Driving Telecom Success: Rethinking Business Models for Higher ARPU

“The device market is, well, somewhat challenging these days.” I heard this the other day from a senior e-commerce manager, specialising in digital conversion optimisation and online customer acquisition. As handset prices continue to rise, unfavourable macroeconomic factors are at play, and purchases are declining as a result. “We’re seeing decreases ranging from 20% to 25% over the past year, depending on the market.”  

Customers simply want to keep their devices for a longer period of time, making plans and services vital for revenue and growth.

In talking about next year’s outlook, this was just one of many strategies I’ve heard being rolled out to capture and retain customers. In 2024, Communication Service Providers (CSPs) will face challenges in monetising their developing 5G networks, requiring innovative approaches for B2B and consumer models.

The next five years are critical. According to one Cisco report, CSPs intend to invest $2 trillion in networks. The landscape is one of rapid technological evolution, heightened customer expectations, and increased market competitiveness. The adoption of advanced digital technologies, the seamless integration of 5G networks, and the delivery of personalised, experience-driven services are critical strategies for survival and growth.
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From connectivity to experience: the ARPU challenge

Traditionally, CSPs have leaned heavily on connectivity services as their primary revenue stream. However, the saturation of markets and the commoditization of these services have led to a plateau and, in some cases, a decline in ARPU (Average Revenue Per User). The solution? Transitioning from a connectivity-focused approach to one that prioritises unique customer experiences and innovative services.
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Monetisation of network services: a springboard for growth

The advent of 5G has opened a Pandora’s box of possibilities for CSPs. The ability to offer high-speed connectivity, paves the way for new services that can be monetized,  such as faster internet, seamless connectivity and other online services.

But this isn’t just about launching new services; it’s about reimagining the value proposition. CSPs need to understand their customers’ needs and behaviours, leveraging data analytics to deliver personalised offers such as tailored packages and premium digital experiences.
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Consumer and market evolution: the bedrock of new opportunities

The transformation in consumer behaviour and market dynamics is a goldmine for CSPs ready to pivot their strategies. Today’s consumers crave experiences that are seamless, personalised, and immersive. This shift calls for CSPs to go beyond traditional telecom services.

One such area is the integration of content and entertainment. Bundling streaming services, gaming platforms, and digital content within telecom offerings not only adds value for the consumer but also creates new revenue streams.

Moreover, the enterprise segment presents lucrative opportunities, especially with the growing demand for customised 5G solutions. Industries such as manufacturing, healthcare, and retail are looking for tailored connectivity solutions that can enhance operational efficiency and enable new business models.
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The B2B-to-Customer model: a collaborative approach

CSPs could benefit from a B2B-to-customer model – partnering with businesses across different sectors to offer integrated solutions to the end consumer.

For instance, partnering with a healthcare provider to offer telemedicine services, leveraging its network capabilities to facilitate remote consultations and patient monitoring. Similarly, collaborations with fintech companies could lead to the integration of financial services into mobile platforms, offering consumers a one-stop solution for their financial and connectivity needs.

These collaborations not only open new revenue channels but also enhance customer stickiness, as consumers find more value in a service that caters to multiple aspects of their lifestyle.
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Leveraging advanced services for ARPU uplift

Advanced services, powered by the capabilities of modern networks, are key to unlocking higher ARPU. This includes AI-driven analytics that can tailor plans based on individual usage patterns, or smart home solutions that integrate seamlessly with a user’s mobile service.

Additionally, the deployment of edge computing in tandem with 5G networks can facilitate new services like real-time data analytics and AI-driven insights for businesses, creating new revenue avenues.
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The road ahead: innovation and customer-centricity

As CSPs navigate these uncharted waters, the focus should remain on innovation and customer-centricity. This entails not only developing new products and services but also rethinking the entire customer journey. Every touchpoint, from discovery and purchase to support and retention, must be aligned.

The path to enhancing ARPU in the telecom sector lies in a strategic shift from traditional business models to ones that embrace technological advancements, customer expectations, and collaborative ecosystems. By focusing on differentiated offerings and advanced services, CSPs can not only elevate their ARPU but also position themselves as leaders in a digitally driven future.

The journey will be challenging, but for those willing to innovate and adapt – the rewards will be substantial.

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