1、CR AF TING FUTURE-RE ADY COMMERCIAL STR ATEGIES FOR TELECOM SERVICE PROVIDERSStrategic imperatives in the age of commoditization&AI2025DR.NEJC JAKOPINPartner,Telecommunication,Information Technology,Media&Electronics(TIME)MunichKURTULUS ALICPartner,TIME IstanbulGUILLEM CASAHUGAPartner,TIME HoustonMA

2、RC PALACIOS BOIXPartner,TIME Mexico CityCLEMENT SAMSONPrincipal,TIME ParisGREGORY PANKERTManaging Partner,TIME BrusselsCONTENTEXECUTIVE SUMMARY 31.NAVIGATING UNCERTAIN ENVIRONMENTS 42.THE EXECUTE-ELEVATE-EXPLORE STRATEGY 83.ARCHETYPES OF FUTURE TSP B2C BUSINESS MODELS 30CONCLUSION 342The landscape f

3、or telecom service providers(TSPs)1 has significantly shifted in recent years.Traditionally,TSPs relied on their physical networks to set them apart,but this advantage has begun to fade.Today,they face an increasingly crowded field with new competitors,such as hyperscalers(large cloud service provid

4、ers,including AWS and Microsoft Azure),highly focused mobile virtual network operators(MVNOs),and fiber providers,making the market more competitive,especially in digital services.This change comes at a challenging time,with high inflation,rising interest rates,and a potential economic downturn maki

5、ng investments riskier and more expensive.Although inflation declined in 2024,many countries,especially in Europe,are still recovering with a 2024 GDP growth rate of less than 1%;the forecasted rate for 2025 is around 1.5%.TSPs must now reassess their market approach and innovate to stay relevant to

6、 their customers in these uncertain times.This Report was developed in collaboration with 50 executives from global TSPs in a coevolution process.We utilized key insights from interviews conducted with global TSP CxOs in the first half of 2024,as well as real-life examples,largely drawn from the exp

7、erience of these executives and Arthur D.Little(ADL)projects.These case studies are intended to provide an overarching picture for operators to consider in their strategic analysis of future value creation by exploring opportunities“at the core,”“near the core,”and“non-core.”The Report champions a t

8、hree-pronged approach Execute,Elevate,and Explore to refine operational excellence,transform near-core business,and venture into new markets,respectively.To secure their future success,TSPs must identify and harness key strategic enablers while navigating associated trade-offs.Our findings highlight

9、 a wide array of AI applications that offer immediate benefits,as well as observations of AI-driven,long-term enhancement of business models.Delaying transformation initiatives places TSPs at a competitive disadvantage.With that in mind,we delineate five(+1)potential archetypes for TSP business evol

10、ution,underlining the importance of timely and strategic adaptation.1 TSP is a term used to describe commercial service providers within the telco industry,which most mobile and/or fixed network operators are today,but also ISPs(Internet service providers).E XECUTIVE SUMMARYARTHUR D.LITTLE3Figure 1.

11、Telco industry dynamics1.NAVIGATING UNCERTAIN ENVIRONMENT SThe telecom industry is experiencing a disruptive period of change.The value creation models of traditional telecom providers are becoming more outdated,and telco asset reconfiguration is accelerating.Reconfiguring assets involves aligning t

12、he traditional layers of an integrated telco with their underlying fundamental business model and capabilities.Telcos and other industry players are reorganizing their assets and capabilities along their value chains,such as networks,services,and products,to better align with their core competencies

13、 and strategic goals.These developments are particularly affecting TSPs and will decisively shape their present and future development.Many ADL publications describe this trend and emphasize the underlying drivers and major trade-offs as well as the transformative implications of this strategic shif

14、t.2Current business models of traditional TSPs face multiple challenges,such as diminishing differentiation in network and technology,2 See:Taga,Karim,et al.“Time to Accelerate Growth.”Arthur D.Little,2021;Pankert,Gregory,et al.“Navigating Fixed Asset Reconfiguration in Telcos.”Arthur D.Little,2023;

15、and Taga,Karim,et al.“Game-Changing:New Players,New Rules!”Arthur D.Little,2022.growing competition from hyperscalers and“over the top”(OTT)players(e.g.,Netflix,Amazon Prime Video),and growing diversification/heterogenization of existing/future TSP business models(see Figure 1).These challenges will

16、 shape future TSP business models and require attention and full understanding:-Challenge 1:Commoditization of technology.InfraCo separation as well as the rise of softwarization and core API-as-a-service erode product networkbased differentiation.-Challenge 2:Global information and communications t

17、echnology(ICT)leaders,OTT players,and specialized challengers.New entrants,OTT players,and hyperscalers aim to steal most of the historical telco value.-Challenge 3:Heterogenization of business models.TSP business model heterogeneity will strongly increase as TSPs prioritize investments in product d

18、ifferentiation.Source:Arthur D.LittleSource:Arthur D.LittleFigure 1.Telco industry dynamicsOTT players,hyperscalers,etc.Commercial layer(TSP)Retail,customer operations,product aggregationNW orchestration&operation layer(OSS)New entrants(MVNO,FNVO,etc.)InfraCoPassive infrastructure layer(e.g.,towers,

19、fibers,data center infrastructure,etc.)Rise of core/API as a service Active infrastructure layer4REPORT:CRAF TING FUTURE-READY COMMERCIAL STRATEGIES FOR TELECOM SERVICE PROVIDERSARTHUR D.LITTLECHALLENGE 1:COMMODITIZATION OF TECHNOLOGYAccelerating asset reconfiguration and the increasing entry of fin

20、ancial investors have led to a surge in InfraCo(i.e.,separate companies owning passive telecom infrastructure,such as towers,fibers,and data center infrastructure).The InfraCo business model relies on asset mutualization through wholesale,leading to additional standardization of passive connectivity

21、,especially considering the ever-increasing fiberization of access networks and the resulting absence of technology differentiation.The affordability of telecom-only retail organizations is at risk,due to increasingly efficient wholesale(i.e.,low barriers to entry from a technical and commercial per

22、spective)and viable retail-wholesale value creation,which led to stronger retail competition and high-quality services.The shift toward(network)softwarization(uplift in development and deployment of architectures that separate the software implementing network functions,protocols,and services from t

23、he hardware running them)and core API-as-a-service is reshaping the industry,diminishing traditional connectivity differentiation,and highlighting the need for TSPs to innovate in services.Network excellence has become critical,demanding a shift to pricing models that prioritize time-of-use and spec

24、ific use cases.The emergence of software-defined networks introduces a diverse ecosystem of partners,from traditional network operators to new entrants like hyperscalers,driving efficiency and enabling advanced use cases.While asset reconfiguration may not be universally applicable across all operat

25、ors(some will choose to remain integrated),the likelihood that various InfraCos and TSPs will emerge in each market is extremely high.Consequently,integrated operators will face the same challenges as TSPs and InfraCos separately,combined with the added complexity of prioritizing investments across

26、their different layers.This means that TSPs will not differentiate themselves based on their underlying technological infrastructure but rather at the product and service level.CHALLENGE 2:GLOBAL ICT LEADERS,OTT PLAYERS&SPECIALIZED CHALLENGERSAsset reconfiguration in todays telco market goes in tand

27、em with disintermediation the growing trend of removing intermediaries from the telecom retail process.New players,technologies,or business models enable customers to bypass traditional retail channels to access telecom products and services directly.There are still numerous examples of new market e

28、ntries across the globe,often leveraging niche market positioning.By homing in on a distinct value proposition,these players craft offerings meticulously tailored to specific segments(often just 5%-10%of the market).Recent examples include the Romanian diaspora for Digi Communications and globetrott

29、ers using Lyca Mobile.Favorable mobile/fixed virtual network operator(M/FVNO)agreements facilitate both market and targeted approaches and can also yield operational advantages when coupled with a streamlined value proposition.For instance,in Denmark,Fastspeeds singular 1 GB broadband plan exemplifi

30、es simplicity that needs to be backed by operational efficiency.This strategic customer-first orientation is disrupting the telco market,particularly in regions like Southeast Asia and the Pacific,where the advent of MVNOs is taking 10%-14%of combined market share and challenging the status quo,acco

31、rding to ADL analysis.This disruption clearly follows in the wake of advanced European markets with up to 20%-25%MVNO market share.Another area of MVNO surge is Mexico,where combined MVNO share skyrocketed from 2%to 10%in recent years.Next to specialized new entrants targeting specific customer subs

32、egments with tailored value propositions,OTT players and hyperscalers increasingly focus on historical telco revenue streams,notably content,entertainment,and advertising.OTT streamers such as Netflix,Disney+,Hulu,and Max are claiming a sizable portion of traditional telco TV distribution revenues.T

33、his creates a situation where traditional TV revenues are doomed to decline.In addition,the popularity of OTT streaming services is eroding the customer retention benefits of broadband+TV bundles.5Most hyperscalers Apple(Apple TV+),Google(YouTube TV),and Amazon(Prime Video)also entered the content d

34、istribution value chain,replicating the business models of the focused OTT streamers and further pressuring traditional telcos.These hyperscalers could move further into the traditional connectivity playing field(as illustrated by Amazon bundling connectivity with Prime),squeezing traditional telcos

35、.An increasing number of telecom-as-a-service start-ups like Gigs take this trend to the next level.Gigs is a platform that enables any company to start its own wireless service.Nowadays,anyone can launch a telecom company in a matter of days.To reiterate,with the reduced ability of TSPs to differen

36、tiate themselves based on their network infrastructure,they will need to increase their activity in product segments where there are already numerous significant competitors,such as hyperscalers or OTTs.This will undoubtedly pose a significant challenge for TSPs.CHALLENGE 3:HETEROGENIZATION OF BUSIN

37、ESS MODELSReconfiguring the TSP and its network assets will raise the degree of scrutiny on its business model and its ability to sustainably differentiate and create value without owning the underlying network asset.In the coming years,it is expected that a profound transformation of the fundamenta

38、l business model of TSPs will develop sustainable differentiation levers.These differentiation features can be diverse and are analyzed at a later stage but are subject to significant CAPEX expenditures by the TSPs.Even though current interest rates and inflation are declining,major economies are st

39、ill recovering from the crisis.For example,in Europe,GDP growth for 2024 is less than 1%and only 1.6%GDP growth is expected in 2025.TSPs will be navigating a tightrope as they seek to finance their transformations.The telecom markets macroeconomic environment presents a dual challenge,as weighted av

