The rapid growth of Facebook, WhatsApp, WeChat and other Internet-based services has prompted some commentators to write off telcos in the consumer communications market. But many mobile operators retain surprisingly large voice and messaging businesses and still have several strategic options. Indeed, there is much telcos can learn from the leading Internet players’ evolving communications propositions and their attempts to integrate them into broad commerce and content platforms. In this report we examine what opportunities still exist for telcos in this strategically important sector.
Although they make extensive use of WhatsApp, Facebook Messenger, Snapchat and other Internet-based communications services, consumers still expect mobile operators to enable them to make voice calls and text messages. Indeed, communication services are widely regarded as a fundamental part of a telco’s proposition, but telcos’ telephony and messaging services are losing ground to the Internet-based competitors and are generating less and less revenue.
Should telcos allow this business to gradually melt away of should they attempt to rebuild a competitive communications proposition for consumers? How much strategic value is there in providing voice calls and messaging services?
This report explores telcos’ strategic options in the consumer communications market, building on previous STL Partners’ research reports, notably:
This report evaluates telcos’ current position in the consumer market for voice calls and messaging, before considering what they can learn from three leading Internet-based players: Tencent, Facebook and Snap. The report then lays out four strategic options for telcos and recommends which of these options particular types of telcos should pursue.
- Executive Summary
- What do telcos have to lose?
- Key takeaways
- Learning from the competition
- Tencent pushes into payments to monetise messaging
- Facebook – nurturing network effects with fast footwork
- Snapchat – highly-focused innovation
- Telcos’ strategic options
- Maximise data traffic
- Embed communications into other services
- Differentiate on reliability, security, privacy and reach
- Compete head-on with Internet players
- Figure 1: Vodafone still makes large sums from incoming calls & messages
- Figure 2: Usage of Vodafone’s voice services is rising in emerging markets
- Figure 3: Vodafone Europe sees some growth in voice usage
- Figure 4: Internet-based services are overtaking telco services in China
- Figure 5: Usage of China Mobile’s voice services is sliding downwards
- Figure 6: China Mobile’s SMS traffic shows signs of stabilising
- Figure 7: Vodafone’s SMS volumes fall in Europe, but rise in AMAP
- Figure 8: Voice & messaging account for 38% of China Mobile’s service revenues
- Figure 9: Line is also seeing rapid growth in advertising revenue in Japan
- Figure 10: More WeChat users are making purchases through the service
- Figure 11: About 20% of WeChat official accounts act as online shops
- Figure 12: Line’s new customer service platform harnesses AI
- Figure 13: Snapchat’s user growth seems to be slowing down
- Figure 14: Vodafone Spain is offering zero-rated access to rival services
- Figure 15: Google is integrating communications services into Maps
- Figure 16: Xbox Live users can interact with friends and other gamers
- Figure 17: RCS is being touted as a business-friendly option
- Figure 18: Turkcell’s broad and growing range of digital services