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Telco business models are changing: Here’s how

21st March  |  
4 minutes

For decades, the telco business model remained relatively unchanged: generating revenue by selling voice and data minutes. Today, however, telcos are moving into vertical business segments and experimenting with new technologies, partnerships, and routes to market. The telecom operating model is evolving in new and unexpected ways as carriers look to unlock new sources of value and win over new customers.

The evolution of the telco business model

In some respects, carriers have no choice but to adapt the telecommunications business model. With the widespread availability of low-cost “unlimited” voice and data packages for subscribers, services have become commoditised leading telcos to look elsewhere for growth to drive shareholder value.

And grow they must, especially as network technology is constantly evolving. Telcos need to ensure that their networks remain at the cutting edge of technology if they are to protect against churn, and that requires significant and ongoing investment. This challenge only gets more difficult, with 2022 seeing record levels of investment by telcos in both fixed line (fibre to the home) and wireless (5G) infrastructure. In the US, mobile carriers have invested more than $121 billion in network infrastructure since 2018.

The future telecom business model

However, although network evolution represents a challenge for telcos, the network is also their greatest asset and the foundation for future telecom business models. To date, telcos have fallen behind over-the-top (OTT) service providers when it comes to delivering digital services to consumers and businesses. Today, as the 5G revolution starts to take hold, and partner ecosystems become de rigueur for telco innovation, leading carriers are working to ensure this does not happen again and are already jockeying for position in new markets.

If we make an analysis of telco business models, we can see that partnerships are central to success, along with a willingness to make bold moves into new industries.

Examples of innovative telecom business models

  1. Batelco, the principal telecommunications company in Bahrain, has partnered with a Danish digital infrastructure provider to create OneBox, a digital post box that enables Bahrainis to securely communicate with public entities and private sector businesses.
  2. Vodafone is among the telcos increasingly looking to move into business-to-business cloud services provision. Its product suite includes cloud migration, security, and multi-cloud management and optimisation tools.
  3. KDDI, a Japanese mobile operator, has partnered with Supership, a data and technology company, to launch a next-generation digital advertising distribution platform. The platform, which utilises Novatiq’s technology, creates the first privacy-safe, end-to-end digital advertising solution in the Asian advertising market.
  4. Verizon has made a move into the logistics space with advanced vehicle-tracking systems. Its technology provides fleet operators with a near real-time 360-degree of their fleet’s operations enabling them to reduce costs, increase productivity and stay on top of vehicle maintenance.

Telecom business modelling: the opportunities in digital marketing

Globally, telcos are experimenting with a wide range of new business models. As the KDDI example above reflects, one area of interest is in the digital marketing sector. Here the withdrawal of third-party tracking cookies, that have fuelled the lucrative programmatic advertising industry, represents a decisive moment of change. The industry is crying out for privacy centric solutions to ensure that the right marketing messages get to the right audiences at the right time, and telcos have just the tools they need.

By verifying digital IDs using their network assets, telcos can securely, safely, and in compliance with all privacy laws, enable the programmatic industry to flourish. For some time, Novatiq has been a lone voice in the market recommending this telecom business model transformation. Now, a new joint venture between Deutsche Telekom, Orange, Telefónica, and Vodafone has proposed an ID solution for digital marketing, underscoring that this particular telco business model opportunity is now ready to be exploited. Those that move first, stand to gain most. And with Novatiq’s ID platform and solution already up and running and tested in real-world deployments, the fastest route to market is clear.

For more information on the opportunity for telcos in digital marketing, download our whitepaper.

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