40、erage cost of capital(WACC)climbs and return on investment capital(ROIC)dips consequently,leading to a tightening in the allocation of transformation CAPEX,which underscores the difficulties telecom operators will face to self-finance their disruptive business model transformations.ASSET RECONFIGURA

41、TION ENHANCES THE EFFICIENCY OF THE WHOLESALE MARKETThe historic fluctuation in ROIC for European telecom operators further highlights these challenges,displaying a critical period where WACC has overtaken ROIC,signaling a potential squeeze on future investments and transformations.The higher capita

42、l costs can consequently delay business model transformations;companies that consciously make investments now could gain an important time advantage.The need for a business model transformation and the challenges to self-financing the required transformation will force TSPs to carefully prioritize a

43、nd select the transformational initiatives they invest in.Some will focus on operational efficiency to compete in price wars while others will investigate near-core business opportunities to balance the declining connectivity revenues.The recipe for success is uncertain,and different routes might le

44、ad to beneficial outcomes.Consequently,a strong increase in the heterogeneity of TSP business models is expected in the coming years as different players make their bets on the winning formula and the underlying value-creation drivers.WHAT DOES THIS MEAN FOR TSPs?Asset reconfiguration enhances the e

45、fficiency of the wholesale market,while disintermediation brings new players into the traditional telecom field.These trends make it hard for traditional TSP businesses to differentiate today and nearly impossible in the future.As a result,there is an explicit need for retail transformation.The upco

46、ming chapters of this Report will concentrate on the different commercial strategies TSPs employ to combat the above-described challenges and a robust commercial strategy framework,followed by the creation of potential future business model archetypes.6REPORT:CRAF TING FUTURE-READY COMMERCIAL STRATE

47、GIES FOR TELECOM SERVICE PROVIDERSARTHUR D.LITTLE7TSPs need to clearly define how they stand out in terms of value proposition,customer experience,innovation,and other essential building blocks of commercial strategy.Changing customer needs and the rise of recent technologies like generative AI(GenA

48、I)3 make it essential for TSPs to know what they offer,ensure it exceeds customer expectations,and align with their long-term goals.Our analysis of key enablers and trade-offs helps CEOs shape their strategies with a clear understanding of the challenges and opportunities ahead.Refining business mod

49、els and strategies is about being forward-looking and informed.It is crucial for TSPs to develop strategic clarity,as it will determine their future direction,affect how much market share they can grab,impact their ROI,and influence how people see their brand.A clear strategy will give TSPs confiden

50、ce to move forward,whether they aim to lead in affordability,innovative technology,or unbeatable service.3 For definitions of GenAI and other technologies,see:Meige,Albert,et al.“Generative Artificial Intelligence:Toward a New Civilization?”ADL Blue Shift Report,2023.ADLs Execute-Elevate-Explore mod

51、el offers a roadmap to help TSPs navigate the complexities of an evolving business over both the short and long term(see Figure 2).By closely reviewing their commercial strategies against the backdrop of industry changes,TSPs can thrive by turning challenges into opportunities for growth.This framew

52、ork outlines tactical and strategic iterative responses:-Execute(short to medium term,at the core).This strategy focuses on sharpening execution and tactical activities to maintain competitiveness within the telco sector.It represents the pursuit of excellence in day-to-day operations and commercial

53、 activities,including sales,marketing,and customer care.The emphasis is on incremental improvements that improve efficiency,service quality,and customer satisfaction.The Execute strategy encourages progress within the existing business structure that is minimally disruptive.2.THE E XECUTE-ELE VATE-E

54、 XPLORE STR ATEGYFigure 2.Execute-Elevate-Explore modelSource:Arthur D.LittleSource:Arthur D.LittleFigure 2.Execute-Elevate-Explore modelDESCRIPTIONEXAMPLES OF STRATEGIESExecuteElevateExploreKEY ENABLERS ACTIVATIONPricingSalesCEXOpsPricingSalesCEXOpsValue propPricingSalesCEXOps Subscription manager

55、Hyper-personalization Rethinking the“home”as“family”Sustainable telco Next-generation sales channels Reinvented pricing strategies Hyperlocal fiber sales push From channel to holistic customer journey Extending business models toward digital marketplaces&e-commerce/financial services Establishing co

56、rporate ventures to invest in future business models Focuses on operational excellence&efficiency Targets incremental improvements in core business Aims to transform near-core business through differentiation Enhances core value proposition within telecom service offering Seeks to venture into new,n

57、on-core markets&segments Involves significant shifts,redefining TSPs value propositionLow changeMid changeSizable changeValue propValue prop8REPORT:CRAF TING FUTURE-READY COMMERCIAL STRATEGIES FOR TELECOM SERVICE PROVIDERSARTHUR D.LITTLE-Elevate(medium to long term,near the core).This approach invol

58、ves a direct and assertive transformation of the“near-the-core”business,through differentiation levers aimed at strengthening and repositioning in the market.Elevate indicates a transformation within broader scopes like pricing,sales,customer experience,and operations and is aimed at enhancing the c

59、ore value proposition while staying within the conventional telco sphere.-Explore(long term,non-core).This strategic response is characterized by developing or venturing into new segments or industries,seeking to transcend the confines of traditional connectivity service.This could encompass the int

60、roduction of new offerings,such as energy and home device management for business to consumer(B2C),to sidestep the intense competition in connectivity.Explore marks a substantial shift,calling for a redefinition of the value proposition and a strategic and visionary move into new business areas.In a

61、 time of high uncertainty and disruption in the telco operating model,reinventing the TSP offers the most promise.There is no single solution,as this reinvention strictly connects to the underlying market.Crafting a unique TSP value proposition for each market by balancing the dimensions of Execute-

62、Elevate-Explore is the best strategy.During our work with clients,we observed an ample set of examples to inspire each dimension,and here we provide an illustrative list for TSPs to consider in their transformation journey.EXECUTE:STAYING COMPETITIVE&MANAGING PRICE WARSOperators are increasingly ado

63、pting Execute strategies to enhance the customer experience and solidify their market positioning.These strategies are distinguished by their emphasis on delivering superior service experiences and fortifying brand loyalty.Executives from leading telecom companies have underscored their commitment t

64、o customer-centric strategies through capital investments,demonstrating the importance they place on improving customer interactions and services.The benefits of these investments extend beyond mere customer satisfaction.During an ADL interview,the CEO of a leading telco in a Western European countr

65、y highlighted the potential to achieve substantial cost reductions,as evidenced by its deployment of a new Gemini(formerly Brand)-based chatbot,which is expected to save tens of millions of euros in traditional service-level cost via internal workforce or external call centers.Possible Execute-align

66、ed measures(depending on the companys value proposition)include the following list of non-exhaustive options:-Creating digital next-generation sales channels,including digital transformation and apps-Developing premium,locally-focused B2C content(from the perspective of a TSP as content provider)-Re

67、inventing pricing strategies-Implementing hyperlocal sales push-Automizing and digitizing broad set of measures-Evolving from channel to holistic customer journeyCreating digital next-generation sales channelsSeveral operators are pursuing new innovative digital channels.The Austrian TSP A1 introduc

68、ed a live shop,representing an innovative leap in online retail.This enables customers to engage with product offerings in real time.This immersive approach allows for a more dynamic and interactive shopping experience,akin to an in-store visit but from the comfort of home.Significantly,the conversi

69、on process seamlessly integrates into A1s website,allowing customers to add products directly to their basket during the live stream.This feature streamlines the purchasing process and enhances the immediacy and convenience of online shopping,catering to modern consumer preferences for efficiency an

70、d personalized service.9Spanish TSP MasMovil embraced a unique marketing approach by partnering with influencer agencies.They initiated targeted sales campaigns,utilizing influencers who were provided with promotional codes to share with their audiences.These influencers earned incentives based on t

71、he number of people using their codes.MasMovils strategy involved launching around 25 influencer campaigns per month,with a substantial weekly budget ranging from 200,000 to 600,000.This approach also allowed for direct conversion on MasMovils website,where customers used the promo codes and complet

72、ed their purchases in a streamlined and efficient manner.Developing premium,locally focused B2C contentIn the competitive landscape of OTT services,telcos have focused on local content production to captivate domestic audiences,adopting strategies akin to those of prominent players like Netflix and

73、Amazon Prime Video.In Finland,incumbent telco Elisa offers a strong example of this strategys efficacy.Elisa has invested significantly in its entertainment video services,achieving a robust CAGR of 9.5%between 2020 and 2022,which translates to a remarkable 180 million in revenue.This revenue consti

74、tutes a substantial 28%share of Finlands total market,estimated at 635 million.Elisas OTT entertainment service,Elisa Viihde,offers pay TV packages and video on demand.It has attained a noteworthy market position,rated as the preferred domestic service.In the area of consumer preference,Elisa Viihde

75、 ranked second only to Disney+and surpassed Netflix and HBO Max.The success of Elisa Viihde is further exemplified by its original series,which have garnered both local and international acclaim,receiving prestigious awards such as the Golden Venla,MIPDrama,and Canneseries.This recognition bolsters

76、Elisas brand and significantly contributes to customer attraction and value capture in a highly competitive market.Elisas approach underscores the pivotal role of localized content in enhancing customer engagement and brand loyalty.The focus on regional relevance and quality content creation indicat

77、es operators evolving strategies to remain competitive and relevant in the dynamic OTT market.Reinventing pricing strategiesIn the current economic environment,characterized by high interest rates(compared to previous years)and persistent inflation,TSPs are inclined to realize higher prices by pushi

78、ng for price increases.Providers are applying creative or reinvented pricing mechanisms,as the following examples demonstrate.Deutsche Telekom adopted a unique commercial strategy through its“support as a service”initiative,which is available for purchase in several customer channels.This strategy m

79、arked a shift from merely offering connectivity to providing residential clients with comprehensive service packages.For a monthly fee of 5.99,customers receive a suite of services,including monthly service(optimization)recommendations,on-site support within 24 hours,and comprehensive assistance for

80、 home networks like smart TV and Wi-Fi.This approach integrates a personalized contact point accessible through various channels and represents a reinvented“more for more”business model.By adding new layers of service to its bundle,Deutsche Telekom aims to justify a premium on average revenue per us

81、er(ARPU).In the US,MVNO MobileX is also taking innovative approaches to pricing.MobileX uses the capabilities of AI to predict the data volume that end customers will need and,based on this analysis,offers individualized products and pricing.In the Netherlands,KPN introduced speed-based mobile Inter

82、net subscriptions,which allow customers to choose from three different unlimited data plans with speeds up to 50 Mbit/s,300 Mbit/s,and 600 Mbit/s.Odidos launch of broadband plans with speeds up to 8 gigabits per second(Gbps)signifies a potential market shift toward flexible,speed-tiered services.In

