The changing dynamics of the telecommunication market

Two decades after the 2002 Telecom Policy ushered in the mobile communications revolution, the telcos find themselves in search of an unknown path into the future. Their business model for two decades was centered around providing voice and short messaging services for a growing consumer base. 

With the rise of social media platforms, and the increasing speeds at which their system is able to operate, data has emerged as the new frontier and none of them is sure how to turn it into a profitable proposition. 

This is a dilemma unlike what most other businesses face. Their own investments are rendering their own business model obsolete. Over the past decade, they have invested more than $2 billion in purchase of high speed spectrum and installed the required equipment to provide 4G services to their customers, but in the course of doing so, their own revenue base has been eaten away as the higher speeds have made it possible for their customers to make voice calls and send short messages without using the telcos own service. 

Today the telecoms are searching for the business model that helps carry them into the new world that has been ushered in by the proliferation of high speed telecommunications. Two decades ago nobody thought that one day telecoms would be looking at ways to process payments or manage bank accounts, provide streaming content or operate Super Apps to provide myriad services to their customers like hailing a cab, making a restaurant reservation or purchasing cinema tickets. 

Today all this and much more is being looked at because, as telecom executives put it, they cannot remain a “pipe” connecting two individuals for much longer. They must branch out into other services. 

Once known to be the core of telcos, the voice and texting services have seen a decline in importance as more and more OTT players like Whatsapp and Facebook enter the market. As per PTA annual report 2020, “10% decline in total ARPU occurred because consumers shifted away from traditional voice services.”

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Ahtasam Ahmad
The author works as a Sector Analyst at Profit and can be reached at [email protected]

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