Five new revenue streams for telcos

With fixed line revenues on the nose telcos need to explore new service delivery options and find new channels to keep the cash flowing in.

The downward trend in fixed line telephone services continues to chip away at the revenue of telecommunications providers, with data released yesterday showing nearly one in five Australian adults are now without a fixed line home telephone.

The data, from the Australian Communications and Media Authority, shows bundling of fixed, mobile and internet services has been working for telcos, with 43 per cent of households holding two or more services as part of a bundling arrangement.

But just how sustainable the bundling strategy is for the sector is questionable, with 37 per cent of those aged 18-24 having no fixed line telephone at home, and the growing use of smartphones driving that percentage up every year. The number would probably be higher if it wasn’t for the fact that many of these young adults are still living at home with their parents who pay the fixed line phone bills. Just 16 per cent of 18-24 year-olds who live alone have a fixed line phone, according to the ACMA survey.

For many telco consumers, the additional services they’re taking up include smartphones with data plans, social networks, VOIP and instant messaging.

Telcos have presumably seen this fixed line decline coming, and for some time Telstra chief David Thodey has been talking about the strategy the telco is pursuing to make up for the revenue loss.

But aside from bundling and some tiered pricing, there’s a lot Australian telcos aren’t doing that they could be.

The ACMA survey found it was free services, such as free local calls, that was seen as the main benefit of bundling for 53 per cent of households, while 48 per cent identified the convenience of dealing with a single service provider for billing purposes.

Looking around the world, it’s clear telcos are being forced to rethink the delivery of their services and find new revenue streams. Here’s five options telco service platform provider Amdocs has identified.

  1. Move from product bundling to data bundling

Consumers want plans that can be shared between devices, so if they buy a data bundle and have a tablet, smartphone and 3G dongle they can share that data between all their devices, says Amdocs product marketing manager Jonathan Shmukler.

“That’s a real challenge today but it’s very valuable to customers to have simplicity like that,” says Shmukler. And with Amdocs research suggesting 40 per cent of customers will pay a premium for a seamless experience across channels, getting the service and pricing proposition right across services should pay off.

  1. Offer family data plans

Any parent that’s ever had a shocking data bill racked up by one of their children will understand the desire for family data plans. “If you have five family members you don’t need five data plans,” says Shmukler. In an ideal world parents would be able to allocate family members a certain amount of data to use, and when it runs out choose to buy more, or not.

  1. Deliver smart capping

The days of unlimited plans are coming to an end around the world, and telcos are getting smarter about capping. Shmukler says SingTel was one of the first telcos to provide visibility on data speeds after it decided to offer premium data customers priority on the network, ensuring they don’t experience lag time even if there’s network congestion.

Customers may also be willing to pay a premium if their telco can let them know, in real time, when they are about to reach their data limit.

  1. Finally crack tiered pricing

In a survey looking at pricing strategies, Amdocs recently found 92 per cent of Australian telecommunications providers plan to launch tiered pricing in the next 12 months. Shmukler says the sector is also looking to further segment data users based on the type of data they use.

Telcos are also looking to partnerships with content providers to help subsidise the cost of browsing specific types of content, such as social media or sponsored video.

  1. Catch up on mobile payments

Mobile operators in the Asia Pacific region expect mobile payments revenue to grow from an average 14 per cent of all revenues today to 24 per cent within the next three years, says Amdocs. India is the region’s leader, with prepaid top-ups still hugely popular, but in more advanced markets bill payments, money transfers and billing on behalf of app stores are all of interest.

If telcos don’t explore these markets then app store providers, credit card companies and banks will all step up to take a greater share of the revenue available.

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