83、October 2024,Frances Bouygues Telecom launched its B.iG convergence bundle,which expands the household and fixed/mobile bundling significantly in terms of scope and pricing dynamics.Using intelligent pricing mechanisms creatively taps customers willingness to pay,thereby improving profit or countera

84、cting cost pressure.1 0REPORT:CRAF TING FUTURE-READY COMMERCIAL STRATEGIES FOR TELECOM SERVICE PROVIDERSARTHUR D.LITTLEImplementing hyperlocal sales pushThanks to the ever-increasing demand for high-speed Internet,fiber networks have emerged as the backbone of modern connectivity.However,the challen

85、ge lies not only in building these networks but also in ensuring they reach full subscription potential with a take-up rate that ensures optimal ROI.The hyperlocal fiber sales push approach emerges as a tactical response to this challenge,pivoting from a broad-scale marketing approach to a nuanced,c

86、ommunity-focused strategy.Smart stores serve as agile and scalable points of sale that can be rapidly deployed to respond to local demand.These stores are more than just retail spaces;they are designed to be community hubs where customers can experience firsthand the transformative power of fiber co

87、nnectivity.In remote areas,telco operators like KPN and Orange are introducing“Light Stores,”which offer a lighter cost structure,fewer FTEs(full-time equivalents),and premium materials but provide a local presence both for mobile and fixed(usually deployed in parallel to fiber deployment to maximiz

88、e commercial power).Furthermore,these smaller,strategically placed local shops can combine retail operations with local call center responsibilities,effectively decentralizing customer service to make it more personalized and accessible.Leading operators are already pursuing these strategies.Germany

89、s Deutsche Telekom exemplifies the performance-linked strategy by linking a portion of the compensation for each sales channel to overall performance,thus incentivizing sales agents to maximize their efforts.The UKs Community Fibre rewards door-to-door sales if the sales are done in the seven days a

90、fter a brochure is delivered to the client(independent of the final channel).This initiative motivates agents to share marketing materials with clients,even if the immediate door-to-door sales attempt is unsuccessful.Despite more agile and scalable sales approaches by local stores,the idea of locali

91、zing shared call center activities by introducing double functions in stores shows traction around the industry.This concept implies that activities from central call centers will shift to smaller local shops or outlets taking over call center responsibilities.FIBER NETWORKS HAVE EMERGED AS THE BACK

92、BONE OF MODERN CONNECTIVITYThus,within smaller stores,handled by a maximum of one or two employees,demands from local customers as well as call center activities can be efficiently addressed.Automizing&digitizing broad set of measuresIn many markets,incumbent telcos and major operators are witnessin

93、g the entry of MVNOs and larger players,resulting in significant customer and revenue losses.Additionally,these companies are grappling with the challenge of monetizing their investments in 5G and fiber technologies.Automation and digitization can help companies cope with the bottom-line impact and

94、counteract these revenue and customer losses.One such example is a leading mobile operator in a Western European country,which reported a 25%customer base reduction(an astonishing loss of 10 million accounts)over the last five years.To counteract these challenges,the telco has embarked on a journey

95、toward operational efficiency and implemented two major initiatives aimed at reducing network costs and enhancing customer experience:-Revision to the trouble-ticket process.The telco focused on the customer experience,especially in network operations,by investing in automation and AI.One significan

96、t project revolved around managing customer trouble tickets related to network issues.After selecting the best-suited product for its needs,the company emphasized process revision as the key to success rather than solely implementing innovative technology like chatbots and robot process automation(R

97、PA).This approach resulted in a remarkable 60%decrease in trouble tickets needing escalation to the service desk and a 60%reduction in required FTEs.The increase in first-call resolution KPI was the same percentage.These improvements led to significant OPEX savings.In addition,the time taken to iden

98、tify actions to resolve trouble tickets also dropped by 80%.1 1-Network automation.The company introduced AI algorithms for automated alarm detection,correlation,root-cause analysis,and resolution.This move improved first-call resolution rates and reduced the time to dispatch trouble tickets to fiel

99、d forces or back-office teams.Front-office workload was reduced by 70%and back-office workforce by 20%-30%.The integration of AI reduced the time for root-cause analysis from hours to minutes.Here again,the critical factor for success was the comprehensive revision of operational processes to accomm

100、odate automation(investing nearly a year in process redesign),which was pivotal compared to the actual product implementation.Telcos strategic efforts underscore several vital lessons for TSPs embarking on an efficiency journey.Firstly,deliberate process revision is paramount.The success of a compan

101、ys initiatives hinges not just on adopting innovative technologies but also critically on revising and optimizing existing processes to align with these technologies.And AI-enabled process automation,evaluation of automation potential,and identification of bottlenecks can help here.Celonis,a Munich-

102、based process-mining start-up,enabled Vodafone to reduce process costs by 11%and helped Deutsche Telekom save US$74 million within procure-to-pay processes.Secondly,maintaining a customer-centric focus is crucial.By prioritizing customer needs and experiences versus a product-first mindset,the telco

103、 was able to achieve significant improvements in service quality and efficiency.Lastly,the utilization of innovative technology,especially AI,played a key role.The integration of AI for automated processes and decision-making dramatically reduced response times and operational workload.Evolving from

104、 channel to holistic customer journeyOperators are experiencing a change in thinking from channel management to an individualized customer journey focus.The head of customer experience at a major global telecom group reported this transition,substantiated by concrete KPIs and the traction of AI-supp

105、orted customer experience initiatives.This evolution has positioned this group as a leader in net promoter score(NPS)in more than half the countries it operates in,with aspirations to lead in two-thirds.This transition marks a departure from the traditional approach of calculating average customer s

106、atisfaction across channels.Now,the emphasis is on a personalized customer experience for one,where individual customer journeys are meticulously crafted to prevent dissatisfaction recurrence,significantly improving retention rates.Globally,multiple telecom operators are employing innovative strateg

107、ies to disrupt and enhance the traditional customer journey(see Figure 3).SFR in France,for instance,utilizes GenAI-enabled dynamic scripts.This technology allows agents to respond to customer inquiries in a highly personalized manner,incorporating emotional scoring for a more tailored experience.Fi

108、gure 3.Levers to create disruptions on the client journeyIVR=interactive voice response;SVI=switch virtual interfaceSource:Arthur D.LittleIVR=interactive voice response;SVI=switch virtual interfaceSource:Arthur D.LittleFigure 3.Levers to create disruptions on the client journeyBefore customer contac

109、tAnticipate needsDuring customer contactMaximize answer qualityAfterRespect client&maximize valueScoring QoS clientPredictive ticketingScoring Wi-Fi:100%base:smart Wi-Fi Scoring smartphone quality:e-builder native in appIndustrialization of omnichannel predictive ticketingNext IVRSmart scriptsIVR op

110、timizedIn-app SVIDynamic scriptsEmotional scoringPickup Contextualization of proactive on-base calls through branding before call:customer only answers if truly interested and/or available and can reschedule callQoS mobileQoS Wi-Fi fixePredictive ticketingIn-app IVREmotionsScriptsExpertsPortugal1 2R

111、EPORT:CRAF TING FUTURE-READY COMMERCIAL STRATEGIES FOR TELECOM SERVICE PROVIDERSARTHUR D.LITTLEVodafone has introduced its smart pickup feature:after interacting with Vodafone,customers receive a branded follow-up call,with on-screen information identifying Vodafone as the caller and providing the o

112、ption to reschedule if needed.These strategies significantly improve customer engagement by adding context and personalization to customer interactions.ELEVATE:LEVERAGING DIFFERENTIATIONGlobally,operators are increasingly adopting Elevate strategies focused on maintaining sustainable ARPU and profit

113、 margins in the face of declining or stable connectivity markets.A unique approach to business transformation involves a bold revamp of core operations,utilizing various differentiation strategies to reposition the company.Elevate tactics encompass a transformation across multiple areas,such as pric

114、ing,sales,and operations,with the goal of improving the core value proposition while remaining within the traditional telecom industry.Compared to Execute,Elevate is more oriented toward changing current market positioning,as opposed to making pure efficiency gains.However,from a value proposition p

115、erspective,Elevate is not as disruptive as Explore.These strategies,diverse in nature,are pivotal to addressing the challenges posed by competitive market dynamics.They include:(1)adopting a digital orchestrator role and(2)rethinking the“home”as“family.”Adopting a digital orchestrator roleOperators

116、can leverage their extensive customer base and existing billing relationships with the clients by offering discounts,benefits,or promotions related to service bundles.These“megabundles”save consumers money,increase convenience,and simplify the billing process while expanding the exposure of some ser

117、vices to new audiences.This concept is supported by real numbers,according to a report by Omdia and Bango.4 Twenty percent of all streaming video subscriptions are now sold through bundling partnerships with telco companies;the number is expected to reach 25%by 2028.4 Tongue,Giles.“20%of Streaming S

118、ubscriptions Delivered Through Telco Bundling in 2023.”Bango,9 August 2023.In certain regions such as Latin America,close to 50%of streaming video subscriptions will come from telco bundles within the next five years.Global revenue from video,music,and other subscription-based services sold via telc

119、os will total$24.8 billion this year and grow to$42.8 billion in 2027,presenting an appealing opportunity for telcos.Operators like T-Mobile and Optus leverage their established customer relationships and billing platforms to become effective aggregators and managers of these subscriptions:-T-Mobile

120、 Go5G Next.T-Mobile has innovatively redefined its approach to customer engagement by launching the Go5G Next plan,incorporating a unique megabundle strategy.This plan integrates premium services like Hulu,Apple TV+,and Netflix,providing a comprehensive entertainment package valued at over$400 annua

121、lly.T-Mobiles focus on enhancing customer value is evident in offering these services at no additional cost,setting a new benchmark.Moreover,T-Mobile aggressively highlights that its offering is cheaper than similar plans from Verizon and AT&T.By including subscriptions to popular streaming services

122、,T-Mobile is addressing evolving consumer preferences for bundled digital content,thereby positioning itself as a leader in wireless entertainment offerings.-Optus SubHub.Optuss SubHub allows customers to manage various online subscriptions in one place.It offers incentives like a free 12-month Amaz

123、on Prime subscription,savings of up to 10%for adding multiple subscriptions,and includes services like Amazon Prime Video,Calm,and Kindle Unlimited.This platform reflects Optuss strategy to simplify subscription management and offer financial benefits to its customers.Telcos are exploring different

