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Better communication tools improve customer experience,
increase sales and reduce cost. Enterprises are - compared with
consumers - therefore disproportionately willing to pay for
• 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
• 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
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 enterprises
• 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
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
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 intelligently.
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 top'
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 together. GTB
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