Telecom Blue Ocean Strategy


None of the incumbant telecom providers has put into place any Blue Ocean Strategies. Blue Ocean Strategies have made the Circus, Wine, Gaming, Airline, etc. industries exciting again, so why not apply it to the telecom market. The only telecom players, I know of, that implemented some blue ocean strategies are Free in France, GiffGaff in the UK and Freedompop in the USA. So why not do a Blue Ocean Strategy exercise in this blog post.

Here is my strategy canvas:

Telecom Blue Ocean

Traditional operators focus on charging heavily for calls and SMS although lately more and more packages with free minutes are available. International calls however are still charged extremely expensive. Mobile phones are subsidized up to 24 months and as such you need to stay with them for at least this period. Operators spend a lot of their money investing in the roll out and maintenance of their networks. They also have very complex pricing plans and as such need heavy investments in BSS.

MVNOs try to compete on price and most often do not subsidize mobiles. They do not have their own network as such they do not need to invest in it. They offer less tariff plan options. You are often free to change whenever you want. To make up for not subsidizing mobiles, you can get mobile loans which means you have some sort of permanence.

So how would Blue Ocean Mobile do it differently?

In line with Free’s example, call costs should be eliminated, including international costs. Mobiles should not be subsidized but cheap mobile loans should be offered for those that do not bring their own device [BYOD]. Blue Ocean Mobile should focus on LTE and try to win LTE licenses. However instead of doing heavy investments in installing antennas everywhere, Blue Ocean Mobile should only install antenna’s in those areas where few people live but connectivity is required, e.g. major highways. This is in line with Free’s strategy. However unlike Free, the operator’s network should not be built with unreliable WiFi hotspots. Instead specially designed “Personal Antennas” should be sold to everybody who wants one. What is a personal antenna? A personal antenna is a nanocell LTE antenna. A personal LTE antenna in your home that not only gives service to you but also to neighbours and people close to your home. The idea is that you become a sort of mini-LTE ISP to which others can connect. For every KB that gets transferred through your personal LTE antenna, you will get a revenue share. So it is in people’s interest to put the personal antenna in a place where it can service a lot of people and to have a good backbone Internet connection. People should be able to win back their investment in the Personal Antenna in a few months and make money afterwards. This should allow Blue Ocean Mobile to seriously lower their investment in rolling out an LTE network and to get free mouth-to-mouth advertising. Via a software-defined network [SDN] management system all nanocell LTE antennas are controlled by Blue Ocean Mobile.

Since Blue Ocean Mobile is focusing only on data traffic, it should work together with “over-the-top players” to offer a compelling list of services. Ideally Android Phones and the iPhone will use the data network for calling others instead of a circuit network. Customers should have a full range of BYOD management options so small and medium-sized businesses can easily manage the phones of their employees as well as push enterprise applications towards them.

Blue Ocean Mobile should also try to avoid investment in BSS. Tariff plans should be easy with the customer defining how many free megabytes they want to purchase for a fixed monthly fee and a simple extra charge for overage. So instead of operator defined tariff plans, everybody has a personalized tariff plan that they can adjust every day. Calls and SMS are charged based on data traffic not on per minute charges. VoIP solutions is the standard. Blue Ocean Mobile does not have a circuit network or SS7.

Blue Ocean Mobile is also copying the long tail support from Giff Gaff in which customers give support to other customers and are responsible for marketing. Unlike Giff Gaff not only prepaid but also subscriptions are supported. Like Giff Gaff customers get a revenue share when they participate in support or marketing.

Blue Ocean Mobile’s strategy is just very high-level and still needs in-depth analysis but it is an open invitation for innovative people to start applying Blue Ocean strategies to anything they feel in need of disruption.

Maarten Ectors is a senior executive who is an expert in applying cutting edge technologies (like Cloud, Big Data, M2M, Open Hardware, SDN, etc.) and business innovations to generate new revenues. He is currently looking for new challenges. You can contact him at maarten at telruptive dot com.

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  1. Michail
    January 28, 2013 at 3:48 pm

    I know at least couple of Telecom operators, who do take very seriously blue ocean strategies: Telekom Austria Group, VF, DTAG, etc. The greatest challenge however is implementing ANY of the brilliant ideas that those smart and intelligent people come with. I guess the problem in any telecom is the fact that their business is still quite good and there is no need for significant financial risk that any blue ocean strategy actually requires.

    • January 28, 2013 at 5:00 pm

      Hi Michail,

      All the operators you mention invest heavily in launching new services. However what examples do you have where any of them showed any blue ocean strategy?

      Regards,
      Maarten

  2. Osman
    August 29, 2013 at 4:16 pm

    The reports shared in this blog only consists of countries either Europe or Australasia. However if you pull out the reports of Asian telecom markets such as Pakistan then search for Telenor. Telenor introduced a revolutionized blue ocean concept of mobile banking. Giving you a lay man example is like western union where expats can send money to their families back home. The product is called easy paisa ( easy money) this is money transfer within the country while using your mobile bank account, You can pay utility bills. Its simple you deposit money in your mobile banking account and through the money you can not only pay your bills, but also can send money to other same network mobile user and he\she can collect from the retailer shops designated in their areas. This product has changed the idea of Pakistani market. Increased revenues as well as increased customer based.

  1. January 16, 2013 at 12:19 pm

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