124、portfolio routes to enhance market positioning as digital orchestrators:-Focus on connectivity.Some operators concentrate on providing core connectivity services as their primary offering.1 3-Hard bundling of value-added services(VAS).Incorporating VAS into core offerings creates compelling package

125、deals,similar to the approach used by T-Mobile.-Soft bundling of VAS.Allowing customers to choose from different VAS options,like EEs model,helps ensure that customers do not pay for unwanted services.-“Build your own.”Combining core connectivity with customized VAS,akin to Verizons strategy,allows

126、for tailored solutions that meet specific customer needs.Telcos must also decide how these strategies fit within their business lines.For example,Deutsche Telekom focuses on core connectivity in its mobile and fixed portfolio but adopts a digital orchestrator role in the TV sector.Assessing the impa

127、ct of these strategies on new customer intake,churn reduction,profitability,and organizational structure is crucial for crafting an effective portfolio that aligns with business objectives and market demands.This evolution of telcos becoming universal content aggregators comes with its own commercia

128、l and technical complexities.Commercial complexities in telco bundling include price subsidization,where telcos traditionally bear the cost,but increasingly,service providers share it.Marketing spend commitments are a source of friction,with telcos often unable to meet them due to internal constrain

129、ts.Activation rates for bundled services can be challenging,with rates around 50%considered good.Telcos exercise caution in due diligence with partners to ensure reliable support for customers.The power dynamics between telcos and OTTs vary,with OTTs becoming more demanding.Issues like sudden price

130、changes by OTTs can undermine telcos commercial strategies.Telcos also need to be vigilant against fraudulent activities by users,such as abusing free bundle offers or defaulting on payments.On the technical side,implementing telco super-bundling services requires significant technology investment i

131、n full subscription management and content-discovery capabilities,which is challenging due to competing priorities and cost-cutting measures.5“O2 Telefnica Starts the 2024 Financial Year with Further Growth and Increased Profitability.”Telefnica,5 September 2024.THE INTEGRATION PROCESS CAN BE LENGTH

132、Y,DRAINING RESOURCES AND ADDING TO OPERATIONAL COMPLEXITYIn many emerging markets,unified or itemized billing is rare,which complicates bundled service offerings.Back-end integration between OTTs and telcos is often complex and time-consuming,with concerns about direct API access and security.Front-

133、end complexity also increases with new services,affecting sales pitches and customer support.The integration process can be lengthy,draining resources and adding to operational complexity.This creates a significant challenge for telcos in managing and streamlining these new service integrations.Reth

134、inking the“home”as“family”Commercialization strategies of TSPs were historically focused mainly on the individual rather than the family.However,there has been a noticeable shift toward commercialization strategies that target family bundles.TSPs are rethinking the“home,”not just as a location but r

135、ather as a“family”in the sense of a related service group in their commercialization efforts.For example,Swisscom deliberately targets couples,families,flatmates,and solo occupiers with its Combi&Family discount(formerly blue Benefit).When multiple members of a household are Swisscom customers,the o

136、pportunities for any remaining family are more favorable.Similarly,O2 Telefonica in Germany launched the O2 Kombi-Vorteil family tariff,which allows families to optimize and save on combined fixed and mobile packages.Telefonica reported a positive impact from this campaign,claiming that the monthly

137、churn was only 1%after the launching of the tariff.51 4REPORT:CRAF TING FUTURE-READY COMMERCIAL STRATEGIES FOR TELECOM SERVICE PROVIDERSARTHUR D.LITTLEEXPLORE:DIVERSIFYING BEYOND CONNECTIVITYIn the face of stabilized connectivity revenues,operators have investigated other areas of growth.Explore str

138、ategies represent telcos finding new growth engines and/or moving the focus from the core business to other disruptive areas to compensate for declining revenues.In that regard,growth trajectories can be distinguished between business-to-business(B2B)and B2C offerings.B2B:Broadening the portfolioThe

139、 landscape for B2B telcos is shifting,with a notable increase in non-connectivity services.Many of our interview subjects cited diversification as a matter of survival for B2B businesses,yet the value proposition and go-to-market should be thoroughly considered.For example,some operators we observed

140、 focus on specific industries and build their capabilities quickly by using M&A or forming extensive partnerships.Several operators have successfully grown this segment to account for 20%-40%of total revenues,presenting more lucrative opportunities than traditional connectivity services.Offering loc

141、ally integrated,customized ICT solutionsGlobal operators are recognizing a market shift toward composite demand,where B2B clients prefer a singular entity to address all their ICT needs.This trend has led operators to adapt and integrate comprehensive strategies into their business models.For instan

142、ce,Austrias A1 has adopted the concept of“managed everything”solutions,while Saudi Arabias Solutions by STC and Batelcos Beyon position themselves as full-service ICT providers.This approach underscores the necessity of not just internal ICT capabilities but also the vital role of partnerships in co

143、vering the extensive spectrum of ICT needs.For example,Solutions by STC has developed an extensive network of both local and global partnerships,all selected through a sophisticated and mutually beneficial assessment process(see Figure 4).Despite corporate venturing to augment their position in digi

144、tal services,telcos increasingly invest in transforming their organizations into ICT rather than connectivity providers.Beyon,from incumbent Batelco,developed an external technology group(spin-off)to host the connectivity offering,and more importantly,provide the platform to grow its ICT products,in

145、cluding financial services,cybersecurity,software as a service,and additional services for B2C and B2B customers.As such,exploring not only means strategically growing the ICT product portfolio but also transforming the overall perception and image of the telecommunications industry.Figure 4.Five pi

146、llars of partnership ecosystem strategySource:Arthur D.LittleSource:Arthur D.LittleFigure 4.Five pillars of partnership ecosystem strategyRevenue growth&maximizing profitabilityBuild capacity alignedwith B2B strategyFocus on products&servicesIntegration management office(IMO)establishmentEnhanced pa

147、rtnerexperience12345Focusing on win-win revenue growth for both STC&partner,yet tending to cover as much as possible internallyGlobal technology vendors certification&continuous training to build staff capacity&capabilitiesFocusing on developing new products to increase breadth&depth of portfolio,as

148、 well as attracting partners to maximize value for clientsBuilding post-merger integration(PMI)capabilities to ensure success of post-acquisition target integration&maximum synergiesManaging partner lifecycle from prequalification to renewal,including day-to-day operations,with objective to position

149、Solutions by STC as the#1 choice of partner45%growth in partner revenueGlobal vendorcertificationsPremium partner for tech vendors&new product growthEffective PMI150+leadingglobal partners1 5B2C:Broadening the portfolioIn examining the evolution of B2C differentiation strategies among TSPs,it become

150、s evident that past approaches to diversification were not always executed with strategic foresight.Historically,operators often ventured into reselling products outside their core expertise,leading to a limited understanding of their new offerings.This lack of depth in product knowledge was further

151、 compounded by inadequate incentive structures,not just in sales but across organizational levels.Such an approach resulted in suboptimal integration and coordination and affected overall effectiveness.Currently,TSPs are pivoting toward a more intelligent and integrated approach to product diversifi

152、cation.This shift shows a clear distinction between two key strategies:1.The API-based reselling of products that involves a broader,more generalized strategy of offering various third-party products through API integrations,which can sometimes lack a cohesive link with the operators core services.2

153、.The deep integration of specific services,such as video content,into their BSS(business support systems)and OSS(operations support systems),signifies a more profound integration,where services are intricately woven into the fabric of the operators existing systems and offerings.This action ensures

154、a seamless customer experience and aligns closely with the operators expertise and market positioning.Both options are observed in the TSP industry.As TSPs recalibrate their B2C differentiation strategies,the current focus is on smart diversification,where understanding,integration,and strategic ali

155、gnment play pivotal roles.This approach enhances the value proposition for the customer and ensures that these new ventures are synergistic with the operators core competencies and market objectives.Operators use different B2C diversification strategies:-Extending the business models toward digital

156、marketplaces and e-commerce-Extending the business models toward financial services-Building a super app with local and international digital services leveraging the strong telco brand-Enabling utility services and general home management via a household integrator/smart convergence roleExtending bu

157、siness models to digital marketplaces&e-commerceIncreasingly,TSPs are becoming active in digital marketplaces and e-commerce,attempting to further diversify their traditional business models.This trend has become particularly noticeable for quite some time in Southeast Asia and the broader Pacific r

158、egion(see Figure 5).Figure 5.Southeast Asia and Pacific TSPs in the digital marketplace/e-commerce marketSource:Arthur D.LittleSource:Arthur D.LittleFigure 5.Southeast Asia and Pacific TSPs in the digital marketplace/e-commerce marketMonetization of space on own self-service application toward third

159、-party value-added service providersOnline/offline service model(in-store pickup from any of Taiwan Mobiles stores),exploring discounts on online telco billvia momo coinsThird-largest e-commerce platform in South Korea,local distributor for Amazon Global,with“prime-like”subscription tiersVALUE-ADDED

160、 SERVICE MARKETPLACEONLINE RETAIL-TELCO INTEGRATION(SUBSCRIPTION)E-COMMERCE PLATFORM1 6REPORT:CRAF TING FUTURE-READY COMMERCIAL STRATEGIES FOR TELECOM SERVICE PROVIDERSARTHUR D.LITTLETaiwan Mobile(TWM)provides an interesting example of supporting telco movement into e-commerce.As the second-largest

161、telecom company in Taiwan,TWM partially owns Taiwans largest B2C e-commerce service provider,Momo.As far back as 2019,the e-commerce business of TWM accounted for more than half of the groups revenue.6 TWM has achieved a business model diversification away from a traditional TSP to a leading TSP wit

162、h strong e-commerce capabilities.Extending business models toward financial servicesTSPs in Asia and Middle East and North Africa(MENA)are increasingly venturing into financial services,a strategic move driven by the regions unique characteristics.The telco industrys deep understanding of digital pa

163、yments,data analytics,and customer behavior,combined with high mobile penetration rates,makes it well-equipped to address the financial needs of both urban and rural populations in emerging markets.Furthermore,in regions with significant unbanked or underserved populations,mobile-based financial sol

164、utions enable telcos to fill critical gaps in accessibility and affordability,fostering economic empowerment in ways that traditional banks cannot.Telcos in Asia and MENA have seen considerable success in financial services,whereas similar ventures in Europe have often faced hurdles.This difference

165、is largely due to the unique market dynamics and regulatory environments in each region.In Asia and MENA,where financial infrastructure is less mature,there is a strong demand for digital banking solutions,especially among those underserved by traditional financial institutions.Furthermore,governmen

166、ts in these regions are often supportive of fintech and digital banking innovations,creating a favorable regulatory environment that encourages telco-led financial services.In contrast,Europes mature banking sector presents high competition,with consumers showing strong loyalty to established banks.

