Product Strategists At Telcos Shouldn't Obsess About "Bit Pipe Syndrome"

Product strategists in various industries tend to dismiss telcos' role in service innovation, focusing instead on disruptors such as Google and Apple. It is true that new entrants and over-the-top (OTT) players have bypassed carriers, reducing their role to providing bit pipes.

Product strategists at telcos are suffering from what we are calling “bit pipe syndrome.” Didier Lombard, the former CEO of France Telecom, summed this up well when he declared back in 2007, "I am not building freeways for Californian cars."

Since then, many observers have claimed that telcos will die if they do not reinvent their business models, leveraging their networks as a service. This case is overstated: Reports of operators' deaths are exaggerated.

No doubt telcos are increasingly being commoditized to the point that they will become utilities, but there is no shame in monetizing networks — carriers' bread and butter for a few more years. Fundamental connectivity remains a valuable service — all the more if product strategists focus on gaining more pricing power and delivering more segmented offerings, either on their own or with new strategic partners.

When it comes to product innovation, operators still have key assets to leverage — particularly their billing capabilities — to become trusted partners for consumers and third parties. Some global carriers have a strong presence in emerging countries, and they will have more sway in shaping the types of content services that the world consumes.

Product strategists at operators have the assets to continue to differentiate their offerings and innovate in a disrupted telecom ecosystem. I am not saying this is not challenging and extremely difficult, but here are some approaches that could work:

  • Monetize the pipe by asking a premium for device management and connectivity access.Carriers are starting to deliver a better quality of experience for customers who are willing to pay a premium. 
  • Add intelligence to networks to make services more contextual.Carriers can offer direct billing capabilities and enhance the value of the services they or their partners develop by adding location, presence, or customer knowledge on top of network connectivity. These assets are not unique to operators, but the ability to let third parties mash up these various elements can be a differentiator, making services more contextual. 
  • Provide more than just an open platform.Let's face it: Operators are not the most agile players when it comes to working with developer communities. However, some such as Telefonica with its BlueVia approach are providing relevant marketing tools and offer new business models that share revenues with developers instead of having them pay to mash up different APIs. 
  • Build trust as a competitive advantage.Mobile phones are the personal devices we use the most. We store intimate communications, share our social whereabouts via Twitter or Facebook, and access mobile banking or health services via these new, daily companions. Increasingly, consumers will want privacy, identity, and security to be protected on mobile devices. Because operators have strong brands and a direct billing relationship with consumers, we believe they can be better positioned than OTT players — whose business model, more often than not, relies on advertising revenue streams.

Clients willing to know more about this can download this new report: “Product Strategists At Telcos Shouldn't Obsess About "Bit Pipe Syndrome”.

What role do you think operators have in product innovation? Tell us in the comments.