We live in a 24/7 connected society. Telcos now face challenges that are suitably different from those a decade ago. From the need to adjust to the digital era came the most profound of these changes – a completely different approach to customers.
Telcos needed to move away from being utility companies to become complete carrier service providers (CSP), with emphasis on the “service” part. This change was triggered mainly by third party companies coming to play in the digital communications landscape – for instance, developers, vertical industries and governments looking to improve public services.
In due time, these players became interested in taking full advantage of the possibilities thrown up by digital communications. Telcos needed to add new capabilities and services to create new, complete B2B platforms, effectively transforming their business model into something much more complex.
This is what we’d call the Telco 2.0 ecosystem – a multi-sided business model with the CSP at the centre, acting as an enabler between upstream partners (software developers, content providers, consumers, public sector, vertical industries) and downstream private and enterprise customers.
At the moment, telcos provide services such as entertainment content (cable and Internet TV), software, customer care, and almost any kind of end-to-end connectivity solution. This includes M2M.
So how can we add value to M2M?
Providing connectivity for M2M services is not enough. A Telco 2.0 must provide the added value that makes these companies real carrier service providers: complete, tailor-made, end-to-end M2M solutions.
When we asked Angel David Barrio, Head of Alliances & New Business, Global M2M at Telefónica Digital, on the importance of these services, he said “20% of the content of M2M contracts define the connectivity services, 80% is related to these other services.”
Value-added services are the competitive edge, but the strategy – and how deep into the water a Telco goes in placing itself at the centre of the Telco 2.0 environment is very important as well. While other companies take a “defensive stance” focusing just on value-added services, Telefónica has fully embraced the multi-sided business model, acting as a middleman between end customers and other third party companies, according to a study by Telco 2.0 Research.
This role involves, of course, a very active partner strategy, among other requirements. David Vellender, Head of M2M Business Development UK & Ireland and Commercial Partnerships at Telefónica Digital, explained the objective is to “develop solutions working side by side with our partners along all the process to create and deliver specific final products to fulfill the diverse customer needs”. In the end, really what the client wants is a solution that works and one that simplifies their tasks, not something that creates more problems.