167、Additionally,the European regulatory landscape can be more restrictive,making it challenging for telcos to penetrate the financial market with digital solutions.6“Taiwan Mobiles 5G+Strategy On the Rise;Momo Revenues Top Half for the First Time.”Taiwan Mobile press release,10 December 2019.Asian telc

168、os are increasingly moving into the digital banking space,launching innovative applications that cater to the evolving financial needs of consumers and businesses.This shift represents a strategic expansion beyond traditional telecom services,as detailed in the following examples:-Next Bank(Taiwan).

169、In early 2023,incumbent Chunghwa Telecom launched the digital bank Next Bank.-Singtel and Grab(Singapore).In Singapore,Singtel collaborated with the super app Grab to launch GXS,Singapores first digital bank.This venture includes offerings such as savings accounts and flexible loans.With an EBITDA b

170、reakeven planned for FY26,Singtel is expanding its financial services into Malaysia and Indonesia,indicating a strategic commitment to the consumer financial sector.-Axiata Boost(Southeast Asia).Managing the fintech business Boost across seven countries,Axiata reported revenues of MYR 60 million in

171、2022,marking a 92%growth from the previous year.The company plans to reach profitability by 20252026 and has already provided 1.5 billion in loans to enterprises.-Airtel Payments Bank(India).Airtel Payments Bank is one of Indias leading neobanks,offering a range of retail banking services,including

172、in rural areas.By 2020,it had served 55 million customers and achieved profitability in 2022.-JazzCash(Pakistan).This branchless banking service focuses on digital finance for microbusinesses,providing features like QR code generation,digital invoices,and tools for sales monitoring and payments.-GCa

173、sh(Philippines).GCash is a leading fintech in the Philippines.The app can be used to transfer money,withdraw cash,and for many other related services.GCash is partly owned by the Philippian telco firm Globe Telecom.-Tigo Money(Latin America).The financial service of the regions leading telco recentl

174、y partnered with Visa,has over 5 million active users and US$50 million in revenue,and aspires to become the leading fintech player in the markets where it operates.1 7-MENA market.In the MENA region,there is a significant opportunity for fintech,particularly in the payments and transfer segment.Key

175、 developments include:-STC Pay(Kingdom of Saudi Arabia).A leading fintech entity in Saudi Arabia,STC Pay has become the regions first financial unicorn.In partnership with Western Union,it has transformed international remittances,serving 7.8 million users.-Etisalat(United Arab Emirates).This compan

176、y launched Wio,a new digital banking platform in that country,offering a fully digital banking experience tailored to customer lifestyles and needs.-MTNs Mobile Money(Africa).The financial services arm of the largest African mobile operator allows customers to pay bills,send and receive money from f

177、amily and friends,and apply for personal loans.It has been launched in several markets,and the number of users grew dramatically from 28 million to 64 million in 20192023.-Safaricom(Kenya).Safaricoms M-PESA,a mobile money transfer application,has played a significant role in financial inclusion,serv

178、ing more than 30 million people across Africa.The service grows with 9%CAGR and contributes 40%to the telcos total revenues,indicating the services significance to the telco.Building super apps with local&international digital servicesProximus,a prominent Belgian telco,unveiled a Proximus+,a versati

179、le super app.This application combines a myriad of services ranging from telecom and energy management to community engagement and travel planning,integrating both local and global digital services.The comprehensive nature of Proximus+positions it as a potential market disruptor,streamlining daily a

180、ctivities like Wi-Fi management,public transport,and energy use while also offering functionalities such as local event booking and restaurant reservations.The strength of the Proximus brand is pivotal in providing an integrated,seamless user experience,thereby transforming the app into a central pl

181、atform for various lifestyle and utility services.More than 1 million people are already using the app.Orange introduced Max it,a versatile super app designed for users in Africa and the Middle East.Built by Oranges teams in Africa,Max it brings together telecommunications,financial services,and e-c

182、ommerce in one accessible platform aimed at simplifying everyday life.Available to both Orange users and non-users,the app integrates functions like managing mobile and fixed-line accounts,accessing Orange Money for transfers and payments,and utilizing a digital marketplace for games,music,TV,and ti

183、ckets.Orange expects Max it to attract 45 million active users by 2025.Other notable super app developments include:-MyJio(India).Developed by Reliance Industries,MyJio encompasses a wide range of applications,including Saavn,Jio Mart,Jio Payments,and Jio Health.Its potential integrations with platf

184、orms like Facebook and WhatsApp offer a significant competitive edge by providing a diverse array of services.-Ayoba(Africa).Spearheaded by MTN,Ayoba is hailed as Africas first super app.It caters to both MTN and non-MTN users,offering services that span payments,messaging,content,and travel,along w

185、ith specialized services like MTN Online School and MTN MoMo.Ayoba aims to expand its user base to 100 million by 2025.-Turkcells PayCell(Turkey).Turkcell is in the process of transforming its PayCell app into a super app,incorporating functionalities such as bill payments,fuel purchases,mobile mone

186、y transfers,and QR code payments.Telcos hold unique leverage in the development of super apps due to several factors:-Established customer base and trust.This makes it easier for telcos to introduce and promote new services via a super app.-Integrated service delivery.Super apps enable telcos to off

187、er a diverse range of services in one place,enhancing customer convenience and engagement.-Cost-effectiveness and efficiency.Developing a super app is more resource-efficient than creating multiple standalone applications.1 8REPORT:CRAF TING FUTURE-READY COMMERCIAL STRATEGIES FOR TELECOM SERVICE PRO

188、VIDERSARTHUR D.LITTLE-Data insights and personalization.Access to rich customer data allows telcos to personalize services within the super app,improving user experience and satisfaction.-Brand advantage and marketing.Well-established brand presence and marketing channels provide telcos with a compe

189、titive edge in promoting their super apps,aiding in market visibility and user acquisition.Enabling utility services&general home managementTSPs are not just focusing more on the family in commercialization(see Elevate),they are also trying to diversify products and become the digital service provid

190、er for families and all their digital needs at home.The integration of smart home technology has become a crucial component of the broadband network,playing a pivotal role in ensuring a seamless,top-notch end-to-end user experience.Examples of smart home services provided by TSPs can include cloud g

191、aming,telehealth,and telework.For example,Deutsche Telekom offers products in the context of smart convergence that can locate pets(especially dogs).Intelligent door locks are another example;these can send signals when children open the refrigerator without parental permission or trigger an alarm s

192、ystem if a front door is opened when residents are absent.7TSPs are now leveraging customer premise equipment(CPE)and gateway innovations as strategic entry points into homes.This trend is seeing a resurgence as operators seek to enhance the in-home experience through advanced technologies.For examp

193、le,initiatives like Purpl(created to help people with disabilities save money)or common incident management approaches.At the same time,companies like Comcast are now marketing gigabit Wi-Fi as a standout feature,prioritizing the quality of in-home connectivity over traditional broadband-speed metri

194、cs.7“Deutsche Telekoms Mobile Phone Contract.”Deutsche Telekom,accessed January 2025.Furthermore,the trend toward partnerships is becoming more pronounced,with TSPs collaborating with security services and home automation companies to expand their household service ecosystems.These partnerships mirr

195、or efforts by US telcos with companies like ADT and Comcast initiating repeated initiatives to reboot their home service offerings,emphasizing the growing importance in the TSP industry of supporting integrated and secure home environments.This shift not only enhances the capabilities and appeal of

196、smart home ecosystems but also aligns with broader industry trends of providing comprehensive,integrated solutions that cater to the nuanced needs of modern households.By focusing on both innovative product offerings and strategic partnerships,TSPs are well positioned to capitalize on the expanding

197、opportunities within the smart home market,ensuring they remain at the forefront of digital-and home-life convergence.Organizational disruptions:Establishing corporate ventures for future investmentThe trend toward corporate venturing is currently visible in a variety of industries.Several TSPs are

198、either building their own departments for corporate entrepreneurship or setting up their own corporate venturing funds:-Elisas strategic international ventures.Finnish telecom incumbent Elisa exemplifies the strategic expansion into near-core international digital services.The company established th

199、ree international ventures,each focusing on deep industry-specific services to serve leading clients in their respective fields(see Figure 6).These ventures span near-core areas,such as network automation and workplace collaboration solutions.The exception is AI-powered manufacturing,which still inc

200、orporates a substantial cloud component to align it closely with near core.Elisas strategy of focused diversification and aggressive expansion through acquisitions and partnerships has been notably successful,yielding a CAGR of 34%from 2018 to 2022.1 9-Proximuss investment in international diversifi

201、cation.Proximus,another major player in the field,has made a substantial investment toward diversification,committing an amount equivalent to 25%of its market capitalization.This investment underscores the companys dedication to and belief in the potential of international digital services.Proximus

202、is targeting growth in this sector from 35%to 50%of its total revenue over the next three years.The companys focus areas include the communications platform-as-a-service(CPaaS)and digital identity market,primarily through its subsidiaries Bics and Telesign.Bics contributes 66 million from non-connec

203、tivity ICT services out of its total revenue of 1,132 million in 2022.On the other hand,Telesign operates purely in ICT services,boasting a revenue of 473 million and a robust 35%CAGR.Proximus also utilized M&A to quickly grow in the international market.With the acquisition of Route Mobile,Proximus

204、 secured a top three position in the CPaaS global market;its combined EBITDA reached a world-class 13%-15%.-Swisscom Ventures.Swisscom Ventures is the venture capital(VC)arm of Switzerlands leading TSP Swisscom.Swisscom Ventures was introduced in 2007 and since then has invested in over 80 technolog

205、y companies and achieved 35 successful exits since inception.Swisscom acts as a strategic investor and offers entrepreneurs access to a broad range of portfolio services,in addition to financial support.CORPORATE VENTURING IS CURRENTLY VISIBLE IN A VARIETY OF INDUSTRIESLike venture capital,corporate

206、 ventures depend on timing and cycles.In times of high interest rates and decreasing VC activity,TSPs should consider other growth levers.STRATEGY FORMULATION FOR RETAIL TRANSFORMATIONWhen crafting the robust commercial strategy to win retail transformation,TSPs should blend all three logics:do the

207、current core business right(Execute),look for new positioning and growth levers for core business(Elevate),and grow beyond core(Explore).Our experience working with leading global telco executives showed us that retail transformation strategy should be a function of the anticipated wholesale efficie

