Updated: Jun 16
The telcos face increasing pressure to adapt to changing market conditions and consumer behaviour. Because of the modest 2.7% increment rate of the US GDP, the telecom industry growth will depend upon the development of additional revenue streams. This article discovers why expanding telco revenue streams is crucial and how to approach it properly.
New Revenue Streams For Telecom Companies are Must-Have
The increasing rivalry among ISPs is one of the key reasons why additional income streams are needed. As more firms enter the market, consumers have more options to choose from. Consequently, telecom businesses must differentiate themselves by providing creative and one-of-a-kind services. It necessitates substantial investment in new technologies and infrastructure.
Introducing innovations such as cloud computing, the Internet of Things (IoT), and 5G networks have opened up new revenue streams for telecom operators. ISPs may now provide cloud-based storage and computing options, as well as Internet of Things-enabled devices that can connect to their networks. These extra services affect customer experience and drive revenue.
The increased demand for data-intensive offerings is also among revenue streams for telecom operators. Video broadcasting, online gaming, and social media usage are all increasing, and ISPs should keep up.
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Telecommunications Industry Revenue Streams “As Is”
Currently, the revenue streams for telecom companies and ISPs are gathered via multiple adapted channels.
It is telecom providers’ conventional income stream, which includes calls, text messaging, and voice mail services. Landline telephone services, meanwhile, have declined because of the growth of over-the-top (OTT) applications such as WhatsApp, Skype, and FaceTime. Because of the loss in income from voice services, telecom providers are looking for alternative revenue streams.
The increasing demand turned it into the primary revenue stream for telecom operators. Data-driven businesses are 23 times more probable to draw in consumers, six times more likely to keep those consumers, and 19 times greater inclined to succeed. However, with the growth of OTT applications, telecom operators face challenges monetizing their network services as customers increasingly use free or low-cost OTT services for their internet needs.
These are additional services that telecom operators provide to customers, such as music streaming, video streaming, cloud storage, and other digital services. The global market for mobile value-added services is expected to reach $1,4 trillion in 2027. Their popularity is gaining momentum for telecom operators, as customers will pay for premium subscriptions that enhance their digital experience.
Roaming refers to using a mobile phone outside the coverage area of one’s home network. The world’s roaming market will incline revenues up to $60 billion in 2023. Telecom operators generate revenue from customers that use their mobile phones while travelling abroad. However, with the telecom industry growth and the increasing availability of affordable local SIM cards, customers are becoming less dependent on international roaming services.
Telecom operators also generate revenue selling hardware devices such as mobile phones, routers, and other telecommunications equipment. They may offer customers the option to purchase this equipment outright or on a subscription base to generate sales.
Uncovering the Top Challenges ISPs Encounter in Boosting Telco Revenue Streams
The telecommunications industry is highly competitive, with many players offering similar services at competitive prices. This rivalry can decrease revenue and profit margins for telecom operators as they struggle to keep customers and maintain market share.
Telecom operators are subject to various regulatory pitfalls, including licensing requirements, spectrum allocation, and data & consumer protection laws compliance. These challenges can be time-consuming and costly for telecom operators and can affect their ability to generate revenue.
The telecommunications industry is constantly strengthening, with innovations emerging rapidly. Telecom operators need to invest heavily in research and development to keep up with these advancements requiring significant investment.
Building and maintaining telecommunications infrastructure, such as cell towers and fibre optic cables, affect the telecommunications industry revenue. Telecom businesses should invest heavily in infrastructure to deliver quality customer service.
Dependence on external factors
The telecommunications industry heavily depends on external factors, such as economic conditions, political stability, and changes in consumer behaviour. Any changes in these external factors can affect the demand for telecom services.
How to Increase Revenue in Telecom Industry?
Implementation of Cloud Technologies
Telecom companies leverage their network infrastructure to offer cloud-based services like data storage, SaaS, IaaS, etc. It can be monetized through subscription fees and usage-based charges.
Telecom companies can leverage their customer data and network infrastructure to offer targeted ads to advertisers. The income comes through advertising revenue-sharing arrangements and by charging advertisers for access to customer data.
5G Network Services
With the deployment of 5G networks, telecom companies can offer a range of high-speed, low-latency services. It includes enhanced mobile broadband, ultra-reliable low-latency communications, and massive machine-type communications. For instance, SoftBank, a Japanese telecom company, has partnered with several automakers to develop 5G-powered autonomous vehicles. The service is monetized through subscription fees, data usage charges, and value-added services, such as real-time traffic updates and remote vehicle control.
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Telecom companies can leverage their customer data and network infrastructure to offer eCommerce services like mobile payments, digital wallets, and online shopping solutions. The monetization source could be transaction fees and commission-based revenue models. Singtel in Singapore has launched an augmented reality virtual shopping experience, allowing customers to browse and purchase products from their online store using a smartphone app.
How to Develop and Implement Revenue Streams for Telecom Companies?
Know the market and the customer
Conduct market analysis. It involves assessing the telecom industry landscape, identifying market trends, and analysing the strengths and weaknesses of competitors. This information will help companies to identify the revenue streams that are most relevant to their business.
Think of a strategy
Business strategy should be based on market analysis. Companies need to develop a plan that aligns with their overall business objectives. It should include specific revenue goals, target markets, and a timeline for implementation.
Identify the infrastructure and allocate resources
For the telecom industry growth, companies need the proper infrastructure and resources to support the revenue streams they plan to develop. It may include investments in cloud technologies, 5G networks, and eCommerce platforms.
Build partnerships and collaborations
Organisations need to collaborate with advertisers, automakers, and retailers to expand new telco revenue streams. This approach can leverage existing resources and expand the customer base.
Implement and monitor
Once the alternative sources for telecom operators are developed, there’s a need to implement them and monitor their performance. It involves tracking revenue and customer feedback and making adjustments to improve performance.
The telecom industry faces increasing pressure to adapt to changing market conditions and consumer behaviour. To stay competitive and sustain growth, telecom companies and ISPs need to explore additional revenue streams. To increase telecommunications industry revenue, companies use cloud technologies, offer digital advertising, and prioritise specific business & operational strategies. CSPs that can successfully introduce innovative services and adapt to changing market conditions will thrive in the constantly evolving technological landscape.