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The future of telecom and the evolving role of service providers

Telecom companies can overcome disruption with personalization and ecosystem partnerships that will reinvent the customer experience.

It’s a whole new ball game for communications service providers (CSPs)—or telecom providers—as they navigate a shifting industry landscape. We believe the future is bright, however, for those that can outthink the disruption. By capitalizing on the very forces currently plaguing them, providers could create a world with revenue and margin growth in new addressable markets.

The communications industry is in flux

The communications industry is in the throes of a digital shake up, as over the top (OTT) digital giants and new startups upset the status quo. Offering new communication options and, in some cases, alternative access technologies, these digital invaders are shifting the competitive landscape, capturing revenues, and hitting margins.

The big question confronting communications service providers is, “Where do we go from here?”

At the same time, telecommunications providers are challenged to meet the increasingly high expectations of empowered—and sometimes less loyal—subscribers. In addition, they are tasked with making large investments in network capabilities, particularly as the explosive growth in data-intensive applications increases traffic. Add a slowdown in subscriber numbers, continued regulatory pressures, and forecasts for sluggish revenue growth, and the result is industry disruption. The big question confronting providers is, “Where do we go from here?”

A brighter future for telecom?

Seeking answers, we conducted extensive research, including a survey of 135 industry leaders in 51 countries. Based on our investigation, as well as decades of engagements with communications clients, we assert that today’s telecom provider can emerge in 2020 as a new and stronger business. Indeed, providers have a huge growth opportunity before them thanks to disruption stemming from technology challenges, changing customer expectations, and rapid industry convergence.

90% of CSPs believe cognitive computing will be an essential industry technology in 2020. 

The rise of business ecosystems based on internet and “as a service” technologies is creating new market opportunities. Many established OTTs are attempting to become core platform players of scale, effectively competing in the communications and IT sectors, as well as eyeing pieces of other industry value chains, such as finance and retail.

The 2020 telecom provider

Making this growth opportunity a reality requires simultaneous progress along two trajectories. The 2020 telecom providers will emerge as today’s providers advance along two digital service axes: The digital services provider (DSP) and the digital services enabler (DSE). To complete this evolution, telecom companies must make significant changes at warp speed.

For providers to successfully become DSPs, they must elevate the customer experience. In fact, 87 percent of the CSPs we surveyed say that customer experience will be the ultimate differentiator in 2020. To improve in this area, the majority of executives surveyed intend to focus on customer service (67 percent), omnichannel (66 percent), self service (66 percent), and Web presence (56 percent). 

Read the full report to discover what capabilities telecoms are prioritizing for the future—and learn how companies can develop ecosystems and partnerships that will drive long-term growth. 


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Meet the authors

Rob van den Dam

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, Global TM&E Industry Leader - IBM Institute for Business Value


Bob Fox

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, US Telecommunications Industry Leader, IBM Consulting

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    Originally published 01 February 2016