Telecoms – Why It's Moving Towards a Subscription Business Model and How Consumers Will Benefit?

Here are the ways telecoms businesses are moving towards a subscription business model better!

Telecoms Are Trading Up to the Subscription Economy.

There are two primary reasons why the telecoms industry is doing this:

1. Cost of billing a customer.

The cost and complexity for a telecoms business to produce a bill for a customer is high and prone to errors. The complex factors are around providing accurate and understandable bills for data usage and roaming for voices calls, data usages plus texts. Mix into this complex ‘bundle’ offers and then try and match the billing service to this and it’s a business nightmare to manage. This nightmare then reflects through into a poor customer experience – thus cost of billing is high in terms of real money and potential churn. When was the last time you understood your telecoms bill?

2. Competition.

The telecoms industry is highly competitive but incumbent providers are relatively old in their thinking when it comes to billing. New competitors are trail blazing the market with new simple fixed cost packages which modern consumers can more easily relate to. Consumers want ease, simplicity, plus convenience and this is achieved by offering simple online telecoms subscription packages for services.

This is a topic that only a few analysts are discussing as they have been too closely aligned with the telecoms industry and are therefore ‘incumbent’ in their thinking; they also lack an understanding in just how complex telecoms billing is and how much it costs in terms of Opex and Capex. Due to the high cost of customer acquisition, the telecoms industry seeks to own long-term relationship with its customer base to keep churn low – often a handset subsidy is used as a mechanism to achieve this in western markets (which is becoming uneconomical as handset prices rise).

In today's telecom industry, long-term consumer loyalty is critical to success. The most obvious approach is to deliver content and services tailored to a subscribers' requirement and do it in a consistent and refreshingly easy manner.

The Telecoms industry doesn’t need to convince consumers as they already know subscriptions are easier.

Consumers are already well versed with subscription models as many have been through the process with other service providers such a music and film providers. Therefore, once a consumer has gone through the complete seamless process of a good customer experience, the telecom billing solution company will be hooked.

Within the telecoms industry there is a rising level of sophistication being applied to the management of real-time to traffic. This allows tight control over how services are consumed, priced, and managed. Therefore, the industry has the ability now to offer simple fixed priced subscription packages with some flexibility to charge outside of the package for overuse (overage).

Therefore, in recent months, consumers may have seen an increase in the number of free trials available plus new telecoms businesses offering fix priced subscription services.

Conclusion: Telecoms Are No Exception To Business Transformation. We are seeing a tension between the telecom incumbents and the new telecom challengers which will lead to a change in the way consumers are billed. Adopting a subscription model approach is a win-win for both customers and the industry, consumers have certainty plus convenience and the industry wins with lower operating costs and improved retention. In the end the consumer will choose the billing model they prefer, and the industry will adapt.