Finding the next telco money-spinner

As revenue from voice and messaging services dry up its time for the telcos to find a new avenue to make up the shortfall. So what's is going to be?

As the Formula 1 Grand Prix season opened last weekend in Australia, Vodafone announced that it would be ending its sponsorship of the McLaren racing team at the end of the year, leaving McLaren with an annual $75 million hole in its budget for 2014 and onwards. But not for long, it seems – there is already speculation that Mexican service provider Telmex, which sponsors McLaren’s new driver Sergio Perez, could take over Vodafone’s role at the racing team, enabling a pretty seamless transition for McLaren.

If only life was as simple for service providers. Like McLaren, they’re also suffering from a sudden loss in income, but in their case, it’s due to the commoditisation of voice and SMS services, and the role of over-the-top (OTT) players in providing free voice and messaging. According to research by Ovum, OTT messaging cost operators $13.9 billion, or nine per cent of message revenue, in 2011.

Without a fairy godmother in the background to make up this shortfall, service providers have to go out and look for a new income stream. Speaking at Mobile World Congress in Barcelona last month, Vodafone CEO Vittorio Colao pointed to one sector that service providers should target more: small- and medium-sized businesses (SMBs).  

Noting that by 2015 there will be 240 million businesses accessing the cloud via mobile devices, Colao insisted that this provided a great opportunity for service providers, and not just in terms of providing the connectivity for cloud services.

”In Europe, 34 per cent of SMBs have lost customer data, either by accident or because of hackers,” Colao said, adding that service providers had the ability to provide SMBs with the data security they needed.

And we’re beginning to see service providers take advantage of the SMB opportunity. AT&T, for example, is offering cloud services to businesses that enable them to procure IT services from AT&T, paying only for what they use, rather than investing in expensive and hard-to-maintain IT systems themselves.

Other SMB opportunities belong in the more traditional communications field, with service providers offering SMB customers solutions for business-class email, business-class Internet and voice over Internet Protocol (VoIP). But these services too have to be able to react to the dynamic changes in the industry. The increasing popularity of bring your own device (BYOD) means that service providers also need to be able to provide their SMB customers with capabilities such as separate price plans for employees’ personal use and business use and the ability to disable certain services when a user switches from business to personal mode.

Such services might seem to lack the glamor of Formula 1, but they offer service providers a turbo-charged engine for growth.

Jeff Barak is Amdocs' Voice blogs corporate editor and the former editor-in-chief of the Jerusalem Post.