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Research

Telco Online 05–2020

Telcos and the 4.0 Industrial Revolution

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Throughout history, people have used technology to make their lives easier and make improvements to bring it to the next level.

The first Industrial Revolution of 1765 saw the mechanisation of agriculture, extraction of coal and the invention of the steam engine. In 1870, the second Industrial Revolution heralded the emergence of electricity, gas and oil along with steel production and the invention of the telephone. The third revolution in 1969 brought nuclear energy, electronics, telecommunications and computers.

Industry 4.0

We are now in the throws of the fourth Industrial Revolution - Industry 4.0, which of course started with the Internet, and whose transformative powers are benefiting people in their everyday lives. The Internet has enabled the sharing of knowledge and information, online shopping, electronic payment of bills, working from home, the Internet of Things and much more.

So, where do Telcos fit into the 4.0 Industrial Revolution? Digital transformation is driving change in the world, improving peoples’ lives and benefiting society as a whole while also creating new business opportunities. Interestingly, telcos are at the heart of this transformation through their investment in technology and interoperability, providing the basis for new business models across different industries. In addition, global connectivity allows access to real time information and marketplaces benefiting peoples’ quality of life.

To give you an idea of how important telcos are in the Industry 4.0 Revolution, global flows of goods, services and finance could triple from $26 trillion in 2012 to more than $80 trillion in

2025 enabled by telecom technology. To put these figures in perspective, the total value

of these flows increased only 1.5 times in the 20 years between 1990 and 2012.1

However, the telco digital transformation is unfortunately not akin to a magic trick and requires them to address and overcome a number of challenges.

Digital transformation

Firstly, telcos need to look hard at their investment into network capacity as data utilisation grows and we see a surge in connected devices. This increase in demand for bandwidth means that telcos should be looking at scalable solutions capable of managing data capacities at peak times. This can be resolved with the adoption of cloud solutions. The advent of Scalable On-Demand (SDN) allows network traffic to be managed more efficiently and can be easily scaled. In addition, Network Functional Virtualisation enables the implementation of network functions in software that can be moved or replicated on-demand, without the need to enhance physical infrastructure.

Secondly, digital transformation presents telcos with the opportunity to extend revenue streams beyond connectivity through the Internet of Things (IoT). IoT has disrupted many industries and led to the development of smart buildings, connected cars, smart cities, agricultural applications to name but a few. The number of connected devices is expected to reach 34 billion by 2025.2 For telecom companies, the IoT can help in predicting consumer behaviour as well as developing predictive models to forecast future trends. Additionally, IoT can be used to monitor performance of cellular towers and the data captured is invaluable to engineers in reducing maintenance costs and efficient management of electric power.

Finally, telcos need to take a hard look at how they engage with their customers. Many customers typically do not have positive experiences dealing with telecom companies with interactions viewed as being difficult, frustrating and time consuming. To grow, telcos need to keep their customers happy and upsell services, but to do that they need to provide a seamless online experience. This can be achieved only by focusing on the customer journey and how they engage with the customer with the aim of increasing brand loyalty.

Online Customer Journeys

The customer journey has many aspects - subscribing for the initial plan, renewals, billing, promotional offers and many more. Telcos are increasingly engaging with their customers via app messaging, but must be careful to ensure that the messaging is relevant to the customer. The brand experience should be seamless whether dealing with mobile, cable or internet offerings. Attention to detail is key to the brand experience and the design of the digital transformation process is instrumental in delivering the experience.

Understanding customers needs can help telcos shape the experiences their customers wish to have. By roleplaying as the customer, they will be able to identify potential situations and problems that might arise and lead to a clear definition of goals to be achieved. Customer journey mapping also increases employee engagement and motivation as employees are involved in the process, listening to others experiences and offering suggestions. It has also been shown that customer journey management results in a 54% greater return on marketing investment, 10 times improvement in the cost of customer service, 18 times faster average sales cycle and 3.5 times greater revenue from customer referrals.3 Ultimately for telcos, mapping the customer journey will result in increased customer satisfaction and give their customers the experience they deserve.

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