To a large extent, in the past couple of years, telecom companies have not been successful in their efforts to monetize the deluge of data running across their networks. With many services having become commoditized, an operator’s ability to reinvest in network upgrades and digital advances has been severely curtailed. And during this time, the competition has come knocking. Over-the-top (OTT) players offering apps and streaming content directly to consumers via the Internet, have become relevant, especially in core services such as messaging and voice. WhatsApp, Viber, and Apple’s iMessage represent more than 80 percent of global messaging traffic, with Skype accounting for more than a third of all international voice traffic minutes.
The resulting drop in service revenues for many operators, combined with intense competition, has led to significantly lower ARPU and tightening margins. There is a case for telecom executives preparing for the worst: a potential tipping point that could disrupt the industry and change the face of business for many companies, leading to inevitable casualties.
Telecom executives are already picking their battles to sustain their competitive edge. With the mobile industry now moving towards 5G, a strategy consisting of driving down costs has become something of a mantra. These days no supplier is spared the unabashed memo from a Supply Chain or Procurement department outlining the necessity of trimming the cost of a service value of a contract before it’s renewal, should suppliers be lucky enough to make it this far.
At XINTEC we believe there has never been a better time to promote a lower-cost technology proposition to the global telecommunications market, and particularly to operators seeking to drive down supplier costs.