Our increasingly digital society is today providing opportunities for new players to bring radical change to the telecoms sector. Incumbent companies may be well advised to collaborate with the newcomers in order to offer customers innovative new services.
Digital technology has been one of the main drivers of growth in France over the last fifteen years according to international consulting firm Deloitte. This dynamism drove mergers and acquisitions in the French IT sector to double in 2013. Meanwhile 42% of total expenditure on goods and services linked to Information and Communication Technologies (ICTs) during the year came from the telecommunications industry. However, the latest report on the future of French digital industries to 2020 published by the G9+ Institute, a French association representing 50,000 professionals from all corners of the digital sector, reveals that both French and international telecoms operators are now facing an increasingly competitive climate and will need to adapt quickly. The arrival of new players is set to bring sweeping change to the digital landscape over the next six years, predict the G9+ authors.
A restructuring of the digital landscape ahead
The report points to the emergence over the last few years of new business models which are competing with those of the incumbent telecommunications operators. The newcomers are mainly Over-the-Top (OTT) players – including such giants from adjacent sectors as Facebook, Dailymotion and Google – offering a combination of telephony, messaging, video on demand, video telephony and other innovative services. This change in the global telecoms scene is bringing about a restructuring of the market and if the incumbent telecoms operators wish to remain competitive, they will need to offer a new range of services themselves. And these large companies still have a lot going for them: long-term customer experience, a contract-based money-making business and specialist knowledge of infrastructure, including Internet and mobile networks, VPN, etc.
Sharing infrastructure and skills
In France, the telecoms market is now undergoing fragmentation. Customers are demanding and footloose and change their providers easily, so telecoms operators need to redouble their efforts in order to retain their custom. Against this background, some operators – notably SFR and Bouygues Telecom – have struck infrastructure-sharing agreements. Their partial sharing deal is due to come into operation in 2018. This type of agreement will not only enable these major firms to make savings, but might well also lead to improvements in customer service. However, the G9+ report also argues that incumbent telecoms operators ought to be working with the new players and capitalising on the newcomers’ talent for innovation. The expressions ‘co-opetition’ and ‘competitive alliance’ have been coined to describe this ambivalent relationship. Meanwhile if they want to push ahead with this kind of collaboration, the industry players are going to need the support of government, the relevant regulatory and competition bodies, the financial world and other players in the ecosystem, point out the G9+ Institute experts.