Accenture, a global management consulting, technology services and outsourcing company, said that telecom operators and service providers would face struggles globally as traditional operator revenue streams (voice telephony and SMS) would decline and will continue to do so.
In a report, the telecoms analysis by a Senior Manager in Accenture Nigeria, Olu Akinluyi, noted that in the near future, according to Cisco, voice will make up less than 10% of total mobile traffic.
He said that subscribers are increasingly turning to cheaper Over-The- Top, OTT, alternatives such as WhatsApp and Skype, to make calls and send messages with these OTT players having typically lower entry costs but having global reach, and pose a significant challenge to existing telecoms operators.
He said, “for example, the total number of mobile VoIP minutes is expected to grow from 15 billion in 2010 to 471 billion in 2015 (Juniper Research). Furthermore, Telecoms subscribers now have much higher expectations from their providers, and telecoms operators are scrambling to find ways of providing differentiated customer service to address the needs of their subscribers, to avoid losing them to rivals – especially now that technology has reduced the hurdles of switching between telecoms providers.”
He explained that almost all Telecoms operators are therefore looking to data services to drive growth. However, the competition for provision of data services is fierce – especially since this strategy puts them in direct competition with traditional internet service providers in many cases.
“Telecoms operators and service providers therefore now face pressures from both sides as well. Traditional revenue streams are drying up due to competition from OTT players, amongst other factors, and there is increased competition in new areas of interest. The scenario is also causing a race to the bottom on price for telecoms services.
“Competition is supposed to be a good thing for consumers. It is meant to create a situation in which they get the best value and price, for goods and services.
“At the moment, consumers have never had it better – they can choose their devices from an increasing list of manufacturers at constantly decreasing prices, choose their connectivity from a bouquet of offers with constantly decreasing prices, and choose their applications from a collection of low cost or free options. However, at some point this competition could turn out to be a poisoned chalice.”
He however, asked that what happens if device manufacturers and telecoms operators start, continue, going out of business? Now that consumers’ appetite has been whet, is it sustainable to continue to expect prices to drop? Should regulators be doing more to ensure an even playing field? Should governments do anything to protect their companies from global competition? Should the principles of free markets be allowed to prevail?
“A lot of difficult questions need to be asked and answered in the global telecoms industry – and these questions equally to the local industry. For example, the Nigerian Communications Commission, NCC, has issued 4G licenses to wireless internet providers to ensure that Nigerian subscribers have access to affordable, and widely available, data services.
“However, licenses have not yet been made available for auction to mobile operators. These operators face increasing pressure as traditional revenue streams are being eroded by OTT players for example, and this erosion is encouraged by the presence of these new wireless internet service providers.
“As a result, these mobile operators may not be able to compete effectively as they have to use their limited spectrum to provide the Quality of Service, QoS, guarantees that traditional voice services demand, whilst trying to compete against providers who do not have this challenge.
“OTT players such as WhatsApp do not have a physical presence in most countries in which their services are used, and therefore do not pay taxes or provide jobs in those countries.
“Again, whilst consumers benefit from better and cheaper services, what happens if mobile operators, who have paid millions of dollars in license fees, and spent millions more on equipment, begin to shed jobs? What happens if tax revenues from these mobile operators decrease?
“Whilst competition can be a very useful tool in providing value to consumers, it can also create scenarios which undermine the benefits it is meant to provide.
Akinluyi therefore advised that to ensure a vibrant telecoms sector, it must include maintaining a healthy balance between competitive policies, to provide value for consumers, and policies aimed at ensuring that companies can continue to thrive and provide jobs, benefits to shareholders, as well as tax revenue.

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