A social clarion call for telcos

Telcos can't rely on legacy services much longer and maybe its time they started building their own social messaging apps.

Now that Telstra has signed the last dotted line to finalise its structural separation, and released its NBN pricing plans, it’s clear the telco is adopting a bundling strategy to help protect its existing customer base. As Stephen Bartholomeusz explained yesterday, the ‘defend and attack’ strategy is already delivering for Telstra, albeit boosted by its efforts to improve customer service.

However, the big question mark still hanging over the telco, and indeed its major competitors, is just how long it can sustain revenue provided by what are becoming legacy services.

Late last year, the Australian Communications and Media Authority (ACMA) revealed that nearly one in five Australian adults are without a fixed line home telephone, with the number even higher for young adults.

But perhaps more damning than that was a report released by telecommunications analyst firm Ovum last week that found telecom operators lost $US13.9 billion in SMS revenues in 2011 due to social messaging.

That’s the kind of number that makes people sit up and listen.

Social messaging has disrupted traditional services, and operators’ revenues in this area will come under increasing pressure says Ovum.

For now, telcos are riding the wave of data usage as consumers embrace social media on mobile devices. This is expected to be even greater once more 4G-enabled devices are made available. The one thing telcos have been able to bank on to date is that if they give Australians more and faster data options consumers will find ways to use it.

But, as independent telco analyst Paul Budde reminded us last week, we’re only just scratching the surface of what’s available to businesses that embrace WiFi.

Singtel’s innovation head Loo Cheng Chuan argued last year that telcos need to prepare for a world where people don’t need a mobile data network.

Ovum recommends telcos forge stronger partnerships with handset manufacturers, app developers and subscribers, but can a telco really stand in between a consumer’s social media profile and their device?

Perhaps it’s time telcos built more of their own social messaging apps. Telstra may not be in a position to take on Facebook, but it could do a better job of harnessing location based data to deliver consumers services that make their lives easier. Convenience will be essential if customers are to accept the telco utilising the personal data it holds about customers to offer them new services.

Beyond social messaging applications, telcos can also get better at better pricing data with tiered pricing and more sophisticated bundling for family members says telecommunications service platform provider Amdocs.

Amdocs has also pointed to mobile payments as another potential money earner for the sector. Combining social messaging with payments is one are being explored by Pollenizer-backed start-up Pygg.

Pygg allows people to send payments to eachother using social networks, and the group is expected to expand into mobile payments, taking on the Commonwealth Bank and ANZ which both offer person-to-person mobile payment solutions.

It’s no surprise then that Pygg also counts Vivdwireless CFO Tim Howard among its investors. The companies that succeed in this sector in the future will be those that understand the convergence of data, social media and mobility.

The role and revenue opportunities for telcos in that group is yet to be locked in.

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