208、ncy(see Figure 7)as it will depend on the local market.In the markets with a low degree of wholesale efficiency,operators can still focus on executing within their core business,given less pronounced risks from retail and sales disruptors,while in highly effective wholesale markets TSPs should activ

209、ely seek new positioning for core business and even explore beyond it to survive.Figure 6.Elisa international digital servicesSource:Arthur D.LittleSource:Arthur D.LittleFigure 6.Elisa international digital servicesINTERNATIONAL DIGITAL SERVICES VENTUREPORTFOLIOINTERNATIONAL DIGITAL SERVICES REVENUE

210、PARTNERS&CUSTOMERSNetwork automation servicesAI-powered manufacturing solutionsWorkplace collaboration solutionsEnterprise video,audio&digitalDigital signage solutionsAdvisory&outsourcingHealth,safety&environmentManuf.ops managementQuality managementSupply chain management Network automationNetwork

211、monitoringPerformance managementService assuranceLarge international CSPsWorkplace system providersManufacturing service providersPartnersCustomers201820202022133221423+34%Revenue(millions)2 0REPORT:CRAF TING FUTURE-READY COMMERCIAL STRATEGIES FOR TELECOM SERVICE PROVIDERSARTHUR D.LITTLEAs we outlin

212、ed above,the telco market is headed toward higher wholesale efficiency,so globally,many TSPs will sooner or later face problems presented by more advanced telecom markets when it comes to market share,price erosion,and customer-acquisition cost increases.In the next chapter,we propose a framework to

213、 navigate this by allowing telcos to craft a future-proof commercial strategy.KEY ENABLERS FOR CRAFTING FUTURE-PROOF COMMERCIAL STRATEGYBased on their scale and market presence,telcos adopt a variety of commercial strategies that encompass the Elevate-Execute-Explore framework.Large,multi-market tel

214、cos often have the capacity to pursue multiple transition avenues and form substantial partnerships.In contrast,smaller,single-market telcos may focus more on specific areas like ultra-lean network optimization or developing a super app.Regardless of size,telcos face trade-offs with each strategy,ba

215、lancing enablers against operational complexities(see Figure 8).Trade-offs mainly revolve around the level of customization and segmentation applicable in contrast to the mass-market appeal of mobile and fixed operators at scale.The moving target nature of the problem at hand makes this complex for

216、operators to do on a regular basis:When is change substantial?Which of my specific enablers are not running appropriately?In many cases,the orientation toward commercial competitor moves tends to remain at a rather tactical,short-term reaction level;with the view on enablers,operators can take a ste

217、p back to consider angles that can create a significant impact while requiring a feasible level of orchestration and up-front development.Ensure tailoring of commercial strategies Local market conditions are a critical driver for any service organization,necessitating bespoke commercial strategies t

218、ailored to each player.Universal strategies often fail because what works in one region may not succeed in another.Even within a single market,factors such as local market share differences,regional preferences,cost structures,or the maturity of go-to-market approaches can drive significant variatio

219、ns.To address these complexities,telcos must move beyond generic frameworks and focus on strategies actively tailored to the specific dynamics of each market.This includes understanding customer behavior dynamics and preferences as well as trends within the competitive landscape as inputs for benchm

220、arking and forecasting.Further,it is vital to consider external emerging trends like regulatory changes or technological disruptions.Figure 7.Retail transformation strategy blend in relation to local markets degree of wholesale efficiencySource:Arthur D.LittleSource:Arthur D.LittleFigure 7.Retail tr

221、ansformation strategy blend in relation to local markets degree of wholesale efficiencyLowMediumHighDegree of wholesale efficiencyMix of strategic initiatives(%split)ExecuteElevateExplore2 1The foundation for strategic planning formulates by combining an outside view with an assessment of capabiliti

222、es,ambition,and differentiation against the market needs of the company.While most operators take a similar approach to market contextualization,the specific areas they prioritize or perspectives they adopt can vary,leading to different strategic directions.Identifying the right approach should not

223、be taken too lightly and should periodically consider modifications.Prioritize effective data managementTo effectively develop products,telcos need to cater to customer needs.Effective,organization-wide data management is key to understanding these needs at scale.This allows operators to create micr

224、osegments and effectively address customer needs,reflecting on the trade-offs between broad reach and targeted engagement.A segmentation strategy will identify subsegments,including high-potential targets,for which revised or tailored offerings can be pitched.Once identifying these high-value micros

225、egments,developing propositions becomes easier since they typically represent narrower groups with specific needs,such as music lovers,sports enthusiasts,or families with younger children.Another application of effective data management is data monetization.Internal monetization helps telcos develop

226、 more effective churn-forecasting models and dashboards to monitor patterns to make faster product decisions.External monetization involves selling depersonalized data;for example,data of high-value customers is valuable to banks.Smaller operators often use intermediaries like Eureka AI while larger

227、 operators may sell data directly.The viability of this approach is heavily influenced by data compliance regulations and is more prominent in Asian and Middle Eastern telecom markets while some European initiatives have previously fallen through the cracks.Despite the clear relevance of data,few te

228、lcos have a comprehensive information layer in place that spans the entire organization and caters to all operational scenarios.Typically,service and commercial teams within these companies gather and process data independently,with limited feedback loops and data mining over time.Inadequate data go

229、vernance practices further hinder the effectiveness of data usage in telecom companies.Players of all sizes and maturity levels struggle to understand the quality of their data and its location,often resorting to inefficient,manual,or semi-manual methods of data preparation for analytical purposes.F

230、igure 8.Commercial strategy enablers Source:Arthur D.LittleSource:Arthur D.LittleFigure 8.Commercial strategy enablers Market understandingAmbitionDifferentiationClient needsData mgmt.&governanceData monetizationCustomizationAffordabilityProduct mgmt.AgilityAutonomySimplicityPartnership governanceGo

231、-to-marketCustomer experienceCommercial mgmt.modelTechnology utilization&AI integrationPerformance measurement&continuous improvementCustomer insight profiling Market contextualizationValue proposition designCommercial executionPartnerships&ecosystem developmentKey enablers of commercial strategyKey

232、 elementsOverarching enablers2 2REPORT:CRAF TING FUTURE-READY COMMERCIAL STRATEGIES FOR TELECOM SERVICE PROVIDERSARTHUR D.LITTLETelcos need to address these gaps by unifying data systems,improving governance,and ensuring collaboration across teams.Quickly forgotten unstructured ad hoc assessments sh

233、ould be discontinued.Automation is crucial to generate practical,data-driven insights.This involves establishing clear data responsibility standards and uniform naming conventions to ensure consistent labeling and organization of data across the full lifecycle and process steps,including prospecting

234、,lead generation,and sales.It should continue into production and operations from diverse sources.With these protocols in place,automating and streamlining data-related tasks becomes feasible,thus improving the basis for this essential enabler.Balance broad appeal with hyper-customized offeringsDiff

235、erentiation beyond mere coverage or service quality demands core product and brand differentiation alongside innovative,value-added services tailored to specific customer needs.In many markets,the subscription aggregator role has become a pillar of this dynamic.The future of telecoms is moving from

236、a one-size-fits-all approach to a nuanced,customer-centric model.The mix of mass-market strategies with specialized offerings tailored to distinct customer profiles is highly variable across markets but always a relevant question in the discussion.Success hinges on identifying and serving valuable y

237、et sufficiently large segments,supported by robust customer insights profiling,pricing,product,and distribution strategies.When doing so,it is important to develop new services that incorporate emerging technologies while remaining accessible to cost-conscious consumers.This requires moving away fro

238、m traditional approaches that rely solely on broad mass-market coverage or rigid,predefined service bundles,as these often fail to address the increasingly diverse needs of customers.Instead,telcos should focus on flexible,modular tariffs that empower customers to mix and match options according to

239、their individual preferences.In the wake of these proposition development dynamics,product management approaches are also changing.Lean methodologies from the tech sector,like the MVP(minimum viable product)model for rapid prototyping and customer feedback loops,are gaining traction in telecoms.View

240、ing customer needs through a“jobs to be done”lens facilitates more precise product development.This shift is not just about new frameworks;its a cultural shift toward customer centricity,which is crucial for attracting top talent in product management.The ability to assess,learn,and iterate quickly

241、gives telcos a competitive edge,enabling them to be first movers in adopting and shaping emerging trends and outpacing competitors.Adopting a holistic and interdisciplinary methodology,combined with flexible operational practices,addresses common obstacles in achieving business success.This approach

242、 in some cases includes forming specialized groups(tribes)focused on distinct customer journeys or processes,such as transitioning leads to sales or resolving issues.Within these groups,smaller teams(squads)concentrate on specific functions,like streamlining the quotation process,enhancing the effic

243、iency of the entire journey,not just isolated segments,and establishing precise outcomes and clear responsibilities.Evaluate the balance between in-house development&strategic partnershipsAllocating focus to developing in-house capabilities or forming partnerships are recurring elements when craftin

244、g advanced value propositions.Given the complex and evolving nature of customer needs and technical solutions,partnerships offer several key benefits:-Reduced costs.Partnering can help telcos reduce costs or shift from a larger CAPEX to a variable OPEX cost structure,of particular benefit during the

245、 initial launch phase.-Shorter time-to-market.Partnerships can accelerate time-to-market compared to in-house development.-Wider market access.Partners provide access to new customer segments through existing billing relationships,facilitating the integration of telco offerings into partner bundles

246、and reinforcing a win-win model.2 3Adopting increasingly available“as-a-service”models further augments the scalability and cost-effectiveness of solutions and at the same time may create the potential to“productize”internal solutions to sell to third parties as an as-a-service offering.This possibi

247、lity would leverage in-house development,making this angle a separate stream for consideration in validating commercialization.Within the mix of partnerships in commercial development,operators have three enablers to substantiate their approach:1.Autonomy.Operators do not necessarily need full contr

248、ol across product changes and pricing at all times,but within their value proposition,a certain level of autonomy and mechanisms to control partner-driven changes will be required depending on the service and how it is included in the operators proposition.2.Simplicity.In many cases,full back-end in

249、tegration enables a seamless customer experience,but the customer-driven simplicity has to be matched with process and production simplicity to avoid resource and time-intensive developments or in-life operations.Effective API integration is one angle for achieving simplicity in both dimensions,clea

250、rly favoring partners that provide robust yet user-friendly API options.Furthermore,simplifying client-facing product offerings is also important for sales teams.3.Effective partnership governance is crucial.Establishing clear responsibilities and incentive mechanisms up front ensures that conflicts

251、 are resolved effectively and all parties remain motivated toward mutual success.Implement a sophisticated go-to-market approachDuring the commercial execution phase,strategies are put to the test in the real world,translating tailored value propositions and strategic partnerships into tangible cust

