Levarage US Sales Leadership

LEVERAGE SUCCESS IN THE USA IN OTHER COUNTRIES

The U.S. is a dynamic and definitional market in telecoms. The market is characterized by fierce competition to concur the customer through new and differentiating services and a range of customized price packages. The real key to the success of the US CSP’s is their closeness with its customers. Customer Insights. Variable tailored price packets are being offered leading to a high ARPU and relatively low churn. Carriers might be inspired by what is happening in the US. Some of the real fundamentals in business are well deployed in this mass market. The customer is at the center, innovation is key and market dynamics stimulate fierce competition.

ALU has a strong foothold in the US and many regions can leverage ALU’s strategic approach and sales tactics in the US with the goal to position us better with other customers and engage in discussions on how we can help them to improve our customers’ performance.

The main drivers of the US’ leadership in telecoms are:

1. Customer-Centric Marketing, the end-user is the core business driver
2. Competition within the Direct and In-Direct Perimeter
3. Innovation with Access to Capital

INNOVATION

Americans like to be front runners, over the last 10 years the U.S. leads innovation on many fronts and in the telecoms industry we identified 4 areas:

·         Online platforms (Google, Facebook, Twitter)

·         Devices and applications (iPhone/ iPad, Android, Kindle…)

·         Commercial services (Amazon, Netflix, EBay), and has a head start in learning how to manage complex devices.

·         New business models (iTunes, smart metering, mobile payments)

Silicon Valley’s culture has reinforced venture capital investment in technology startups and financing structures for innovation that proofed to be more effective than anywhere else. This is reflected in customer awareness of available offerings and their excitement to adopt. The American consumer is a relatively early adopter both at home and in the office.

Not only is innovation celebrated, but new and successful companies like Netflix, Twitter, Zynga, Foursquare and Tumblr have unprecedented power. The second half of the last decade has witnessed how Facebook and Google drive the political and regulatory agenda; these American companies have become hugely influential in a short time.

TAKEAWAYS:

Selective innovation, executed shrewdly

In markets without the size and funding advantages the U.S. has, spending on innovative new services can be more difficult. However, each carrier must quickly decide on areas such as Cloud, Big Data and Data Analytics. For instance when and how much to invest in trends like Cloud.

CUSTOMER-CENTRIC MARKETING

American carriers know their customer want to be informed, and this is reflected in their message. They actively market their network (quality, capacity, technology, management skill) as a differentiator. Many regions have seen carriers forgo this opportunity by pursuing MVNO, network asset sharing (core, RAN, back office support), outsourced network management, or unbundled network element service (example: last mile access).

Subscribers respond to this, because the best network implies the best access to services. AT&T is still struggling to overcome the perception that its network is congested due to problems supporting the iPhone over 2 years ago. When Verizon experienced LTE network outages they severely punished the responsible equipment provider. Likewise, pre-launch of the CDMA iPhone, Verizon made substantial investments in their Evolution-Data Optimized network to ensure it would not suffer from perceived congestion problems that AT&T did.

American carriers are actively pushing broad LTE deployment, positioning LTE as a “consumer brand” or feature. This can be seen on AT&T’s main website:

“The only carrier that offers two layers of network technology delivering 4G speeds: HSPA+ and LTE. This means you’ll enjoy fast 4G speeds on both the HSPA+ network and on the LTE network where available. This combination adds up to a smoother, more consistent 4G experience overall”

Close connections with end-users allow customer insights leading to well developed offerings like video, multiplayer gaming, media storage, consumer cloud, Millions of Connections e.g. Twitter, Facebook, turn-by-turn navigation , multi-screen video, IPTV, roadside assistance and push-to-talk. Verizon even developed “family locator” and other mobile services for pets:

Connections are reinforced on social networks. AT&T has 114,665 Twitter followers and 1,768,481 “fans” on Facebook, where they are promoting 4G smartphones with a video short featuring a famous comic actor:

Customers aggressively protect their operator’s reputation on social networks and in conversation alike; they are vocal about choices they have and their carrier’s performance.

