Do you still remember the days when you need to pay tons of money for only 100M mobile data and the connection is super slow? Well, I can still remember the torture of waiting for the picture on my phone to appear one pixel by one pixel back in primary school. Lucky for us, it is no longer a problem.
From only 2008 to 2010, the price per MB in the US has dropped from 0.47 USD to 0.05 USD while the speed increased greatly, which means we now have better, faster and cheaper data, as well as other telecommunication service than any time before. The revenue of telecom companies in Europe has dropped 24% from 2007 to 2018.
Their life was pretty good, until applications came into the playground, applications such as WhatsApp and Messenger. Unlike traditional telecommunication operators, those applications and their parent companies do not need to invest heavily on any infrastructures, instead, they rely simply on the network offered by traditional telco companies while offering people a side way to pay less: forget about phone calls and SMS, just come and use online voice calls and messages. Customers love it. Those telecom giants, though, did not feel too good. The emergence of online communication APPs degraded them into infrastructure operators and suppliers by breaking their value chains so that they can no longer rely on the income of users making phone calls and sending messages.
What is worse, it is not just about communicating, the same goes with many other business the telecom companies are in. For example, cable/ wireless TV is threatened by YouTube, Netflix, and even Twitch.
One interesting thing is that some of the telecom companies are trying to cooperate with different applications to somehow win the market back. China Mobile, for example, offers customers different special unlimited data bundles. It categorizes popular APPs based on their developing companies or types (for example, combine Twitter, Instagram, Facebook and WhatsApp together as a social media bundle). In this way, it can develop a more profound relationship with the APP developing companies and thus rejoin the value chain process again.
The example above offers an interesting perspective of how those traditional telecom companies trying to survive the technology disruption. If they want to stay on the stage, they might need to think a little bit harder and act quickly.
Reference:
Entner R. (2011). What is the price of a megabyte of wireless data. https://www.fiercewireless.com/wireless/entner-what-price-a-megabyte-wireless-data
Fonseca M., et cl. (2019) Telecom operators: Surviving and thriving through the next downturn. https://www.mckinsey.com/industries/telecommunications/our-insights/telecom-operators-surviving-and-thriving-through-the-next-downturn
Frisiani G., Jubas J., Nattermann P. (2017) Hello, mobile operators? This is your age of disruption calling. https://www.mckinsey.com/industries/telecommunications/our-insights/hello-mobile-operators-this-is-your-age-of-disruption-calling
Bell Venture. Bye Bye, Monopoly. How digital is disrupting the telecommunications industry – Top 4 trends. https://bell.ventures/insights/bye-bye-monopoly-top-4-trends-disrupting-the-telecommunications-industry