252、omer experiences.This stage demands a clear go-to-market approach,leveraging deep customer insights to personalize interactions and drive engagement.Telcos must ensure that commercial operations are performing optimally:balancing sales productivity,commercial costs,and sales quality to generate maxi

253、mum customer value.TELCOS MUST ENSURE THAT COMMERCIAL OPERATIONS ARE PERFORMING OPTIMALLYIn the execution phase of a commercial strategy,telcos identify which value propositions or use cases to activate,the optimal timing for go-to-market,and the most effective methods for each customer based on the

254、ir unique situation.Every interaction with a customer should be evaluated from a lifetime value perspective,considering the potential value from the customer,the costs of action,and the likelihood of customer response.Telcos should shift from static models that overlook customer changes,like new tar

255、iffs or channel activations,to dynamic models that update in real time or at least within structured predefined intervals and enable timely,personalized,and value-driven interactions aligned with evolving customer needs.The development of trigger-based decision-making scenarios is another key elemen

256、t.Specific scenarios are activated based on predefined triggers.For instance,if a customer checks their broadband speed,a notification or SMS could be sent with options to upgrade or troubleshoot.Operators are increasingly implementing such scenarios tailored to different customer journeys.The seaml

257、ess integration of both automated and human-supported channels is essential for achieving personalization at scale.Channels like call centers,chatbots,retail stores,websites,mobile apps,SMS,and email should work in unison,delivering consistent messaging.If the earlier steps of customer profiling and

258、 use-case identification are executed well,delivering the right message through the preferred channel becomes feasible.To realize all benefits,the right commercial management model should be in place.This involves reviewing the basics,such as balanced,well-structured,and motivating sales incentives;

259、regular commercial planning and goal setting;robust sales cycles and processes;and modern,up-to-date training materials for salespeople,among other things.24REPORT:CRAF TING FUTURE-READY COMMERCIAL STRATEGIES FOR TELECOM SERVICE PROVIDERSARTHUR D.LITTLEAssess AI readiness&prioritize specific use cas

260、esTechnology is a linchpin in effective commercial strategy implementation for telcos.It begins with robust,cloud-based databases that serve as a singular truth source,crucial for accurate customer profiling.Advanced analytics and machine learning(ML)models are necessary to sift through the vast dat

261、a that telcos possess,enabling them to pinpoint the most beneficial actions.While AI emerges as a key facilitator in analytics and decision-making,many operators are still gearing up to fully leverage AIs capabilities.To fully unlock AIs transformative potential,telcos must prioritize readiness asse

262、ssments to identify areas for gradual integration and high-impact use cases.This process highlights opportunities to maximize impact across key areas such as customer care,sales and marketing,products,operations and network,IT,and administration.The case studies in Figure 9 target the status quo of

263、telcos in three major directions:increasing revenues,improving customer engagement and experience,and reducing costs,alongside the key telco areas,such as customer care,sales and marketing,products,operations and network,IT,and admin.The telecom industry is still in the early adoption phase of AI,an

264、d we are currently seeing mainly short-term optimization and cost-reduction use cases.8“State of AI in Telecoms 2023 Report.”NVIDIA,2023.In a 2023 study from NVIDIA,60%of telecom industry professionals surveyed worldwide acknowledged their company is in between“started thinking about AI”and“using AI

265、 for less than six months.”8 The 2024 edition of the same report illustrates further growth of interest and adoption.Among the above case studies,there are some impressive“lighthouse”examples:-Bouygues Telecom developed a human-augmented customer care service.The company is empowering its Next Best

266、Action tool with AI intelligence:for instance,past interactions(already transcripted)with a customer are summarized by an AI large language model(LLM),and key points are displayed for the customer care agents,who then know very quickly the context and history of the present call.-MobileX,a US-based

267、MVNO launched an AI-based mobile subscription.This MVNO offers its customers the most suitable subscription offer based on usage,behavior,and other parameters.It is both interesting for the TSP and the customer;the TSP can make some yield enhancement with its offers while the customers get a tailore

268、d experience.-SK Telecom provides live translation of calls by resynthesizing the voices of the caller in another language.It integrates Korean,Chinese,Japanese,and English,boosting the call experience for both B2C(e.g.,ordering a cab or booking a hotel abroad)and B2B applications(e.g.,business call

269、s).Figure 9.AI use cases for telcos Source:Arthur D.LittleSource:Arthur D.LittleFigure 9.AI use cases for telcos Customer careSales/marketingOperations/networkProductsITAdminMature use caseAdd revenueLower costsBetter CXHuman-augmented careConversational AI&self-serviceMessagingVoiceOmnichannelPlan

270、reco.B2C to B2MeReal-time C2C call experience enrichmentAI-augmented storesAI installationSmart networkFraud avoidanceOptimized network rolloutProspective use case(already imagined by some telcos)Developing use caseAugmented employees“Gold mine”exploitationMass customizationSmart scheduling/summary/

271、transcripts Live translationCLTV AILive analyticsProactive telcoProactive troubleshootingChurn predictionAccurate device trade-inWait-time forecastPersonalized promosInventory mgmt.Geofencing notificationUnmanned storeTraffic video analysisCongestion avoidanceDigital twinsLead genAI PRMPredictivemai

272、ntenanceRev.assuranceCompany internal BOTSpecific BOTCybersecuritySmart IT deploymentsNON-EXHAUSTIVE2 5While AI is already generating efficiency,better experiences,and revenues for TSPs,AI-enabled revolutions will cause further disruptions in the industry.However,those are two different time horizon

273、s but lead times to respond to AI evolutions and AI revolutions are also different.We believe TSPs should prepare for both now.In the short term,AI can bring significant evolutions to TSP operating models by reducing costs,improving customer experience,and generating new revenues.Over the last 18 mo

274、nths,we have seen AI use cases in the telco industry multiply.At present,levers in scope for AI could lead to an estimated 5%-7%EBITDA potential through the empowerment of telco functions from customer care to sales and marketing and product and IT to admin functions.In the longer term,we believe AI

275、 can also bring revolutions to TSP business models,but the nature and scale of the disruption are uncertain.In 2023,OpenAI CEO Sam Altman stated,“Generative AI is still in its early stages,and we have only scratched the surface of what it can do.”Hence,the evolutions discussed in the previous sectio

276、n might just be the tip of the iceberg.We know larger disruptions are ahead of us.However,structuring uncertainties remain regarding these coming disruptions(see Figure 10).Can TSPs move into the AI value chain?A basic AI value chain is represented by three major blocks:infrastructure(super calculat

277、ors),foundation models(general or specific,depending on purpose),and applications and ecosystems.In the past year,multiple telcos have used different approaches to prepare pioneer moves into the AI value chain:-South Koreas SK Telecom has invested directly in the AI value chain since 2022:-Infrastru

278、cture.Semiconductor investments and massive data-centric AI investments.-Foundation models.Developing its own LLM and participating in the Global Telco AI Alliance to create a telecom-specific LLM.SKT also coinvested with AWS in a computer vision model and was an early investor in Anthropic(OpenAI c

279、ompetitor).-Applications and ecosystem.Created an AI ecosystem with multiple direct investments and partnerships.-In late 2023,French iliad Group entered the race:-Infrastructure.Purchased a DGX SuperPOD from Nvidia,which was the largest super calculator in Europe when it was purchased.Figure 10.Key

280、 uncertainties in AI adoption of telcosSource:Arthur D.LittleSource:Arthur D.LittleFigure 10.Key uncertainties in AI adoption of telcosAl revolutionizing telco?Capabilities needed“to play”?Competitors move?Which regulatory framework?Telcos into Al value chain?Demand-side evolution?No integration pot

281、entialLimited to evolutionsLimited capabilities neededNo telco move in AlNo regulationBasic demandDeep integration potential for telcosBusiness model revolutionsSignificant capabilities neededDirect competitors move in AIStringent regulationComplex&deep demandNON-EXHAUSTIVE2 6REPORT:CRAF TING FUTURE

282、-READY COMMERCIAL STRATEGIES FOR TELECOM SERVICE PROVIDERSARTHUR D.LITTLETHE INDUSTRY DOES NOT YET HAVE A FULL UNDERSTANDING OF WHAT AI WILL BE CAPABLE OF IN THE COMING YEARS-Foundation models.Xavier Niel,founder d owner of iliad,invested in Mistral AI,the leading European competitor of OpenAI.iliad

283、 created Kyutai,an open science lab dedicated to AI models with 300 million in funding.-Applications and ecosystem.Niel also owns Station F,one of the EUs largest start-up incubators.In 2023,start-ups raised 1 billion,including 25%attributed to AI-related start-ups.-In early 2024,Swiss TSP Swisscom

284、formed a partnership with Nvidia to order super calculators and develop the sovereign AI infrastructure for Swiss companies.In the meantime,AI development might enable a new business model for TSPs.The industry does not yet have a full understanding of what AI will be capable of in the coming years,

285、but it is an interesting exercise to project the different TSP business models with an AI angle.Those who prepare for these transformations today will emerge as the winners.Preparation involves anticipating potential scenarios and crafting a future-proof AI strategy by addressing two critical questi

286、ons:What is my right to play(what prerequisites and capabilities are essential)?And what is my right to win(what unique differentiation can I create)?To kick off the AI revolution,telcos can follow three strategic steps:establish a robust governance structure to oversee decision-making and implement

287、ation,initiate“no regret”moves that safely prepare the organization for future opportunities without immediate risk,and strategically position and accept calculated risks with“first mover”bets to preempt the market and establish pioneering leadership.Adopt a customer-centric performance measurement

288、approachNext-gen performance measurement and continuous improvement revolve around the customer.Every customer interaction and piece of feedback should be promptly incorporated into the decision-making models and feedback loop.This requires a shift from fragmented,unit-based KPIs to a unified,custom

289、er-or household-centric approach as well as integrating postmortem analyses to distinguish value-generating activities from costly ones.Continuous improvement should span all the steps of the commercial strategy.In our experience,clients who are more successful approach segmentation dynamically and

290、review their segments at least once a year based on new customer data.Even though it calls for significant effort and sometimes may require a review of the whole commercial strategy,it pays off in the end with higher ROI.For instance,a postmortem analysis with a client in Asia showed that customer p

291、erception of price impacted their behavior more than the actual price.Although the actual prices were higher,the perception of being able to talk for“two days a week for free”garnered a positive response.The client made strategic adjustments to respond to this insight.It subtly raised prices but add

