Capitalizing on telecommunications industry megatrendsService provider strategies: Disruptive plays

Service providers are constantly looking for ways to transform their operations so they can launch new offerings faster and more cost-efficiently. To better understand industry trends, Nokia worked with global management consulting firm Oliver Wyman to uncover and analyze the best practices of service providers around the world and the strategies they’re using to achieve success – including disruptive plays.

What is this strategy about?

Outside players are leapfrogging established players
Telecommunications is no longer a protected industry: national roaming agreements and tower sharing have brought down what used to be high barriers to entry. Market disruptions have occurred in every region, driven by late-entrant telcos and well-funded out-of-industry players that see the sector very differently than incumbent service providers. Out-of-industry players often combine multiple successful business models into one — including network, payments, content, analytics and e-commerce — with very aggressive promotional pricing, forcing incumbents to respond by lowering their own rates. Service providers are realizing that innovating in customer-facing areas like sales and service (for example, by creating digital second brands or new digital ecosystems for their services) will be key to matching the offers of out-of-industry players.

“Sudden” fixed–mobile convergence plays

Bundling fixed and mobile offerings can help service providers increase differentiation, reduce subscriber churn and defend their core business against new market entrants. Capitalizing on the opportunities of fixed–mobile convergence — quickly ramping up the mobile play where they didn’t have it before, for example — often requires significant and costly infrastructure investments (either built up organically or inherited through mergers and acquisitions) as well as a solid understanding of the customer beyond a singular product perspective. Some service providers have managed to expand from a fixed- or mobile-only play to a converged offering and grow substantial subscriber bases in record time, usually by closing mobile virtual network operator (MVNO) deals, eating into incumbents’ market share or even becoming regional market leaders.

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What does this strategy look like in action?Here’s how some service providers are using disruptive plays to their advantage:

Aggresive pricing

Japan’s Rakuten is offering prices that are 30% below average 40% of China’s fixed broadband market belongs to China Mobile as it looks to break into the mobile network operator (MNO) market. Their e-commerce background allows Rakuten to act quickly and efficiently, with a cost structure and pricing far below traditional players.

Converged services

Fixed-broadband leader Digi Romania accelerated its expansion into the mobile market with price disruption and converged services for fixed-line customers, growing its mobile subscriber base by over a million.

A strategic national roaming agreement with Vodafone gave Digi Romania access to a mobile network while the company built its own.

3.39 M mobile subscriber of Digi Romania mobile service in 2017, up from 1.5 M in 2013.

Unique plans

40% of China’s fixed broadband market belongs to China Mobile

China Mobile wasn’t in the fixed broadband business five years ago. Today, the company leads with over a third of the total market share. Its foray into fixed broadband started with aggressive pricing and free offers to draw customers. A strong focus on Internet of Things solutions — including a set of integrated smart home devices — also helped attract new subscribers.

Special offers

Indian LTE-only operator Jio attracted 50 million subscribers in just 83 days after launching in September 2016 — a milestone its main competitors took more than a decade to reach. Jio fuelled its growth with a wide range of partner offers (including TV, mobile wallets and streaming music), a bold free trial offer and extremely low rates.

70% drop in average revenue per user (ARPU) post launch.


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