Adapt or Die
Obviously, it has been being illustrated how mobile relationship with the digital future. The future market
will not be defined by simply looking to profit from the financial interest and
protectionism. This does not mean looking back that the old business models and
revenue streams are wrong, but it needs a powerful business model, diverse and
dynamic. Able to explore new services and new business models by operators
working across borders, a big, strong, ASEAN regional player together with the
smaller niche players. By reading the landscape of the mobile industry in
Indonesia today, there are at least four dimensions of the major stakeholders
in it, without counting other parties with little interest. The main
stakeholders in this business is MNOs themselves (i.e. Telkomsel, Indosat
Ooredoo, XL Axiata, SmartFren, Sampoerna Telekomunikasi, and Tri Indonesia).
The second is the OTT players (Over-The-Top) or applications provider running
on the mobile network. The presence of the OTT players currently considered as
two potential by the mobile industry worldwide, which can be a friend or foe.
Because their business model are targeting the revenue from applications usage
by MNO’s subscribers without their owned network capacity provided. In the
mutual relations point of view, they gave the effect of mobile services usage,
but MNO as the part who bear the burden of the cost of providing network
capacity unilaterally. The third is the regulator who should play a major role in
managing all aspects of service and competition within the industry. The fourth
is the customer itself.
This changing market conditions,
pushing MNO to re-examine their framework. But by seeing the current market
situation, it is for all operators in the world cannot see it as a violation by
the OTT players. Today, Indonesian broadband penetration is still low (only 22%
who have a connection), does not even reach half the population who can access
the Internet on mobile phones. But the existing market is almost mature form,
the market demand for greater and greater bandwidth, faster and faster speeds. How
many users who will be doing it if there was no OTT? If there is no Facebook,
YouTube, Twitter, Google? Even the OTT players are the ones who drive demand
for digital, demand for the network offered by the operator. OTT players are
those who can work with, not opposed. OTT is a necessity in this business that
are not appropriate if placed as rivals or foes. But it is more appropriate if
taken together, work together to mutually create a way to enjoy the honey from
the business. In the near future, this business model will provide a new
revenue streams, and now it’s the time seed. Incomes is still zero, but it
could be the future driven business. Inevitably MNOs should take this path
rather than having to add enemies in the industry. And this is the expectation
of the market as well. MNOs can provide customer desires in coverage and
quality of service (QoS), but customers also want the applications and content
provided by the developers, the MNOs and OTT players can work together. And it needs
an active regulators role that mediate and regulate the certainty of the rules
in the synergy within this industry, which can provide a positive value for all
Differentiation
as Switching Cost
There are three factors that can
be simultaneously switching cost and differentiator between MNOs, i.e. (1) The
best basic services in voice call, SMS, and data. (2) Application or content,
there is added value proposition on basic services that can bind the customers,
such as music, media socialization space, accompanied by various promos and so
on, because there is needs of the customer. (3) Customer experience over the
previous two factors, which is currently being as the battleground for MNOs to win
the hearts of its customers by providing a service experience that can be
imprinted in the minds of customers as a Memorable Experience. These three
factors do not yet become a powerful weapon if it cannot be identified easily
by the customer. Customers should be able to easily see, hear, and feel it too.
The basic service is the easiest thing to be recognized by customers, while the
applications and content factors are quite difficult to be identified. Then by
this situation, MNO can create differentiation and value proposition respectively.
Moreover, the most important is the third factor that will determine the winner
in this business in the future that is the customer experience. So in this era
of experiential economy, it is very appropriate when customer experience becomes
an important and cutting edge tool that is able to answer and carve a positive
sensation in the hearts of customers, and to be a strong point of customer
loyalty. Brand is the vehicle to deliver customer experience to customers to be
embedded in customer’s minds. The differentiator which has been created by the
image and customer experience will get into customer’s minds as a value
proposition by the brand intermediary, eventually becoming the best way to create
customer’s willingness to pay.
Value proposition cannot be
effectively targeting all segments. In all businesses, the priority of segments
to be addressed first are the generating revenue in 80%. So obviously, no ones
can serve all segments, but at least 80-90% of the segment that generates
revenue definitely must be targeted and this should be appropriate. The niche
market segments that smaller percentile such as B2B and communities are being
targeted as well. Obviously the focus given to the service is addressing to the
majority of segments, because it is the revenue stream. Except for developed
countries, the composition of the target segment makes it possible to apply the
reverse, where the minority segment (niche) is able to sustain business
operations so as to subsidize the majority segment as a freemium service,
because the infrastructure is already well established. So the business model
is known as the Long Tail Business Model. For mobile businesses in developing
countries such as Indonesia, India, Africa, Brazil seems this model cannot be
applied, seeing that the niche segment which can sustain has not been being
established, although it had begun work on intensively.
Now the internet demand phenomenon
is already established and it’s very real in Indonesia, especially in the big
cities, whereas the small towns is still not a staple. One time when this need
has been spread out in? Indonesia, then the data will be a mainstream revenue.
When will it be happen? Everyone feel the same impatient to wait, probably
still two or three years. Of course, with the support of the Indonesian macroeconomic
infrastructure, GDP growth, political stability, and so forth. At the time of
the data demand has been created and established, meaning that customers
already want the service and would be willing to pay. Then when it come, the
service will become the new primary revenue stream. Unfortunately, until now no
one has dared to be pioneers of change in the mainstream business models in
Indonesia. Because MNO think too much risk. There are whom already trying to
not sell voice and sms anymore, but only Internet data. But what happened? not
profit. Data internet business is difficult and easy at the same time in care,
profitability and so forth. No profit even though many acquiring customers. For
the big MNOs, it’s very hard to leave voice and sms. It's too bigger risk to switch
now. But for a small new challenger, there is no place to sell voice and sms,
nothing to lose they have to, so it's a survival mode. That’s why they must do
it.
How long this business model will
still relevant, and how likely to reconstruct this business model? Steve Jobs
ever said, not the smartest, or the greatest, or biggest will survive, but whose
the fastest to adapt to changes. The greatest right now, might not be the
greatest 2-3 years in the future, however the most rapidly changing to adapt, changing
the business model, and so on. Now it's time to be changed now. Now it's time to
cultivate apps and content. New apps are incubated until they become big and
become a business. In the future, this will be a new digital revenue stream models
for MNO, especially for those who are now only provide pipe. Prepare the
infrastructure, man power, vision, and all sorts, so by the time will come, MNO
is ready. Who is the most rapidly changing future, it will survive. 2-3 years
down the road it will survive. Which still sells only internet pipe, with the
price per Giga per dollars, will be dead.
Questions for discussion:
1. Is the business model of mobile
telecommunications in Indonesia ready to change?
2. How is the mobile telecommunications business
model that can provide a sustainable competitive advantage and profitability?
3. Is there congruence preparation of Indonesian MNO’s
business strategy with AEC challenge?
4. How to design business strategies towards the
mobile market leader in ASEAN?
5. What type of digital companies which will
survive in the future?
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