GSM Customers Expecting More: Adding Value To The Network To Increase Arpu And Reduce Customer Churn
by Maxwell Massaquoi2005-08-22 00:00:00 | Viewed 965 times
Since the end of year 2000 when Celtel deployed its services here in Sierra Leone to this present day or moment, we have seen and actually continue to see the evolution of a sector (telecom) that had been relegated to the league of underperformers for a very long time. In fact, the arrival of Celtel and followed by that of Millicom in 2001 rescued the telecom sector from the "jaws" of perennial despair.
We must commend these two companies for foraying into a country considered to be at the far bottom of the global development pyramid and a so-called "failing state" for that matter.
In the four years following Celtel's initial deployment, the mobile market was controlled by Cletel and Millicom with Celtel carrying a leading share of the market. During this time, the market endured tremendous subscriber growth levels (compounded annual growth of 74%). Today, almost five years on, the market is ablaze with more GSM network operators, four in total to include Comium and Africell-Lintel. These operators are soon to be joined on the mobile communications highway by Datatel, Sierratel and possibly InterCellular-Nigeria.
On the surface, licensing seven carriers in a country this size to provide mobile communications services may not seem conducive for individual business growth (especially for the established firms). But in reality, the increased numbers should have no negative bearing on the firms that can provide consumers with products and services that are differentiated from the competition and that can be of added-value to the end-user customer. Standard voice service along with basic class of service features (caller ID, three-way calling, voicemail, etc.) continues to be the "bread and butter" for the current players with limited contribution from basic data in the form of short message service - SMS.
The firm or firms that can innovate and provide this market with the services that are specifically configured for the "temperament" of the consuming public are likely to be in "pole-position" for sustainable market share increase. The mobile communications industry is on pace to record subscriber levels of 175,000 subscribers by the end of 2005 and 310,000 by the end of 2006 and probably with no significant cooling-off for the next three to four years. The current market conditions make it almost impossible for any single firm to lay claim on a significant subscriber base. The extensive practice of "SIM card switching" or "network-roving" deprives operators of outright ownership of the many end-users engaged in these practices.
In securing the outright ownership of the customer, GSM network operators may not, after all need to engage in expansive network build-outs for additional coverage in trying to tap into additional local access transport areas - LATAs or metropolitan service areas - MSAs for access to customers or rural access areas.
There is adequate national network presence among the operators to be shared if firms can forgo the current backward notion attached to domestic or national roaming among GSM networks. Collaboration among GSM network operators in many parts of Europe in the area of domestic roaming has proven to be a "win-win" situation for all involved (the carriers and consumers). The operators that will focus their growth strategies in a timely manner on horizontal market growth opportunities should be in position to rack-in significant return on investments -ROIs and stabilize their market positions along the way.
In searching for business growth opportunities and market share stabilization, operators must look inward and in this I mean looking at already deployed facilities. I have assigned layers to the major facilities that can be positioned within the wider operational or technical framework of any of these operators. The layers are as follow: LAYER 1: INFRASTRUCTRE - WHOLESALE When capacity permits, create opportunities for mobile virtual network operators - MVNO (making available transmission capacity and air interfaces to terminating gateways) LAYER2: NETWORK FACILITIES Mobility and routing functions - operators with coverage in a given area can provide roaming facilities to mobile stations and customers of other operators lacking presence in that given area (again, let us benchmark EU - European Union) LAYER 3: VALUE ADDED SERVICES Providing access to information services - e.g. news, sports, traffic, etc. (Celtel is already engaged in providing similar services through its operations in Uganda - bulk SMS through its partner firm SMS Media) LAYER 4: INFORMATION PRODUCTS/SERVICES Content provisioning - here, operators should engage local IT houses in coming up with content that can be configured to fit the temperament of the market (Comium has a stated record on this with Kish Telecom, LibanCell and Telecom Karabakh). Well, operators could even go a bit further and deploy at a small or medium scale, GPRS (packet-switched) network facilities to enhance the deployed circuit-switched voice network.
Operators must not be complacent with providing "bare-knuckle" products and services for this increasingly knowledgeable subscriber pool that is well-positioned to catch-up with the rest of the world very soon. GSM carriers need to "step up to the plate" and come up with new products and services that are bound to consistently hit "homeruns" for the carriers.
Among the operators, the estimation that their presence has brought development to a country that had only 19,000 mainlines prior to year 2000 may exist. To these operator-firms, the nation should be content with the availability of any semblance of modern communications in this case pricy basic cellular voice services. Well, I have an advice for the operators inside that box of thinking. Learn from Nigeria's experience.
Today, the unanimous leader (Globacom) of the pack (four GSM carriers), and the last of the four to enter the GSM fray came from behind to lead in quality of service - QoS. By the way, do you know what propelled Globacom to its leading position? Value Added Services! Yes, you guessed it right. Globacom has not done it with 3G or EDGE or ZigBee solutions, rather, it has moved just a tad from first generation platform to 2.5G (medium-scale GPRS network facilities) and basic WAP solutions. Its success has actually come from product and service innovations around other domestic industries (banking, entertainment, etc.).
Innovative solutions that satisfy non-telecommunications needs will be the "fuel-rod" for business growth and customer loyalty in Sierra Leone's growing telecom market. Carriers cannot avoid innovation in this up and coming technologically savvy market. As the Chinese saying goes, "what you cannot avoid, one shall welcome". If you do not, someone else will do it and you cannot afford to play catch up in this fast growing marketplace and in this ever evolving sector. Very soon and probably some 2 years from now, this growing customer pool will start expecting more for their money. So, plan ahead and execute in due time.
Tariff rebalancing (downward) alone cannot guarantee or sustain long-term customer loyalty. Creativity along with providing value to the customer shall help mitigate customer churn, secure the revenue stream and increase the average revenue per user - ARPU.
Maxwell Massaquoi, MBA - is a telecom expert here in Freetown.
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