Telcos are brimming with confidence about the future, but customers are telling a very different story.
Whether they like to admit it or not, telcos are in the midst of a big wake-up call. While digital-native companies like Netflix and Airbnb have raised the bar for what consumers expect in terms of service, telcos have struggled to keep the pace. And the effects are starting to show in painstakingly slow digital transformation and poor growth.
We wanted to get to the bottom of what’s causing telecoms to stall. So, we commissioned a group of researchers to interview some of the industry's most senior figures across Europe.
These are the top three trends we discovered.
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1. Investments are on the horizon.
It’s no secret that an injection of new capital is needed for a business to make sizable changes. And an overwhelming majority of businesses we asked agreed.
On average, companies plan to invest £16 million in tech transformation over the next three years. Virtually all of our surveyed telcos (97 percent) pledged to make immediate investments to their back-end infrastructure within the next 12 months. A third (33 percent) of the overall planned spend will be directed towards upgrading back-end infrastructure, and 31 percent will be funnelled into providing better services for customers.
Large-scale investment in transforming legacy systems is certainly promising. However, impressing consumers who are now accustomed to automatic software updates and next-day deliveries will be harder than it seems.
2. There’s a commitment to new technology.
As well as investing in digital transformation at the back end, we discovered that 38 percent of telecoms leaders favour investing in new services for customers as a top priority.
When asked about what technologies would be a focus over the next three years, 5G and cloud-based products are the top two areas where our telcos are placing their bets.
What we’re hearing from telcos is that there is a clear commitment to creating new products and services. However, as we’ll find out in the next section, understanding exactly what the customer wants and the speed at which new services can be brought to market will be critical.
3. The industry is in denial.
Businesses have a keen eye on the future, and they’re confident in being able to deliver for customers. In fact, a resounding 96 percent of businesses believe they have a loyal customer base. And the overwhelming majority of telcos feel confident that their organization’s strategy will ensure they stay competitive in the next 12-18 months.
That brings us to the third and final trend, which is arguably the most revealing. Telcos might be brimming with confidence about the future, but customers are telling another story.
Our survey of 2000 consumers showed that they’re willing to switch for a slightly better deal and many intend to do so in the near future. Customers see telecoms as a commodity product with little differentiation - so much so that their top priority in choosing an operator is price. That is hardly the basis for strong loyalty to a particular brand.
The industry is in denial, and this isn’t just an unfortunate misunderstanding - it has tangible impacts. A lack of awareness of the customer relationship will leave telcos unable to adapt to changing demands from customers and shareholders alike. It’s time for telcos to get their heads out of the sand and act to meet changing customer demands, before it’s too late.