Industry Insights

Moving Beyond the Dumb Pipe to Win the Digital Economy

By Gretchen Dukowitz / Feb 12, 2018

Pursuing Adjacencies

Would you ever buy mobile service from Netflix or PayPal? What about eBay or Amazon? If you’re shaking your head at such a far-fetched idea, you’re in the clear minority: A recent survey found that almost three out of four mobile users in the US and UK, 73 percent, would switch to one of these companies for their mobile phone service.

Of course none of these companies currently offer mobile service, but the fact that so many people would be open to the idea is eye-opening. It points to one of the biggest challenges facing today’s communications service providers (CSPs): disruption, and in this case, disruption from businesses in entirely different industries. How can you prepare for something you can’t anticipate?

Even more worrisome for CSPs, disruption seems to be more a question of “when” rather than “if.” According to McKinsey & Co., telecommunications ranks number two on the list of top industries facing disruption from digital technologies, second only to media. At the same time, KPMG has found that only about half of telecom companies have a clear strategy and mission for disruptive technology, and just 23 percent feel their company is “very prepared.”

Disruption seems to be more a question of “when” rather than “if” for CSPs.

What, if anything, can CSPs do?

The answer lies in delivering more value—in the form of more digital products and services combined with a better customer experience—that customers won’t want to walk away from. In a growing trend, many companies are now looking beyond their own walls to find exciting new offerings to deliver that value and set themselves apart. In fact, McKinsey & Co. has also found that one-third of organizations are pursuing opportunities in adjacent lines of business. For example, Orange, the largest telecom operator in France, recently launched a mobile banking service.

A third of companies are pursuing opportunities in adjacent lines of business.

For CSPs looking to avoid disruption, commoditization, and price erosion, exploring adjacent business opportunities is quickly becoming an imperative. However, there isn’t one strategy to follow that will work for every provider. With this in mind, the AppDirect team has put together a guide to help CSPs create a smart strategy to pursue adjacencies that will give them a competitive edge.

Download the “Three Ways CSPs Can Move Beyond the Dumb Pipe to Win the Digital Economy” guide here.

Gretchen Dukowitz is Senior Content Marketing Editor at AppDirect.