Telecom providers face ongoing challenges including declining revenues, need for increased investment, and unsustainable data traffic growth. In 2017, analysts anticipate telecoms will take a smarter, more innovative approach. This includes partnerships with startups, focusing on customer retention through loyalty programs, and exploring new data monetization strategies beyond unlimited plans like tiered pricing and speed-throttled "always on" packages. While growth will be incremental, analysts expect a more positive outlook if telecoms adopt innovative solutions to long-standing issues.

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NewYear, New
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2. G E T T E L E C O M S S M A R T
New Year, New Approach
Telecoms providers have endured the same challenges for years; declining revenues, need
for increased investment, unsustainable growth in data traffic and business disruption, all
threaten to negatively impact profitability and growth. 2017 is no different, but this year
we anticipate the telcos response to these challenges will be smarter and more innovative.
We spoke to our partner analysts at Ovum to better understand the year ahead for
telecoms providers and the key challenges they face.
INVESTMENT IN A NEW MODEL
Telcos remain under enormous pressure to adapt with their core business having been
disrupted on a level not anticipated. The ever-changing competitive landscape and
increased pressure has led to plenty of consolidation activity in recent years. Some telcos
are having to fight hard just to survive. As Ovum analyst Steven Hartley advised:
The “bits a traditional telco would charge you for are
shrinking”, they have been shrinking for years, and this won’t
change.
Coupled with this is the fact that consumers fail to appreciate the service offered by the
telcos - “they just want a seamless experience, they don’t care what goes on behind the
scenes” says Hartley. But what goes on behind the scenes costs the telcos, a lot.
Infrastructures and legacy systems have to be upgraded which is expensive and time
consuming, and means that many operators simply can’t compete with digital service
launches.
But telcos are starting to adopt strategies for success, and partnerships with companies
with different approaches will be key. Ovum Analyst Carrie Pawsey suggests, “It’s about
partnerships. Operators are realising they need to cast the net wider to include startups.
Operators will need to learn to fail fast”. Investment is critical for survival but so too is the
need for a new model, which embraces trying new things and quickly cutting anything
that doesn’t work.
CHURN
Churn levels continue to increase and as a result Ovum suggest telcos “need to work on
retention”, a recommendation we presented in our Retention vs Acquisition paper last
year. “It costs so much to get a customer onboard, telcos should be focused on retention,”

3. G E T T E L E C O M S S M A R T
New Year, New Approach
says Pawsey. Telcos are starting to invest in their loyalty schemes; for instance AIS’s
Serenade scheme in Thailand features simple offers for customers such as free coffee and
free car parking spaces. This may be simple but it is working. It has had a significant
impact on revenues and is widely discussed in their annual results. Other telcos have been
investing in loyalty for years, as Pawsey notes, O2 Priority “works really well, it’s a real
point of difference for O2, it retains customers and enhances the perception of the brand.”
MONETISATION
Monetisation remains a key concern. Analysts advise strongly that operators must think
beyond unlimited mobile data plans, as Ovum suggest these plans threaten revenues, limit
opportunities to upsell and put network quality at risk. There are other options, several
operators have used LTE’s greater speed proposition as the reason for introducing new
tiered tariffs. And UK operator GiffGaff has created an Always On data package, which
offers unlimited access to the internet, but the speed and quality is reduced after the user
reaches their limit.
Prepaid data monetisation will also be vital in 2017. Ovum notes the opportunity in social
plans helping increase prepaid revenues. ‘Zero rated’ plans which offer unlimited access to
specific platforms, for instance Whatsapp or Facebook, are also on the rise in all markets,
this is important for getting new data users onto a network to try out new services. Once
consumers realise the appeal of them, the operator can then upsell in order to monetise
those services.
Finally, shared data plans are becoming more and more prevalent. The US leads the way
here with telcos achieving Higher Average Revenue Per Account and more connections
per account. There are also signs of success in emerging markets, but Ovum notes that
shared plans are complex and telcos must beware, keeping things as simple as possible.
WHAT WE THINK
Telco challenges have remained constant for many years. The difference this year is the
potential for a more positive outlook with telcos opting for more innovative approaches
to solving category wide issues. We will still likely see more consolidation, and growth will
only be only be in the form of small incremental lifts, but this is a vast improvement on
past outlooks. The future is brighter.

4. G E T T E L E C O M S S M A R T
New Year, New Approach
If you are interested in learning more about the subject of this article, please contact
Melanie Norris, Global Planning Director, norrism@bbdoknows.com
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