Once a carrier’s reputation is tarnished, recover is a long, slow, sometimes impossible effort. Carriers are quick to make concessions to resolve customer concerns, and proactively offer incentives when customers are considering competitive options. Carriers know back office systems and personnel can be a make or break proposition for U.S. consumers. Poorly integrated networks, billing platforms, call centers, and training caused a huge drop in customer satisfaction and a huge spike in churn (Sprint’s churn level rose to 2.5% postpaid, 9.9% prepaid at one point during the Nextel integration process).

Carriers hesitate to roll out services that may be perceived as predatory and to take on a new supplier if that supplier’s long term commitment to the market (and the carrier) is unsure. Relationships with device vendors are key; exclusive contracts (e.g. AT&T and iPhone for years until Verizon also got a partnership) are sources of differentiation and subscriber acquisition.

U.S. service providers allocate resources in a fashion that allows flexibility and maximum revenue. They view their Opex as an area with potential to reduce costs and enhance value. Carriers are quick to restructure their internal resources, shifting people between departments, hiring new talent, and eliminating jobs as their skill set requirements change. They are also strongly motivated to aggressively deploy new technology that serves to reduce their need for labor.

U.S. carriers seem to be ahead on IP transformation projects that save Opex and allow better monetization.They have been very aggressive on FTTX deployment, with FIOS at Verizon and U-verse at AT&T, and machine-to-machine revenue is high in the U.S. AT&T already has ~1.5 M connected device customers, and is rising rapidly, according to Current Analysis.

TAKEAWAYS:

Create ways to get really personal with customers. Understand customer motivation and purchase drivers through market research such as focus groups, behaviour studies and more

Actively push network awareness. This will enable the

Larger operators with stable market share (Telecom Italia, Telefónica and Deutsche Telekom) could fight churn by letting some postpaid customers switch to lower monthly payments in exchange for extending the contract period.

COMPETITION

Intra-carrier rivalry is extremely high between the U.S.’ big 3 carriers, but small carriers also look at the large carriers as rivals. When one carrier feels threatened, they are strongly motivated to equalize the playing field and then recover lost ground. Because of 10+ acquisitions in the top 3 carriers, all were forced to improve policy and call control systems, OSS/BSS, etc.

Competition fosters creativity in the battle to win customers who value choices. The market caters to them with diversified offerings and numerous pricing options for voice and data. Handset subsides, service features, and contractual price points are all tiered to encourage subscriber migration to larger service bundles and more capable devices, both for individuals and subscriber groups (family and corporate plans). The goal is to more subscribers to a larger service bundle with a greater ARPU per billing statement. AT&T also bundles offers for telephone, internet, wireless and TV – customers can create custom “bundles” tailored to their needs.

  

TAKEAWAYS

Combine powers when possible:

 In a market more culturally fragmented than the U.S.’s, carriers should be seeking out coopetition. An example of this: the Everything Everywhere joint venture between France Telecom, T-Mobile UK and Orange UK. All will benefit from the synergy as a result of combining operations.

Get more aggressive:

Mobile virtual network and value-oriented operators should take full advantage of the economic downturn to aggressively promote their value and price plan flexibility. Orange has been promoting “Sosh,” their contract-free, lower-cost operating company, but mostly among young customers. This is an effort to pre-emptively protect them from new entrant Free mobile.

Other factors unique to the American market’s success are less easily translated to other worldwide markets:

SIZE

The U.S. is a $15 trillion economy, still the largest in the world, and the market gains strength from having one dominant language and comparatively high purchasing power. U.S. carriers can maintain control more easily than those in other countries or regions, and have greater market potential because English is the “international language.”

Many multinational companies, big telecom spenders, are headquartered in the U.S. American carriers have developed enterprise and business markets more successfully than international peers (with possible exceptions of BT, Orange, or NTT). Including wireless, business revenue at AT&T is currently about $ 65 billion, half of it is revenue.