Successful innovation for telcos is important but has proved elusive. We look at some successes and more failures to draw out the common factors required for innovation to succeed.
Telcos have tried innovating in many verticals
Incumbent telecommunications providers have seen their margins fall as basic telecommunications services, both fixed and mobile, have been increasingly commoditised. The need to provide differentiated services to counteract this trend is widely recognised in the industry, yet despite considerable investment and many attempts, too often new services launched by operators have failed to deliver the anticipated results. Yet some, especially in mobile banking and related services, have proved successful. Why is this so?
This report focuses on product and service innovation for customers, rather than on innovation in sales, marketing, finance, operations or networks. It addresses the introduction of new and innovative services and not the repackaging of existing communications services, for example in new pricing and service bundles (see Figure 2).
It looks at examples from a range of services, covering most of the new types of services introduced by MNOs over the past decade. These include:
- Messaging: RCS and its competitors
- Mobile financial and insurance services: Orange Money / Orange Bank, Millicom/Tigo’s joint ventures
- Health: O2 Telehealth, Telenor’s Tonic health service
- Smart home: AT&T’s Digital Life, Deutsche Telekom’s Qivicon
- Lifestyle: Turkcell’s range of apps and Vodacom’s Mezzanine
We have covered many of these individually in previous reports, looking at how they were developed and have evolved over time, and whether and why they are (or we expect them to be) successful.
This report seeks to identify the common factors that led to success or failure, in order to establish some best practices for telcos in innovation. While we recognise that there are often several causes of success and failure, in some cases a single failure can undo much good work.
Previous reports this one builds on include:
- Can telcos create a compelling smart home?
- Telcos’ apps: What works?
- RCS: Walking the commerce tightrope
- Will a big bet on banking pay for Orange – and other telcos?
- Telcos in health – Part 2: How to crack the healthcare opportunity