Telcos must break from 'billing relationship' mold

Billing relationship "lifeline" but operators need to switch mindset from engaging customers as people, not simply numbers, to effectively tap existing connection, industry exec says.
Written by Jamie Yap, Contributor on

COMMUNICASIA, SINGAPORE--While telco operators can curb revenue slump by leveraging their established billing relationships, they still need to snap out of this mold and start engaging customers as people--not subscriber identities--to best tap this "lifeline".

Michael Lai, CEO of Malaysia's Packet One Networks, said most telecommunication companies today are still "living in the billing relationship world". He noted that tapping existing relationships with customers is one way telcos can stem the "attack" from over-the-top (OTT) services which have slashed revenues for voice, SMS and other traditional services.

But to effectively monetize the billing relationship, carriers actually should not continue their strategic business thinking based on this direction, Lai said during the CEO Perspectives panel discussion at the CommunicAsia tradeshow here Wednesday morning.

In the past, it used to be "whoever owned the billing relationship essentially owned the whole [customer] relationship". There has since been a shift of the balance of power in the so-called "DNA" (device, network and application) for telcos, Lai pointed out.

Today, Facebook, Google, YouTube and other various app providers know customers better, from their personal tastes to their social circles, he said. On the other hand, telcos know their customers as "numbers, not people", he said.

Telecos do "have this lifeline to customers" so the key is increasing the engagement of customers, instead of driving new billing mechanisms, such as data roaming, he noted.

On event sidelines, Lai told ZDNet Asia operators are "starting to wake up slowly" but they need to speed things up, or risk having their "own lunch eaten up" by someone else.

If operators want to break free from the old mindset of relying on billing relationships, they first need to be realistic and realize they cannot do everything on their own, he said, noting this has long been a typical telco mindset.

Rather than fear competition from the OTT service providers and offer their own substitutes in the market, he said telcos should leverage the competencies of these OTT players, as the latter's products provide value to subscribers. In other words, cooperation is the way to go, Lai pointed out.

During the panel, the themes of partnership and facilitation were also mentioned by other industry executives.

Leong Keng Thai, deputy CEO and director-general for telecoms and post at IDA (Infocomm Development Authority of Singapore), said the role of the regulator in any country, at least in the ICT space, is changing from a pure regulator of industry competition to a developer with a "facilitative role in the value chain".

To increase innovation in the ICT space, regulators should encourage both partnerships and investments between the private and public sectors. This will encourage people not to give up on pursing good business ideas even if they have no capital, Leong explained.

He pointed to the example of the Singapore's government-led push for next-generation nationwide broadband network (NGNBN), which he said opened up the market for other broadband providers--whereas, previously, there were only a few dominant incumbents prior to the NGNBN.

This also provides a new level of innovation and customer choice because new market entrants focus on creating specialized and targeted broadband packages, such as those aimed at avid gamers or business users, instead of simply looking at households.

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