Industry Insights

7 Telecom Companies Disrupting the CSP Industry Through Digital Transformation—and How You Can Too

By Ideas @ AppDirect / June 10, 2020

Disruption is now a fact of life for communications service providers (CSPs). In fact, the CSP sector sits near the top of the list of industries facing disruption from digital technologies, second only to media. For today’s CSPs the question isn’t how to avoid disruption, but how to plan and execute strategies to respond to it.

The good news is that there are an almost limitless number of ways that CSPs can react. With the right technology tools and mindset, telecom companies can even take proactive steps to become the disruptors themselves. Here are seven CSPs that are doing just that and changing the way they do business to meet the new demands of the digital economy.

1. Telefonica: Focusing on the Customer Experience

The telecom sector has developed a bit of a bad reputation when it comes to customer service. In fact, the CSP industry Net Promoter Score is just 31, placing it 14th out of 20 industries. CSPs recognize that superior customer service can be a disruptive force, which is one reason why 68 percent of senior CSP leaders cite customer experience management as their number one strategic priority.

Telefonica is one company that is testing cutting-edge technology to make big improvements to the customer experience. The Madrid-based telecom operator recently launched a pilot program to create a “cognitive contact center.” Using AI, machine learning, and voice recognition technology, Telefonica developed a virtual agent to address billing and technical issues. If the virtual agent can’t solve a customer problem, it gets routed to a human agent who can.

2. Telenor: Training for the Digital Economy

One of the biggest barriers to digital transformation is a lack of skills in digital domains. In fact, the digital skills gap is the second biggest obstacle to going digital, just behind legacy IT. If CSPs expect employees to evolve digital products, then their skill sets must evolve as well.

The digital skills gap is the second biggest obstacle to going digital, just behind legacy IT.

The CEO of Norwegian telecom company Telenor, Sigve Brekke, recognized this and launched a program to upskill nearly 30,000 employees across the organization. Employees were offered 40 hours of education and training in a number of digital areas, including digital marketing, digital channels, applied analytics, design, and product development. As Brekke explained: “We need to work in new ways, dare to think differently about career development, and we need to stimulate lifelong learning.”

3. AT&T: Outside-in Innovation

In the digital economy, the burden of innovation shouldn’t lie with one group or division; it should be a mandate that reaches across the entire company. AT&T has taken this philosophy to heart and launched AT&T Foundry, a crowdsourcing platform for employees and partners. In a push for new ideas, any employee anywhere within the AT&T organization could submit concepts for new products and services.

This outside-in approach to generating innovation can bring down the cost of research and development. AT&T believes in it so strongly, in fact, that it has invested $45 million to develop 80 Foundry projects.

4. AT&T Mexico: Creating the Network of the Future

The ability to automate processes is a game-changer, allowing companies to optimize almost any digital business function. AT&T Mexico is putting automation to drive innovation by applying it to network quality of experience (QoE).

Automation is a game-changer, allowing companies to optimize almost any digital business function.

In a recent pilot program, the Mexico City-based subsidiary of AT&T launched technology to detect, troubleshoot, and resolve network issues with almost no manual intervention. This type of approach allows AT&T Mexico to isolate issues to specific network elements and automatically invoke the correct workflow to get the right teams involved. Not only does this approach resolve problems faster, but also eliminates the need for expensive manual maintenance.

5. Rogers Communications: Partnering to Deliver More Value

For years, CSPs were focused on building their own homegrown solutions to differentiate their products and services. As more telecom companies look for ways to accelerate time to market and lower costs, this era is quickly coming to a close.

One recent example of this trend is Rogers Communications. Instead of continuing to develop its own cable TV platform, the Canadian telco recently signed a deal to license a white-label version of the Comcast X1 platform. The potential benefit can be seen in the subscriber numbers: Since 2016, every U.S. cable operator has lost customers, but Comcast has been able to grow its pay-TV base by more than 160,000 users. By partnering with Comcast, Rogers will tap into the same benefits—higher customer satisfaction and reduced churn—that X1 has delivered for Comcast.

6. Cox Communications: Expanding into Industrial Internet of Things (IIoT)

Today, the consumer Internet of Things (IoT) is everywhere, from smartwatches and thermostats to voice assistants and intelligent dog collars. Telecom companies can certainly offer these devices, but more often than not that simply means reselling a device. Where CSPs can add real value—and drive greater revenue—is in the commercial or industrial Internet of Things.

CSPs can add real value—and drive greater revenue—in the industrial Internet of Things.

Cox Communications is taking this approach with Cox2M, its new business line for connected asset services. Cox2M allows customers to connect, monitor, and track nearly any commercial asset, including everything from cars to power lines. This type of IIoT strategy allows CSPs to not only offer hardware and software, but also move up the value chain with more complex products and services, as well as professional services.

7. Comcast Business: Moving into Adjacent Offerings

Digital technologies are increasing the likelihood of disruption, but they are also making it easier for companies to move into closely related lines of business. In fact, McKinsey & Company has found that a third of companies are moving to adjacent businesses—such as financial services, IT services, or media—to find new opportunities and revenue.

Comcast Business is a prime example of how this strategy can pay off. In 2012, the SMB-focused division of Comcast wanted to start selling products that were adjacent to its connectivity offerings. They launched a portfolio of cloud-based business applications and support that allowed the company to cross-sell a range of services. In addition to driving more revenue, Comcast Business’ software offerings have enabled the company to become trusted technology advisors to its SMB customers, increasing loyalty and reducing churn.

Using Disruption to Find Unique Opportunities

These strategies are different, but they all prove one thing: Disruption does not have to spell doom for CSPs. Creative thinking, combined with solid planning and execution, can help any telecom company find its unique formula to thrive in the digital economy. 

To learn more about the trends that are driving disruption through digital transformation and how companies are responding, watch our recent webinar, “Tapping Into the $1.2T Digital Opportunity: Strategies for CSPs to Differentiate and Drive Transformation.”

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