The increasing demand (and need) for high speed connectivity in developing countries is leading to network congestion on mobile networks fuelling the market for fixed line broadband. Operators of fixed line services are seizing this opportunity by offering faster speeds and more reliability than mobile networks. As a result, broadband operators are seeing household penetration rates rise sharply alongside revenues and profits.
The spotlight on the industry is bringing new fibre-based players into the space who are competing against the incumbents and chipping away at their market share thanks to these smaller players’ ability to be nimble, keep overheads low, and invest in new technologies such as micro-trenching to increase the speed of their fibre rollout. These new entrants benefit can find funding easily and they are from being free of the legacy systems, processes and bureaucracy incumbents face and are able to move on opportunities significantly quicker while extracting larger profit margins.
How can incumbent telcos ensure this wave of new fixed broadband players don’t eat into their market share and customer base?
Incumbent telcos need to change their commercial and network operations to force new players to focus on less profitable suburban areas. This can be achieved by:
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Building up Property developer relationships – ensure incumbents’ service is available in new projects and existing buildings and look to work on exclusive basis or with a limited number of other service providers.
Securing Right of way – Bid aggressively for Urban municipality broadband projects as a way to facilitate securing right of way for laying cable which can then be used to offer commercial service to customers in the area.
Offering Managed services (i.e. data centers, IT services, network monitoring) – smaller players will struggle to offer best in class managed services as their focus and capex will be taken up by rapid expansion in the core business leaving the opportunity for Incumbents to focus on these areas which can help build strong and sticky relationships with high value corporate customers.
Investing in new deployment and operational technologies and processes – build a nimble low cost capability that competes with the new entrants.
Leveraging existing relationships with Corporates and SMEs – secure their current business into the future.