For the first part of this article go here:
Better communication tools improve customer experience,
increase sales and reduce cost. Enterprises are –
compared with consumers – therefore disproportionately
willing to pay for such tools:
• The more pervasive the opportunity to communicate
becomes, the more chance there is of the buyer being able to
express a demand in the moment of desire, and the seller being
able to respond.
• The richer the interactive media, the less the need for
human effort to overcome any limitations; as a result, both the
enterprise’s costs and the customers’
usability barriers will be lower.
• As communications media become more sophisticated,
value-subtracting tasks such as authentication and payment
become invisible to the user, and the security of the exchange
is better assured.
To achieve these benefits, the communications
tools’ enhanced capabilities must be integrated
with applications in both the data centre and call centre.
Better communications tools will enable machines increasingly
to provide complete automation of business processes, which
will also readily absorb spikes in demand for customer contact.
The relatively inelastic commodity that is human labour can
then be focused on dealing intelligently with complex, custom
or exceptional business processes.
These powerful tools will have utility only if they are placed
in the hands of consumers. To achieve widespread distribution
and adoption, the operator revenue model for voice and
messaging will flip. To compete against free offers from search
and social media services, the marginal price to the user must
be zero. Metered minutes and messages will be replaced by a
flat access fee with unlimited usage, which, critically, will
'feel like free’. Instead of metering end user
activity, operators will charge enterprises for each use of a
rich communications capability to connect, interact and
transact with their customers.
Whichever party carries the cost of the conversation medium,
the conversation gap must be addressed by the parties that
supply these tools:
• Telcos and postal providers, as primary suppliers of
'legacy’ (yet universal, popular and profitable)
telephony, SMS, MMS and mail services to both users and
• Consumer search and social media services, e.g. Google,
Facebook, or Skype
• Enterprise unified communications providers, e.g. Cisco,
Avaya, or Microsoft
• The media and advertising industries, comprising TV,
radio, print, billboards.
Each is vying to provide compelling conversation channels
between customers and enterprises. Over time, these
communications service providers will increasingly converge on
a similar set of capabilities. Each system integrates voice,
messaging, collaboration and commerce into a single suite,
delivered using cloud technology.
All these parties are destined to become cloud communications
service providers if they wish to remain in business. As each
moves in this direction, there will be intensified competition
across traditional industry boundaries. Significantly, none of
these players – neither telcos, nor social media
services, unified communications providers, media companies,
telecoms equipment suppliers, or IT vendors – has yet
truly risen to the challenge of rethinking their business
models for the new patterns of conversation and commerce that
are brought by the cloud.
For operators, there has been little innovation in the core
voice product since Caller ID. Mobile telephony simply extends
the reach of what is essentially the same product as landline
service. If this stasis persists, users will perceive operator
voice and messaging to have diminished value and will find
better things to spend their money on. The operator
share-of-wallet for core communications spending will plummet,
in the same way that Skype has displaced the phone card for
international connections among family and friends by being
both cheaper and better.
To remain relevant and thrive in the cloud, all communications
service providers must rethink their products so that they help
• Connect cheaply and easily to their customers,
• Interact richly and seamlessly with their customers,
• Transact securely and swiftly with their customers.
Until now, operator communications products have had only
limited capabilities to service enterprise users’
needs for customer contact.
Consider as an example today’s freephone product.
The burden of the call cost always lies with the enterprise,
despite the value of a customer's inbound call varying
according to where in the business lifecycle it is received.
Before a sale, the enterprise typically wishes to carry the
cost; after the sale, the tendency is for the user to have to
absorb it. A more fine-grained charging approach is possible,
allowing cost to be varied and allocated more dynamically and
Examples of opportunities to create new revenue models are as
• Connect: A 'Mobile Freephone 2.0’ might
allow free calls to automated call-handling systems, but offer
human contact for after-sales support only in return for a fee
that the enterprise could choose to refund if the cause of the
call is a fault in its business processes.
• Interact: Voicemail could offer a suite of new
interaction capabilities, such as the possibility of
programmatically deleting a message or making messages
interactive (for example, 'press 1 to confirm your dinner
• Transact: A 'PayPal for voice’ capability
would enable users to authorize a payment by hearing an
automated message from their operator that asks them to enter a
PIN. This functionality would remove the need for users to
insecurely and inefficiently dictate name, address and credit
card details to a call centre agent.
Additional value will be created through integration of all
three sets of capabilities, such as a SIM card being used to
authenticate the customer to a CRM system and a bank to
complete a payment.
All parties must also master the skills to manage the critical
privacy and regulatory issues associated with acquiring and
utilising abundant cheap information.
The applicability of this Connect-Interact-Transact framework
is not unique to operators. Social media players can become a
rich channel for interaction between enterprises and their
customers. Monetising social media usage through advertising
alone demonstrates a severe shortfall in vision. Unified
communications players need to extend the reach of their
products out of the silo of the individual enterprise (or
federations of enterprises) to connect with their customers.
Make communications services fit for purpose
To satisfy customers’ needs for cheaper and better
service, enterprises must turn their attention outwards,
focusing on communication and collaboration with customers and
suppliers. Communications service providers of all kinds have
little choice but to rise to this cloud communications
challenge, and give enterprises the tools to do the job.
Failure to build 'cloud-ready’ business models has
serious consequences for operators, who face gradual
substitution of operator services by new entrants. These
services are frequently advertising-funded and thus free to
users, or come 'free’ with a smartphone. The
newcomers better understand how communications services need to
create and consume cheap information as an integral part of
their function, and enable new forms of commerce.
The pattern from previous eras of mainframes, PCs and mobile
phones strongly suggests the emergence of a small number of
dominant global or regional cloud communications platforms.
There will be a consequent upheaval in the business models of
providers of pre-cloud technologies such as post and telephony
that are patterned on an era of analogue communications.
Media companies have found themselves increasingly subject to
intermediation by cloud search and social media giants. If
operators do not act, it may be their fate to become
equivalently subservient to 'the next Google’ that
aggregates not media content but the operators' network APIs.
The ultimate threat is one of envelopment, as operators are
left with all the costs of media delivery for voice and video,
whilst value migrates to signalling in the control of 'over the
Over a trillion dollars is spent every year on post, telephony
and SMS. We are nearing the moment of 'peak
telephony’, where we pass the high water mark for
combined fixed and mobile voice revenue. The question every
cloud investor must ask is, who will seize the moment and build
the cloud communications services that are the new growth
channels for customer contact? Will it be operators, social
media players, unified communications providers, traditional
media companies or someone new and different?
Do business in the cloud
To succeed against this new competition, operators must get to
grips with enterprises’ real requirements for
customer contact. This can happen only if visionary operators
commit to a purposeful dialogue with enterprises to develop
this understanding. Operators can then exploit the success and
ubiquity of their legacy services, and build on earlier
successes in offering new communications capabilities that
support commerce, such as SMS short codes.
I have developed the 'Connect-Interact-Transact’
framework to model the cloud communications opportunity space.
The framework helps enterprises and operators to reshape their
business models to fit the new cloud reality. I am exploring
the most promising opportunities with a few pioneers, and
invite you to participate in creating the future of
communications as part of that community, discussing the ways
we can explore, map and cultivate this new territory
Martin Geddes is the founder of Martin Geddes Consulting Ltd.,
a London-based global provider of business model innovation
services in the telecoms, IT and media sector. For more
information visit www.martingeddes.com ,
or email firstname.lastname@example.org
This is a two-part article. Part one is at