For decades, telecom operators offered “products” to both consumers and businesses. Products are either HW or SW “products” such as mobile phones, voice, data and SMS or “services” such as professional and managed services. In both cases, there is a shared fundamental characteristic; they are discrete objects which led, naturally, the telecom operators that make, market and sell products to be structured into departments, Product Development & Management, Marketing, Sales, Retail & Wholesale and Customer Service.
These departments specialize in one function and have a vertical chain of command and as a result, they operate in silos.
The services, on the other hand, has a fundamental characteristic; they create value only when we used them. Let’s examine this statement with two examples which one of them is a story.
In this article, we will differentiate between the two and introduce in the next article, the challenges of implementing the Service Design for the Telecom Operator.
In a recent article, “LTE Unlicensed – Operator Spectrum Grab?” by Maury Wood, he was discussing that the WiFi has more potential and competency than U-LTE. This is a perfect example whereas discrete product, WiFi 802.11ac wave-2 is going to outperform U-LTE by combining 160 MHz of bandwidth and introducing a constellation of 1024-QAM. The U-LTE is not going to combine more than 60 MHz in the next foreseen 3 to 5 years’ timeframe and the highest constellation is 256-QAM. As we can see, it makes sense to go for the WiFi and there is no point to go for the U-LTE from “Product” standpoint however, if we think about it from “Service” point of view, however, what kind of service we can offer by such a “Product” as a telecom operator? What the customer would use it for? For simplicity and without losing generality or focus, let’s concentrate on the business customers rather than consumers. Offering wireless 2 or 4 Gbps is not going to serve the following with the guaranteed SLA of 99.999% : UC enabled by the IMS, including the VoLTE and video conferencing and all kind of features such as calls transfer between different handsets without loosing the connection and still be on the video conference. This stems from simple fact; the AP for WiFi is a “dump” endpoint where the eNB for U-LTE has all kind of smartness and coordination that enables full end-to-end control over the QoS and security that the AP wouldn’t be able to offer. Not to mention the complexity of implementing such service over WiFi. Moreover, the eNBs inside buildings are becoming Small Cells rather than typical DAS. Now these Small Cells are becoming more powerful and sophisticated and for example, Nokia now has decided to stop using the over-the-shelve chipsets or the one they use for the outdoor eNB but rather they are making their own to adapt to the very specific requirements for the in-door operations which the vast majority of Business are part of.
The second example is a story that emphasize the importance of the service concept and was mentioned in W Kim famous book on strategy. In Japan, NTT DoCoMo launched i-mode in 1999. The i-mode service changed the way people communicate and access information in Japan. It is the insight that NTT DoCoMo gained into why people trade-across the alternatives of mobile phones and the internet. Insight is one of the implementation elements of Service Design that we will cover later on however, “insight” as a concept is one part of four that constitute the big data analytics deliverables.
NTT DoCoMo asked, what are the distinctive strengths of the internet over cell phones, and vice versa? Although the internet offered endless information and services, the killer apps were e-mail, simple information (such as news, weather forecasts, and telephone directory), and entertainment (including games, events, and music entertainment). At that time, the key downside of the internet was the far higher price of computer HW, an overload of information, the nuisance of dialing up to go online, and the fear to give credit cards details electronically. On the other hand, the distinctive strengths of mobile phones were their mobility, voice transmission, and ease to use.
NTT DoCoMo broke the trade-off between these two alternatives, not by creating new technology or using one but by focusing the service; the decisive advantages that the internet has over the cell phone and vice versa. The company eliminated or reduced everything else. Its user-friendly interface has only one simple bottom, the i-mode bottom (i stands for interactive, Internet, information, and the English pronoun I), which users press to give them immediate access to the few killer apps of Internet. The i-mode button acts as hotel concierge service, connecting only to preselected and preapproved sites for the most popular Internet applications. Although the i-mode phone was priced 25% higher than the other mobile phones, it was way cheaper than a PC or laptop.
The i-mode uses a simple billing service whereby all the services used on the web via the i-modeare billed to the user on the very same monthly bill, something that in 2015, some operators are struggling to do. The result is no more separate bills, no credit card information is requested or exchanged online, and once the phone is on, the i-mode is on and connected and there is no hassle of logging in.
By the end of 2003 the number of i-mode subscribers had reached 40.1 million, and revenues from the transmission of data, pictures and text increased from $2.6 million in 1999 to $8 billion in 2003.
Now here is the point; the US and European telecom operators have so far failed in the same period of time. Why? The reason is they focused on getting the most sophisticated and advanced technologies and products and WAP but nothing on the “Service” side.
In the next article will talk about challenges and implementation followed by the service economics and then four articles to cover the subject from telecom operator wireless and wireline perspectives.
