Changing consumer issues in a changing telecoms environment
Commodity-based industry – commodity-based customer feedback
The reality is that our current telecoms market is commodity-based.
The industry is reluctant to admit this but, in the end, they simply sell calls or access – whether fixed, mobile, Internet (it is the Internet, not access to it, that the customer is interested in), SMS and a few other telecoms bits and pieces. As an example, the value-add is more in the mobile phone than in the actual mobile telecoms service.
This is because, for most of its existence, the industry has been based on a monopoly – or at least on the monopolistic behaviour of the key players. All monopolised commodity markets are basically price-driven and this eliminates the need for a great deal of customer service. Customers have little choice and the regulatory emphasis is on price rather than on service. The telcos maintain huge bureaucracies to bill their customers, to collect their money and to manage the large engineering field staff and are less focused on customer service.
As a consequence the feedback from customers about these services has also been (and still is) commodity- and price-driven – access problems, billing problems, etc.
Unless the structure of the industry changes this will continue to be the case, and the current problems will continue to be the key consumer issues.
Open networks will involve more and new players
However other forces clearly indicate that changes are on the way. The trend is towards open networks and this will result in more organisations becoming involved in the delivery of services over these telecoms networks. Some of these will be straightforward content/service providers; others will package various services together and become distributors and marketers, some will simply be billers or will provide network management services, data centre services, security etc – services that we at BuddeComm classify as value-added infrastructure services.
These open networks will provide end-to-end facilities enabling, for instance, energy companies to provide smart grid applications; the heath sector to operate patient monitoring services; plus a range of interactive video educational programs. These providers will have complete control over the network portion allocated for such services. The role of the telcos will simply be the provision of infrastructure.
Some of these services will be provided by national organisations but, increasingly, overseas organisations will play a larger role as well.
First changes within the next three years
It will take some years before the infrastructure for such activities is in place (in terms of both regulation and technology) but networks will begin to emerge in metropolitan markets within the next three years.
And these developments are not limited to the fixed networks. The mobile networks, also, will open up their networks also to allow for similar services to be delivered over the mobile networks. There is already a clear trend towards ‘off deck’ services, where mobile users go directly to the Internet to access services specially designed for mobile users, bypassing the operators’ mobile portals.
Consumer will become more central
So, for some time to come the consumer issues of today will be the issues of tomorrow – access and billing. But in a rapidly changing environment it will become increasingly more difficult to distinguish who is responsible for the service, and to identify who is answerable for the problems that customers are facing. Often two or more companies may be involved.
This becomes an even more complex issue when overseas companies are involved. We need only look at Google, YouTube, etc to see what we can expect. And as many of these services include an advertising and marketing element further complexities will emerge, and issues will cross the borders of the various national regulators.
Not that this will be too difficult to sort out, but processes need to be developed to cater for the changing environment.
The main advantage for customers will be that the competition will shift from commodity to applications. With open networks many organisations will offer competing services over the infrastructure and customers will have far more control of the selection of the companies they want to do business with.
Customers will also participate more actively in this new telecoms environment, and they, also, will become involved in providing services – this, in itself, will add a new dynamic to the regulatory environment.
National healthcare, education and energy services
As the value of the industry to customers moves from access to applications issues such as equal access will become prominent, especially when healthcare and education services become involved.
A problem that is already emerging in Europe is that those who most need these services are also often the people who can least afford them. Telcos will roll out infrastructure and make it available to those people who want to pay for it. This will lead to complaints about access that might not necessarily fit within the current regulatory framework – who will be responsible for what?
Over time the market will sort it out – the problems will occur in the transition period
As is the case with many commodity products, over time telecom commodities, also, will simply be built into the end-user product. They will not be charged for separately, and if things go wrong some of these packages may need to be unravelled in order to establish where the problem lies. Based on global economic trends, BuddeComm has estimated that, in the end, telecoms might simply be just 10% of the total cost of an (electronic) product bought by a customer.
These issues will sort themselves out. The companies who deal with the customer are ultimately responsible for the service and they need to have their own processes in place to deal with customer problems and complaints. On-net competition will drive this development.
However it will be some time before this new environment matures and meanwhile things may become rather messy. Our current processes are ill-equipped to manage this issue, and this will lead to an increase in customer dissatisfaction and customer complaints.
Apart from that, these massive changes will bring with them their own problems. One only has to look at some of the problems that occurred when ADSL was introduced. These problems were solved by the industry but they attracted immediate political attention, and situations like this can easily be blown out of proportion.
It is, therefore, critical that contingency plans be established to deal with the problems that will inevitably arise during such periods.
Paul Budde
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