services easily.
The solution is marketplace subscription bundling. The offer has immediate benefits, opening new revenue streams for any telecommunications company and increasing renewals and retention through bundling.
There is a company that has removed the complexities of making this a reality. Bango offers the “Digital Vending Machine” that removes the complexities and reduces the time to market. What an easy way to expand your ecosystem!
I have written extensively about consumption billing being the future of subscriptions. Super bundling is a transitional step in that direction. Over time, the bundles will be transformed to meet the customer’s consumption requirements. With this is variable pricing that can be converted into pre-paid consumption.
Telecommunications companies offer a platform & payment solution that can bring massive numbers of consumers into their ecosystem. Fortune Magazine reported in April of 2023, “Netflix is turning away from America and Europe for subscriber growth, with over 80% of new members coming from another region last quarter”. There are many estimates that ~1.2 Billion new subscribers are possible in APAC based on access and ability to process digital payments.
The market dynamics for the telecommunications ecosystem could evolve into a pure supply-and-demand model that drives accurate pricing and maximum market-based returns. To do this, the marketplace for subscriptions needs the flexibility to add/remove/change the bundled subscriptions the consumer requires. Agreements between the digital service provider and the marketplace host need to support this market dynamic. Finally, the payment process must be connected with the telecommunications service for simplicity, reduced cost, customer support, and integrated customer analytics.