292、ed benefits like free weekend calls,maintaining the perception of value.This approach effectively managed the disparity between price perception and actual price increases.Consequently,customer engagement stayed robust,and the revised offerings led to increased revenue and enhanced customer loyalty,

293、highlighting the significance of aligning pricing strategy with consumer perceptions instead of focusing solely on actual costs.To achieve such positive value generation with increasing prices or ARPUs with robust customer engagement,telcos must foster a collaborative environment where diverse teams

294、 across commercial and service sectors work in tandem.Traditional methods give way to agile,cross-functional teams capable of rapid response and innovation.These teams should adopt a“fail fast,learn quickly”mindset and be empowered to make decentralized,data-driven decisions.2 7This approach ensures

295、 that every aspect of service and strategy is continually refined and keeps pace with evolving customer needs and market dynamics.All the mentioned enablers of a future-proof commercial strategy require extensive groundwork.This groundwork can be divided into the following three steps:1.Readiness-ch

296、eck diagnostic.Begin with a comprehensive diagnostic assessment to gauge the current maturity of essential enablers and pinpoint immediate gap areas.This diagnostic can guide leaders in selecting a suitable deployment model,balancing between simpler,rule-based logic models and more advanced,neural n

297、etwork-based ones,depending on the existing capabilities.2.Investment decision per enabler.Prioritize use cases by assessing their implementation complexity and potential value.Start with lighthouse use cases that are straightforward and can clearly demonstrate the benefits of an integrated,next-bes

298、t-experience engine.This approach can help in advocating for new methodologies in working,success measurement,and investment allocation.3.Talent development.Focus on attracting and nurturing a new wave of technical talent adept in scaling ML and AI applications,integrating technical and commercial d

299、ecision-making,and setting up effective pilots with robust feedback mechanisms.Establish a dedicated recruitment team,specialized in sourcing tech talent,to ensure that human resources align with and support the futuristic commercial strategy goals.Implications for TSP commercial strategiesTelcos mu

300、st resolve some issues,and consider key dimensions like customer profile,value proposition,and so on.TSPs should consider the following:-Ensure that commercial strategies are tailored to local market conditions by regularly conducting a comprehensive market contextualization.-Prioritize effective da

301、ta management to develop precise customer microsegments.-Balance broad appeal with hyper-customized offerings and adopt lean methodologies for rapid prototyping and customer-feedback integration.-Evaluate the balance between in-house development and strategic partnerships to leverage cost reductions

302、,faster market entry,and expanded customer access.-Implement a sophisticated go-to-market approach that personalizes interactions based on deep customer insights and optimizes sales productivity and engagement.-Assess AI readiness and prioritize use cases that optimize operations and explore transfo

303、rmative business models.-Adopt a customer-centric performance measurement approach,integrating dynamic feedback loops and fostering agile,cross-functional teams.2 8REPORT:CRAF TING FUTURE-READY COMMERCIAL STRATEGIES FOR TELECOM SERVICE PROVIDERSARTHUR D.LITTLE2 9Finding commonalities across strategi

304、es and tactics of the most successful TSPs across the world is not a simple task.At first glance,each is different and follows its own specific playbook,which is difficult,if not impossible,to extrapolate to other markets.Paradoxically,this highly tailored and local strategy and go-to-market approac

305、h is the commonality among leading TSPs.The absence of a strong correlation between the performance of TSPs and their inclusion in large telco groups constitutes a further indication of the very local character of successful TSPs.Leading TSPs excel at three core capabilities:retail excellence,custom

306、er experience,and network excellence(see Figure 11).Of these three capabilities,network excellence is the only one with the potential to benefit from a global scale.As product-and network-based differentiation erodes and TSPs embark on their business model transformation journey,their emphasis on lo

307、cal retail excellence and customer experience capabilities is only expected to increase in an effort to build new sustainable differentiation axes.5(+1)FUTURE ARCHETYPES The lower TSP reliance on typical core telco products and services will open a wider variety of potential differentiation opportun

308、ities and underlying business models.As a result,we can expect a strong increase in TSP heterogeneity.Five(+1)archetypes of future TSPs emerge,each with a distinct value creation flywheel:1.The no-frills connectivity provider (e.g.,DiGi Telecommunications)2.The digital life assistant (e.g.,Concept T

309、,Deutsche Telekom)3.The megabundler(e.g.,Telefonica)4.The physical-digital bridger(so far without typical mainstream representation)5.The serial brand builder go-to-market (e.g.,Masmovil)(+1)The orchestration and platform enabler3.ARCHE T YPES OF FUTURE T SP B2C BUSINESS MODEL SFigure 11.Business mo

310、dels archetypes Source:Arthur D.LittleSource:Arthur D.LittleFigure 11.Business models archetypes Passive infrastructure layer(towers,fibers,data center infrastructure,etc.)Commercial layerRetail,customer operations,product aggregationComCo scopeInfraCo scopeNetwork excellenceRetail effectivenessCust

311、omer experienceRequired access to capabilitiesLocal Local GlobalLocal NW orchestration&operation layer(OSS)Active infrastructure layer3 0REPORT:CRAF TING FUTURE-READY COMMERCIAL STRATEGIES FOR TELECOM SERVICE PROVIDERSARTHUR D.LITTLEThe no-frills connectivity providerThe no-frills connectivity provi

312、der is a TSP choosing the commoditization of connectivity and accepting the pressure on prices and margins.Its fundamental value-creation hypothesis is grounded in the pursuit of efficiency.Its right to win relies on the ability to provide core connectivity services in the most cost-efficient way po

313、ssible,allowing for similar margins but lower end-customer prices than its main competitors.To be successfully deployed,this business model requires access to the underlying connectivity layers(passive and/or active)against at least the same economic conditions as other competing TSPs.This implies a

314、 competitive and open wholesale market,attractive(anchor)tenancy deals,or effective wholesale regulation.The digital life assistantThis TSP aims to become the interface between its customers and their daily lives.It acts as an initiative-taking,ubiquitous,AI-enabled assistant and central manager,pus

315、hing the boundaries of the user experience to the point that anything is just one question/voice command away,through a digital concierge.These TSPs will need the ability to seamlessly connect and integrate with both local and global devices,applications,platforms,and ecosystems.Their success will d

316、epend on their ability to strike the right balance between simplicity,ease of setup and usage,and universal compatibility with devices,applications,platforms,and ecosystems.To succeed in this archetype,TSPs will need to ensure they remain in control or ownership of customer relations,develop(build,a

317、cquire,or partner)the user interface design capabilities,and position themselves as a multi-industry service aggregator and integrator.Considering the industry-convergent nature of this positioning,fierce competition is expected not only from other TSPs but also from customer-facing players within o

318、ther industry value chains(e.g.,energy retailers).The challenge will be the competitive race for scale on software-based competencies and differentiators,which implies that only larger players,or ones able to scale up very fast,stand a chance of winning with this archetype.The megabundlerThe megabun

319、dler will push the existing trend of fixed,mobile,media and entertainment convergence and bundling to the extreme.At least initially,its focus will remain on the typical telco core and near-core services such as connectivity,content and media(including video and music streaming),entertainment(includ

320、ing gaming),cloud and cybersecurity,and so on.Local scale will constitute its fundamental value-creation driver and key success factor,leveraging its volumes to negotiate sourcing deals at conditions unattainable for end customers and smaller competing TSPs.Key enabling capabilities will focus on it

321、s“sell and serve”ability to address a broad portfolio of services up-sell/cross-sell excellence,on its strategic partnership with vertical service providers,and on the ability to distribute it via a convenient aggregation platform.The physical-digital bridgerThis TSP will leverage its strong anchora

322、ge within the local ecosystems and communities to become the digital orchestrator of physical interactions.This type of TSP will provide peace of mind to its customers by centrally managing all“life support”activities and services(e.g.,ambulant care,gardening,and plumbing)through a single digital pl

323、atform.To be successful,these TSPs will need to build and nurture strong partnerships with(sometimes very)local organizations and communities.The developed value proposition needs to be attractive on both sides,for the TSP customers and the service providers.Next to their ties with local communities

324、,TSPs can leverage their existing field forces(maintenance and installation crews)and know-how to optimally manage and organize these to build two-way value propositions.Finally,the physical-digital bridger archetype relies on solid AI real-time contextualization and bridging between the physical an

325、d digital worlds.3 1The serial brand builderThe serial brand builder will take the“fast-moving consumer goods”approach to the telco market and build a house of brands,each targeting a specific niche segment but jointly representing a significant portion of the addressable telco market.It will virtua

326、lly use the proven“niche M/FVNO”playbook and replicate it across a variety of segments to build scale,claiming a market share above its fair share.In order to beat the typical M/FVNOs at their own game,TSPs will need to strike the right balance between two aspects:(1)the size of the targeted segment

327、(critical mass)and the degree of tailoring of their value propositions(specificity of customer value propositions)and(2)creating and capitalizing on synergies in terms of go-to-market and underlying commercial processes,systems,and tools.Here again,AI-enabled micro/nano-segmentation capabilities are

328、 about to be a game-changer.The orchestration&platform enablerThis TSP will,in contradistinction to the prior five archetypes,focus on network excellence instead of retail excellence or customer experience.It will position itself as an open provider of the active and/or orchestration layers,enabling

329、 different(archetypes of)TSPs to focus on commercialization and go-to-market.For this business model to materialize,commoditization of connectivity needs to reach the active and/or orchestration layers.The orchestration and platform enabler also needs to reach sufficient scale to provide network own

330、ership-like economics to its tenants and to develop the ability to expose the specific network functions critical for the success of the business models of the tenants(if any)for example,through APIs(see sidebar).Network API joint vehicleADL supported the launch of a new industry alliance to fast-tr

331、ack network APIs.In October 2024,the telecom industry reached a significant milestone between 12 of the most relevant telecom operators globally(Amrica Mvil,AT&T,Bharti Airtel,Deutsche Telekom,Orange,Reliance Jio,Singtel,Telefonica,Telstra,T-Mobile,Verizon,Vodafone)and Ericsson,announcing the agreem

332、ent to establish a joint vehicle to develop and monetize network APIs.The new company lays the foundation for the telecom API segment to emerge a market ADL estimates will be worth approximately$30 billion by 2030.The adoption of network APIs will fundamentally transform the telecom market,allowing

333、more direct,dynamic,and scalable access to networking and computing resources.To succeed,telecom operators must follow customer demand,which is becoming increasingly universal.This newly established venture with its global platform and reach is primed to provide exactly that for its stakeholders,as well as the wider industry ecosystem.It ultimately can be the driving force for scaling the API mark