RESEARCH REPORT

In brief

In brief

  • Most, if not all Communications Service Providers (CSPs) have felt the effects of commoditization as well as the threat of digital disruptors.
  • Now there is a window of opportunity for CSPs to connect and monetize value chains in an era of edge computing and platform ecosystems.
  • CSPs can now tap into tremendous value by becoming the modern platform for business-to-business (B2B) and business-to-consumer (B2C).
  • In this paper we explore the Connected Brain as key differentiator powering B2B and B2C growth models and tackling the commoditization conundrum.


The threat of commoditization looms large for CSPs

The traditional business of CSPs has hit the wall. Established CSPs around the world have seen their core offering—B2C and B2B connectivity—remain stuck in a period of stalled growth for years, even as demand for bandwidth and digital services has never been higher.

Making matters worse, disruptors are upending the value chain itself. These aggressive competitors are taking advantage of a modern cloud-based, agile technology stack, along with an innate ability to subsidize their products, to gain market share at scale and build lasting, high-value customer relationships through continuous product, process, and ecosystem-driven innovation.

It all adds up to a pretty bleak future for established CSPs…or…does a post-COVID world create a window for CSPs to act? While their current situation is, indeed, very challenging, CSPs have reasons for hope.

80%

of consumers said they were satisfied with their home broadband.

6 in 10

consumers said they trust their CSP, nearly triple their trust in social media providers.

Due to post-COVID shifts, now more than ever CSPs have opportunities to expand their offerings outside their core business. For example, our survey found consumers, who are increasingly embracing remote working, are willing to pay a premium for solutions that help make their work life more efficient.

Similar, but even greater potential exists among small-and medium-sized business (SMB) customers, which have been hit hard by the pandemic. A separate Accenture SMB survey found the pandemic has significantly boosted demand for new and digital services that can help SMBs accelerate their own digital transformation.

CSPs have a genuine opportunity to help drive SMBs’ economic recovery through ecommerce, online collaboration, communications, and security services, and by accelerating SMBs’ shift to the cloud as sales and service increasingly move to digital channels.

CSPs can become the modern platform for B2B and B2C

Building on their trust and access to consumer data and their longstanding relationships with businesses, CSPs are uniquely positioned to become the orchestrator of a wide range of services and offerings. CSPs can tap into tremendous value by connecting a complex ecosystem of new digital offerings from physical smart devices to analytics-based services. But they need to claim this role soon if they want to avoid loss of relevance and the impending risk of commoditization.

Connected Consumer Platform

A platform that wraps high-value CSP services with ecosystem services while ensuring CSPs maintain ownership of consumer data and identity.

The value this approach generates is by moving beyond a mere bundling play into the realm of highly personalized and integrated self-owned and third-party services, that consistently leverage data as the new currency.

A X-Industry Orchestrator for business

A platform through which CSPs can orchestrate and deliver their own and third-party horizontal software functionalities that can become the foundational elements of vertical industry solutions and use cases.

This segment offers the greatest opportunity for CSPs to redefine their growth trajectory by capitalizing on 5G and edge computing.

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The Connected Brain can power these new value plays

Irrespective of a CSP’s strategic direction, there is an underlying code to success that fuels this positioning and platform shift, and this is what we call the “Connected Brain”. The Connected Brain is that key differentiator that can power these B2C and B2B growth models tackling the commoditization conundrum, helping the CSP to progressively expand into new value chains while also serving as the foundation to grow their core business.

Becoming a telco-tech

The Connected Brain is not an off-the-shelf product or a piece of technology, it is an end-to-end strategy which requires material adaption to the organization. The transformation of a telco into a telco-tech is an essential prerequisite for the success of the Brain.

A telco-tech is a company that takes advantage of technology (not just as an enabler but as a source of competitive advantage) to develop and offer innovative and engaging IP and business models, at scale and at speed, to respond promptly to ever-changing consumer and market demands. It operates by leveraging modern engineering capabilities to increase the efficiency and effectiveness of its processes, product and service innovation design, and operations.

With the Connected Brain, CSPs can leave their commoditized, legacy connectivity business behind in favor of a vast new landscape of significant revenue potential—and a promising, growth-oriented future.

These enterprise and consumer journeys will be powered by today’s robust, highly mature cloud environments, which allow CSPs to quickly and cost-effectively break free of their current legacy systems and infrastructure constraints. Rotating organizational talent and building new skills in AI, data, and modern software engineering will also be critical to success, as will a shift in culture, mindsets and incentives. For instance, Senior executive performance structures will require a clear linkage with the achievement of the business’s long-term KPIs.

The time for CSPs to move is now. Progressive CSPs that seize the day and act boldly will be in the position to capture value in the communications industry of the future.

Francesco Venturini

Senior Managing Director – Strategy & Consulting, Communications & Media, Global


April Wirtz

Managing Director – Strategy & Consulting, Communications & Media – North America


Astha Bhardwaj

Senior Manager – Strategy & Consulting, Communications & Media, ASIAM

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