Our friends at STL Partners and their Telco 2.0 initiative recently published what amounts to the follow-up to their extremely influential “two-sided market” manifesto. At its core: a blueprint on the six key opportunities in front of telecom service providers today as they either navigate their way forward in a re-made telecom market or alternatively face, in STL’s words, a brutal retrenchment. We’ve reached out for more from their analysts, but for now a teaser…
What the original Telco 2.0 manifesto was all about was finding new ways to monetize the networks, partnerships and customer relationships that have characterized this industry for more than a century. At its core was the concept of the “two-sided” market, what STL sized as a $125 billion (now a $375 billion) opportunity to sit in the middle of an array of digital relationships and provide all sorts of new revenue-generating solutions and services.
Yet even as their ideas gained influence over the past few years, the telecom and mobile industries changed completely — yet again — thanks to the growth of mobile data services, mobile apps, the cloud, the explosion in IP networks and IP-addressable devices and much more. Those massive changes, coupled with the industry’s deepening understanding of the two-sided opportunity, is summed up in its new report: The Roadmap to New Telco 2.0 Business Models.
At its center are what STL believes are the six best telco 2.o opportunities today:
Core Network Services — using the network and other core capabilities to redefine the customer experience via better marketing, smarter channel strategies and enhanced customer care approaches
Vertical Industry Solutions – extending telecom into IT and vertical solutions
Infrastructure services – expanding and extending current wholesale opportunities to new areas like mobile offload and data center/cloud
Embedded Communications – integrating voice, messaging and connectivity into other applications, including machine-to-machine and embedded aps
Third-Party Business Enablers – or delivering core services as third-party capabilities, including identity, advertising, payments and customer care
Own brand OTT services – copying current Internet and over-the-top players to develop new network-independent apps and services
It’s a good list to chew on and ponder and we can already see some of these strategies in play. Becoming better marketers by leveraging business intelligence derived from the network is something our Susana Schwartz has been tracking heavily for months. On another front, it’s downright amazing just how quickly mobile operators have been willing to turn themselves into data players, willfully treating their formerly core voice and messaging services as a mere feature they’ll willingly embed anywhere if it drives more raw network usage. And finally, on a personal level, I’ve become a fan of Comcast’s Xfinity online services, which aims to do Hulu one better — a clear step down the path of a network operator creating its own over-the-top service and brand.
Other opportunities remain in their infancy. While telcos certainly are a key “under the covers” enabler on many fronts, they have NOT been able to deliver in some key third party areas, for instance as a QOS-booster for key OTT partners or as a payment engine for the mobile app ecosystem. And while larger carriers like Verizon, AT&T, BT and others are making progress in the cloud, the future of such services remain, well, cloudy — at least for the time being.
We look forward for more from STL Partners in coming weeks and months as they publish around their new ideas. Their next executive brainstorm is in London in a few weeks.