November 7, 2017

Risky Games On The Telecom Market

The telecom market for the last twenty years has moved only forward, increasing revenues and increasing the client base. Today, the penetration of mobile communication has reached a limit, and the introduction of new technologies has become indecently expensive. The market has changed, but the mentality of its participants has remained the same. Operators frantically search for new niches and services, technologies and approaches that will provoke another golden shower.


Most of all it resembles a cult of the cargo, when the natives are accustomed to amazing things and food that falls right from Heaven, without thinking about how to independently invent something new and develop the telecom market.

At the turn of the century, mobile operators first felt that like this about their revenue streams Deployment of GSM networks was relatively inexpensive, mobile communications attracted subscribers, there was practically no competition – there were enough customers for everyone. Then 3G appeared and let the modernization of networks cost a large amount, the mobile Internet service and income from it blocked any capital investments.

Today, the pace of construction of LTE networks around the world unambiguously shows – the debit where the loan is reduced has almost ceased, and rapid growth is not foreseen. Of course, the operators will switch to 4G, but they do not smell roses or have their former enthusiasm for upgrades. Representatives of these operators are constantly talking about a new Klondike, the next big thing on the telecom market, a service that will bring the telecom’s financial turnovers to a new level.

New Directions on the Telecom Market

Today, high hopes are placed on developments in several directions. The Internet of Things requires communication and the number of gadgets of all sizes and form factors in the next few years will amount to billions. Only here the revenue from these elements of IoT is so miserable that it’s impossible to seriously call the Internet of Things a market driver. In figures and quantitative metrics – it is possible, but the money invested in this direction will not become a new cash cow for telecoms operators.

What else? Mobile finance. But operators heading in this direction are not allowed to act as banks, merely holders of mobile operating systems, giving them only crumbs from the master’s table. Any attempt to create your own payment tool turns into a ridiculous embarrassment.

Thus it is necessary to understand that it is a mistake for the operators to complain. Revenues and profits, perhaps, do not grow, but still, hold at an extremely high level. Capitalist thinking does not accept stagnation and requires moving forward, but the rules of the game have changed. While the operators played chess, the market has already switched to checkers.

OTT-services and others all play in “drinking”, stupidly snapping off the checkers from the field, not understanding the nuances. As a result, operators are trying to find a source of income that would be predictable and controlled in the longer term, i.e. for more than two to three years. Fresh in their memories still is RBT, whose life was limited to two years, and about micropayments, the incomes from which did not block reputational losses. Operators want a stable income which will generate some love for subscribers.

Great Scheme

Blocking advertising – the pain of all creators of services and content. Subscribers prefer free of charge facilities and monetization through advertising has become the main source of income for content creators, whether these are texts in the media or applications in the smartphone. The development of programs blocking advertising in recent years is at a such a pace that many publishers are already blocking access to their content for those users who block any advertising. And so, someone inside the operator’s group came up with a brilliant move – to block advertising at the network level, at the time of data transfer. A great scheme, because subscribers will be happy and content creators will crawl on their knees with money and beg that operators include them in their lists of content in which advertising will not be blocked. True, everything ended quickly enough – European regulators banned operators from doing this form of business. The use of application-blockers by subscribers remained in the legal field, but blocking advertising at the network level is now prohibited.

The telecom market is a world in which subscriber-users, operators, service providers, and publishers live side by side. Each of the residents has its own worries and different priorities, often they are in conflict with the interests of their neighbors in this living space. History teaches us that fighting with neighbors is futile since in this battle there will be no winners, everyone will lose.

The best way to find a balance in coexistence is to reach a compromise. Operators – to give up their ambitions to multiply the increase in revenues and finally look at charges based on the quality of the network and service. Subscribers – start paying for content and stop demanding it is given away for free, stop blocking advertising and allow content creators to move forward. Service providers – stop imposing on all market participants certain services that are of interest only to themselves. Publishers, developers and site owners – stop posting deliberately dangerous to users advertising, treat the customers with respect and not strive to earn off every user.

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