Telecom operators should offer more than just connectivity to increase revenue

Operators should offer a range of hardware and services like endpoint security, cloud storage, and streaming.

Telecom operators' consumer divisions need to take a page out of their business divisions' books to stabilize and grow their revenue. According to a recent by Analysys Mason, telecoms operators' short-term strategy of upgrading customers to unlimited mobile data plans or faster-fixed speeds has limited potential as many operators already have 80% of their mobile customers on unlimited plans and a third of their fixed customers on 1Gbit/s speeds.

To increase revenue further, operators will need to offer more than just connectivity in their plans. Telecom operators' business divisions have been successful in stabilizing revenue for years, and consumer divisions can learn from their strategies.

Business spending with telecom operators has held up better than consumer spending, which has been in decline for much of the past 10 years. Spending in Western Europe declined by EUR20 billion between 2012 and 2022.

"Business divisions have become aggregators of IT services from multiple providers. Consumer divisions will need to implement a similar strategy if they are to grow their revenue," the report read.

Consumer spend on telecoms services in real terms, Western Europe, 2012–2021

Operators should offer a wide range of hardware and services for consumers, including Wi-Fi mesh hardware, endpoint security, cloud storage, pay TV and streaming services, games, and other products. The products and services offered do not have to be developed or created by the operator.

Business divisions have a low threshold for success and do not try to sell all of their products to all of their customers. These products are low-risk because the operator has not invested in their development.

Operators that broaden their portfolio of services need to be willing to experiment and be flexible. They will need to add and remove products, test different pricing strategies and so on.

The report added that operators should be more concerned about the total value of the account rather than the margin per product. Offering a wider range of services provides more scope for differentiation.

Consumer divisions can also make use of the investments made by the business division. The same basic products for mobile endpoint security can be sold to a multinational as to an individual on a prepaid contract.

Operators' traditional approach was to differentiate their consumer connectivity product with a relatively small number of additional features. Today, operators need to do more and offer a wider range of hardware and services to distinguish their services.

This report suggests that operators need to consider a more complex product portfolio if they want to increase revenue and stabilize their business. Consumer divisions should take a cue from their business counterparts and offer a wide range of services to their customers. By doing so, they can not only differentiate their services but also increase the total value of each account.