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Telecommunications

More of the Same?
By Kevin Perlmutter

The world of telecommunications is caught between unprecedented advancements when it comes to network capabilities and stagnation in relationships with customers. Despite the life-changing impact of what telecoms make possible, customers are increasingly ambivalent or unhappy with their providers. In 2012, telecoms will continue to face infrastructure investment pressures, increased competition, as well as demand for new offerings and better service.

Infrastructure investment pressure
Telecoms are fundamentally making the mobile broadband revolution possible. Meanwhile, there’s an ongoing tug-of-war between telecoms and governments to keep networks on the cutting edge in the face of regulations that democratize the results of substantial investments. As the need for speed and coverage grows, governments are falling behind in evolving regulations to best support investments in innovation and infrastructure.

In 2012, this battle will continue. The wave of acquisitions and joint ventures in the quest for 4G LTE mobile broadband spectrum will accelerate. These partnerships will bring together competing telecoms, further integrate sister industries, and look to overcome regulatory hurdles, allowing companies to offer the fastest network speeds while reducing investment and build-out time. Telecoms, in an effort to win over potential partners or overcome government scrutiny, will also work harder to improve their image as customer and community advocates.

Increasing competition and alliances
There will be further convergence of the telecom, consumer electronic, and entertainment industries. Consumers want their lives on-the-go -- anytime/anywhere -- with intuitive interfaces and seamless integration. This will continue to create new sets of competitors and multi-brand alliances to integrate technologies. It will become more important that telecoms allow for experimentation and developer input to serve customers with the most innovative technology, points of access, and range of choices.

Another onslaught of competition is coming from non-telecom business combinations. Microsoft, Skype and Nokia, for example, are undoubtedly setting themselves up as new ways for people to connect, potentially with or without a traditional telecom relationship. The Google/Motorola partnership will further propel Google’s ability to drive new categories of demand. And retailers like Amazon and Best Buy will continue to set new standards for how people shop for and integrate consumer electronics. Each of these companies is not only expanding its offerings, but also expanding on their opportunities to serve loyal customers.

In 2012, telecoms will not only have to contend with competitors encroaching on their turf from every angle, but with companies that have earned more positive and deeper customer relationships. Look for telecoms to further evolve their business models as they contend with new partners and more demanding customers.

New offerings
Cloud services and mobile payments are moving from the early adopters to the mass market, and both will be increasingly important areas of focus for telecoms. Wirelessly connected devices, from e-readers to remote health-monitoring systems, plus a multitude of remote capabilities in the connected home, will also grow as a percentage of telecoms’ revenue.

Business customers are another area of focus for telecoms in the coming year. Wireless technology presents an opportunity to bring new capabilities to businesses. Telecoms will make a bigger push toward equipping these customers with solutions that go beyond basic voice and data – solutions that will enable them to operate more efficiently and better serve their own audiences.

Some telecoms may begin to challenge the traditional pricing structure. Given the increasing pace of innovation and a constant barrage of advertising for the best products on the market, many people will not want to sign two-year phone contracts that force them to wait for extended periods of time to get the latest technology. Prepaid no-contract wireless will continue to grow in popularity, and people will look to integrated plans for their multiple wireless devices/capabilities.

Evolving customer relationships
The global telecom industry is one in which people are besieged with choices, but few of these choices create true differentiation and loyalty. Telecommunications is one of the few industries epitomized by a multi-year contract, monthly fees, and early termination penalties, topped with a perceived lack of appreciation for customer relationships. Telecoms all around the world are notorious for sub-par customer service, and practices that often make the customer experience cumbersome and frustrating.

In 2012, some telecoms will begin to act upon the opportunity to reframe the customer relationship in ways that drive both demand and loyalty.

Overall, one can most likely expect more of the same from telecoms in the coming year, including rapid innovation and infrastructure deployment, ever-evolving capabilities and offerings, intense competition, and renewed attempts at improving customer relationships. The big question: Will any telecom break from the pack and raise the bar for the whole industry?